Heirs of Luis Bacus vs Court of Appeals, Spouses Faustino Duray and Victoriana Duray G.R.No.

127695, 03December2001

FACTS

On 1984 Luis Bacus leased to Faustino Duray a parcel of agricultural land with total land area of 3,002 of square meters, in Cebu. The lease was for six years ending in 1990, the contract contained an option to buy clause. Under the said option, the lessee had the exclusive and irrevocable right to buy 2,000 square meters 5 years from a year after the effectivity of the contract, at P200 per square meter. That rate shall be proportionately adjusted depending on the peso rate against the US dollar, which at the time of the execution of the contract was 14 pesos. Close to the expiration of the contract Luis Bacus died on 1989, after Duray informed the heirs of Bacus that they are willing and ready to purchase the property under the option to buy clause. The heirs refused to sell, thus Duray filed a complaint for specific performance against the heirs of Bacus. He showed that he is ready and able to meet his obligations under the contract with Bacus. The RTC ruled in favor of the Durays and the CA later affirmed the decision. ISSUES Can the heirs of Luis Bacus be compelled to sell the portion of the lot under the option to buy clause? - Yes, Obligations under an option to buy are reciprocal obligations. The performance of one obligation is conditioned on the simultaneous fulfillment of the other obligation. In other words, in an option to buy, the payment of the purchase price by the creditor is contingent upon the execution and delivery of the deed of sale by the debtor. - When the Durays exercised their option to buy the property their obligation was to advise the Bacus of their decision and readiness to pay the price, they were not yet obliged to make the payment. Only upon the Bacus actual execution and delivery of the deed

of sale were they required to pay. - The Durays did not incur in delay when they did not yet deliver the payment nor make a consignation before the expiration of the contract. 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 is incumbent upon him. Only from the moment one of the parties fulfills his obligation, does delay by the other begin. HELD The petition is DENIED nad the decision of the Court of Appeals is AFFIRMED.

Obligations

and

Contracts

Terms:

Reciprocal Obligations- Those which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously such that the performance of one is conditioned upon the simultaneous fulfillment of the other

Francisco Lao Lim vs Court of Appeals and Benito VillavicencioDy G.R.No. 87047 , 31October1990

This case is with regard to Art 1182 of the NCCPotestative Condition- Stipulation dependent upon the sole will of the debtor

- The continuance, effectivity, and fulfillment of a contract of lease cannot be made to depend exclusively upon the free and uncontrolled choice of the lessee between continuing payment of the rentals or not, completely depriving the owner of any say in the matter. Mutuality does not obtain in such a contract of lease and no equality exists between the lessor and the lessee.

FACTS

HELD: The decision of the Court of Appeals is REVERSED AND SET ASIDE. Benito Dy is ordered to immediately vacate and return the possession of the premises and pay the monthly rentals due thereon in accordance with the compromise agreement until he shall have actually vacated the same. This Judgment is immediately executory.

Records show that Francisco Lim, entered into a contract of lease with Benito Dy for a period of 3 years, from 1976 to 1979. After the stipulated term expired the respondent refused to leave the premises, so Francisco Lim filed an ejectment suit against Benito Dy. This case was then taken over by a judicially approved compromise agreement which provides an automatic increase in rent of 20% every 3 years. On 1985 Dy, informed Lim of his intention to renew the lease up to 1988, Lim did not agree to the renewal.

Obligations

and

Contracts

Terms:

In 1987 another ejectment suit was filed by Lim after the failure of Dy to vacate the premises. It was dismissed by the RTC and later affirmed by the CA for the following reasons: (1) the stipulation in the compromise agreement which allows the lessee (Benito Dy) to stay on the premises as long as he needs it and can pay rents is valid, being a resolutory condition, and therefore beyond the ambit of art 1308 of the NCC; and (2) the compromise agreement has the effect of res judicata. ISSUES Was the stipulation in the compromise agreement which allows the lessee to stay on the premises as long as he needs it and can pay rents is valid? - No, since the stipulation for as long as the defendant needed the premises and can meet and pay said increases is a purely potestative condition because it leaves the effectivity and enjoyment of leasehold rights to the sole and exclusive will of the lessee.

Potestative Condition- This can be found in Art 1182 of the NCC. A potestative condition speaks of fulfillment of an obligation rests solely upon the will of the debtor. An obligation which is subject to a suspensive potestative condition is nondemandable, hence it is void. If it is the debtor himself who determines the fulfillment of the condition, such an agreement produces no juridical effect that can be enforced, and thus null

SECURITY BANK & TRUST COMPANY and ROSITO C. MANHIT vs COURT OF APPEALS and YSMAEL C. FERRER G.R.No. 117009, 11 October 1995

constructed building at a price that is far below its actual construction cost, and this constitutes unjust enrichment for SBTC at the expense of Ferrer. This is not allowed by law by virtue of Art 22 of NCC.

FACTS SBTC and Manhit contracted Ferrer to construct in 200 days a building in consideration of 1,760,000.00. Ferrer was able to finish the construction of the building within the prescribed time, but incurred additional expenses of about 300,000.00 on top of the original cost due to drastic increases in construction materials. Ferrer made timely demands for payment of the increased cost, and SBTC and a representative of an architectural firm consulted by SBTC verified Ferrer s claims for additional cost. A recommendation was then made to settle the claim for 200,000.00 but SBTC did not pay the amount, and instead denied any liability for the additional cost. Ferrer then filed a claim for breach of contract with damages in the RTC, which ruled in favor of Ferrer, Court of Appeals affirmed the decision. ISSUES Is SBTC liable for the increase in cost of the construction due to drastic increases in cost of material? - Yes, since under Art 1182 of the NCC, a conditional obligation shall be void if its fulfillment depends upon the sole will of the debtor. Under Art IX of the building contract it allows for the adjustment of the contract price upon mutual agreement of the parties. - It is the absence of this mutual agreement that the bank is using to support its contention that it is not liable for the increased cost, and in effect this is an obligation dependent on SBTC s sole will, since its consent is required for the recovery of the increased cost to be allowed. - This in effect allows SBTC to acquire the

HELD: WHEREFORE, with the above modification in respect of the amount of attorney's fees, the appealed decision of the Court of Appeals in CA G.R. CV No. 40450 is AFFIRMED.

Obligations

and

Contracts

Terms:

Conditional Obligation- a condition wherein the execution of which is suspended by a condition which has not been accomplished, and subject to which it has been contracted. Potestative Obligation- a condition whose fulfillment was completely within the power of the obligated party

ACINTO TANGUILIG doing business under the name and style J.M.T. ENGINEERING AND GENERAL MERCHANDISING vs COURT OF APPEALS and VICENTE HERCE JR.

G.R.No. 125994, 29June2001

FACTS

Herce contracted Tanguilig to construct a windmill system for him, for consideration of 60,000.00. Pursuant to the agreement Herce paid the downpayment of 30,000.00 and installment of 15,000.00 leaving a 15,000.00 balance. Herce refused to pay the balance because he had already paid this amount to SPGMI which constructed a deep well to which the windmill system was to be connected since the deepwell, and assuming that he owed the 15,000.00 this should be offset by the defects in the windmill system which caused the structure to collapse after strong winds hit their place. According to Tanguilig, the 60,000.00 consideration is only for the construction of the windmill and the construction of the deepwell was not part of it. The collapse of the windmill cannot be attributed to him as well, since he delivered it in good and working condition and Herce accepted it without protest. Herce contested that the collapse is attributable to a typhoon, a force majeure that relieved him of liability.

his obligation in a normal manner; and (d) the debtor must be free from any participation in or aggravation of the injury to the creditor. - Tanguilig merely stated that there was a strong wind, and a strong wind in this case is not fortuitous, it was not unforeseeable nor unavoidable, places with strong winds are the perfect locations to put up a windmill, since it needs strong winds for it to work. HELD: WHEREFORE, the appealed decision is MODIFIED. Respondent VICENTE HERCE JR. is directed to pay petitioner JACINTO M. TANGUILIG the balance of P15,000.00 with interest at the legal rate from the date of the filing of the complaint. In return, petitioner is ordered to "reconstruct subject defective windmill system, in accordance with the one-year guaranty" and to complete the same within three (3) months from the finality of this decision. Obligations and Contracts Terms:

The RTC ruled in favor of Tanguilig, but this decision was overturned by the Court of Appeals which ruled in favor of Herce

ISSUES

Can the collapse of the windmill be attributed to force majeure? Thus, extinguishing the liability of Tanguilig? - Yes, in order for a party to claim exemption from liability by reason of fortuitous event under Art 1174 of the Civil Code the event should be the sole and proximate cause of the loss or destruction of the object of the contract. - In Nakpil vs. Court of Appeals, the S.C. held that 4 requisites must concur that there must be a (a) the cause of the breach of the obligation must be independent of the will of debtor (b) the event must be either unforeseeable or unavoidable; (c) the event be such to render it impossible for the debtor to fulfill

Fortuitous Events- Refers to an occurrence or happening which could not be foreseen, or even if foreseen, is inevitable. It is necessary that the obligor is free from negligence. Fortuitous events may be produced by two (2) general causes: (1) by Nature, such as but not limited to, earthquakes, storms, floods, epidemics, fires, and (2) by the act of man, such as but not limited to, armed invasion, attack by bandits, governmental prohibitions, robbery, provided that they have the force of an imposition which the contractor or supplier could not have resisted.

This case is with regard to Art 1170 of the NCC (Stipulated interest held unconscionable) Case of DANILO SOLANGON AND URSULA SOLANGON vs JOSE AVELINO SALAZAR

G.R.No. 125994, 29June2001

FACTS

On 1986, 1987, and 1990 the Solangons executed 3 real estate mortgages in which they mortgaged a parcel of land situated in Sta. Maria, Bulacan, in favor of the Salazar to secure payment of a loan of P60, 000.00 payable within a period of four (4) months, with interest thereon at the rate of 6% per month, to secure payment of a loan of P136, 512.00, payable within a period of one (1) year, with interest thereon at the legal rate, and to secure payment of a loan in the amount of P230, 000.00 payable within a period of four (4) months, with interest thereon at the legal rate.

- Yes, although the C.B. Circular No 905 lifted the ceiling on interest rates there is nothing in the said circular that grants lenders carte blanche authority to raise interest rates to levels which will either enslave their borrowers or lead to hemorrhaging of their assets. - In the case of Medel vs. C.A. the S.C. has held that 5.5% per month was reduced for being iniquitous, unconscionable and exorbitant hence it is contrary to morals (contra bonos mores) - In this case the Solangons are in a worse situation than the Medel case (6% per month interest rate) the said interest rate should be reduced equitably. HELD:

This action was initiated by the Solangons to prevent the foreclosure of the mortgaged property. They alleged that they obtained only one loan form the defendant-appellee, and that was for the amount of P60, 000.00, the payment of which was secured by the first of the above-mentioned mortgages. The subsequent mortgages were merely continuations of the first one, which is null and void because it provided for unconscionable rate of interest. They have already paid the defendant-appellee P78, 000.00 and tendered P47, 000.00 more, but the latter has initiated foreclosure proceedings for their alleged failure to pay the loan P230, 000.00 plus interest. ISSUES Is a loan obligation that is secured by a real estate mortgage with an interest of 72% p.a. or 6% a month unconscionable?

WHEREFORE, the appealed decision of the Court of Appeals is AFFIRMED subject to the MODIFICATION that the interest rate of 72% per annum is ordered reduced to 12 % per annum. Obligations and Contracts Terms:

Legal Interest- the legal rate of interest for the loan or forbearance of any money, goods or credits, where such loan or renewal or forbearance is secured in whole or in part by a mortgage upon real estate the title to which is duly registered, in the absence of express contract as to such rate of interest, shall be 12% per annum, unless it is unconscionable or contrary to laws, morals, public policy.

This is with regard to ART 1170- Interest rate from damages as stipulated by parties

R.T.C MAKATI BR. 61 MAGTANGGOL EUSEBIO AND LEILA VENTURA

G.R.No. 113926, 23October1996 Case of Security Bank and Trust Company vs.

FACTS

On April 27, 1983, private respondent Magtanggol Eusebio executed 3 Promissory Notes from different dates in favor of petitioner Security Bank and Trust Co. (SBTC) in the amounts of 100,000, 100,000, and 65,000. Respondent bound himself to pay the said amounts in six (6) monthly installments plus 23% interest per annum.On all the abovementioned promissory notes, private respondent Leila Ventura had signed as co-maker. Upon maturity there were still principal balance remaining on the notes. Eusebio refused to pay the balance payable, so SBTC filed a collection case against him. The RTC rendered a judgment in favor of SBTC, although the rate of interest imposed by the RTC was 12% p.a. instead of the agreed upon 23% p.a. The court denied the motion filed by SBTC to apply the 23% p.a. instead of the 12% p.a. ISSUES Did the RTC err in using 12% instead of the 23% as agreed upon by the parties? - Yes, the rate of interest was agreed upon by the parties freely. Significantly, respondent did not question that rate.

stipulations in the contract where it is not illegal. Furthermore, Article 1306 of the New Civil Code provides that contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

- The 12% shall be applied for obligations arising from loans, or forbearance of money in the absence of express stipulations

HELD:

IN VIEW OF THE FOREGOING, the decision of the respondent court a quo, is hereby AFFIRMED with the MODIFICATION that the rate of interest that should be imposed be 23% per annum. Obligations and Contracts Terms: PROMISSORY NOTE - A written document in which a borrower agrees (promises) to pay back money to a lender according to specified terms. A written promise to pay a certain sum of money, at a future time, unconditionally. A promissory note differs from a mere acknowledgment of debt, without any promise to pay, as when the debtor gives his creditor an I 0 U. In its form it usually contains a promise to pay, at a time therein expressed, a sum of money to a certain person therein named, or to his order, for value received. It is dated and signed by the maker. It is never under seal. He who makes the promise is called the maker, and he to whom it is made is the payee.

- P.D. No. 1684 and C.B. Circular No. 905 no more than allow contracting parties to stipulate freely regarding any subsequent adjustment in the interest rate that shall accrue on a loan or forbearance of money, goods or credits.

- It is not for respondent court a quo to change the

This case is with regard to Art 1170 of the NCC- Damages GR No 80058, 13February 1989 Ernesto Ang and Rosalinda Ang vs. C.A. and Lee Chuy Realty Corporation

Facts:

property is cleared of all occupants and obstructions, the seller shall deliver a deed of absolute sale in favour of private respondent with all pertinent papers necessary for the issuance of a certificate of title in the name of the buyer.

On December 1979 Lee Chuy Realty Corporation (buyer) issued in favour of Ernesto and Rosalinda Ang (seller), MBTC check in the amount of 50,000.00 as initial down payment for the purchase of the property. In the receipt that was accompanied the payment it supposedly embodied the terms and conditions of their agreement. This accompanying receipt was not returned and instead the buyers where sent another receipt prepared and signed by the Angs. The first receipt indicated the purchase price of 1.6 million while the new receipt did not. On January 12, 1980 the seller informed the buyer that they only have until January 24,1980 to pay the balance of the purchase price, with which the failure to do so will result in the cancellation of their agreement. In response the buyers duly informed the sellers that they have been ready to comply with the obligation, while the sellers have not yet complied with their obligation to clear the subject properties of the obstructions thereon. By March 3, 1980 the buyers through their counsel, demanded for the refund of the down payment on account of the failure of the sellers to comply with their obligations, and their subsequent withdrawal from the sale. After the failure of the sellers to return the 50,000.00 the buyers filed a complaint for the collection of a sum of money plus damages before the RTC. The RTC decided in favour of the sellers. On appeal, the Court of Appeals overturned the decision of the RTC and held that it was the sellers that committed the breach of agreement. Issue:

- It was the failure of the seller to comply with aforementioned conditions of the agreement that caused the delay in the payment of the obligation of the buyer (which is to pay the balance of the total this was merely a slightpayment on or before January 24, 1980). breach of agreement and does not merit a rescission of the contract

- Furthermore, the seller refused to proceed with the sale unless the buyer agreed to the higher price of 2,340,000.00 the seller with this action committed a serious breach of agreement. There already existed a perfected contract of sale between the parties and the purchase price was set at 1,600,000.00. The seller cannot increase the price that was the disagreement withagreed upon, without the consent of the buyer. the price due to the sellers refusal to sell means that it is a serious breach of contract and that it grants the buyer the right to rescind the agreement Held:

The decision of the Court of Appeals is Affirmed. (As a consequence of the resolution of the sale, the parties should be restored to their original situation. Seller should refund the down payment with legal interest from the date of the extrajudicial demand made on March 3, 1980.) Obligations and Contracts terms: Reciprocal Obligations- The power to rescind is implied and any of the contracting parties may, upon non-fulfilment by the other party of his part of the obligation, resolve the contract. It shall not be permitted for slight or casual breaches of contract. It may only be granted on breaches that are so substantial and fundamental as to defeat the object of the parties making the agreement.

Was the court of Appeals correct in holding the Angs liable for breach of the agreement? - Yes, as was shown the sellers breached the agreement when they failed to fulfil the obligation incumbent upon them namely: (1) That seller will undertake to remove and clear the subject property of all occupants and obstructions within the month of December 1979 and (2) That when the subject

This case is with regard to Art 1169 of the NCC Delay Olivia Navoa and Ernesto Navoa vs. C.A., Teresita Domdoma and Eduardo Domdoma

GR No 59255 20December1995

Facts: On December 1977 Teresita Domdoma and Eduardo Domdoma filed a case with the RTC for collection of various sums of money based on loans given by them to Olivia Navoa. They cased was dismissed on the ground that there was no cause of action and that the Domdomas do not have no capacity to sue. They appealed to the C.A. and was granted a favourable decision. There were 6 instances in which the Domdomas gave Olivia Navoa a loan. The first instance is when Teresita gave Olivia a diamond ring valued at 15,000.00 which was secured by a PCIB check under the condition that if the ring was not returned within 15 days from August 15, 1977 the ring is considered sold. Teresita attempted to deposit the check on November 1977 but the check was not honoured for lack of funds. After this instance, there were other loans of various amounts that were extended by Teresita to Olivia, loans which were secured by PCIB checks, which were all dated to 1 month after the loan. All these checks were not honoured under the same reason as the first loan.

15, 1977, and even then, Olivia Navoa failed to pay the price for the ring when the payment was due (check issued was not honoured. Thus it is confirmed that Teresitas right under the agreement was violated. - As for the other loans extended by Teresita to Olivia, they were all secured by PCIB checks. It can be inferred that since the checks were all dated to 1 month after the loan, it follows that the loans are then payable 1 month after they were contracted, and also these checks were dishonoured by the bank for lack of funds. - Olivia and Ernesto Navoa failed to make good the checks that were issued as payment for their obligations. Art 1169 of the Civil Code is explicit: those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfilment of the obligations, the continuing refusal of Olivia and Ernesto Navoa to comply with the demand of payment shows the existence of a cause of action. Held:

The petition is DENIED and the decision of the C.A. remanding the case to the RTC for trial on the merits is affirmed. Obligations and Contracts terms: Security- A means of ensuring the enforcement of an obligation or of protecting some interest in property. It may be personal or property security. Cause of Action- is the fact or combination of facts which affords a party a right to judicial interference in his behalf. The requisites for a cause of action are: (a) a right in favour of the plaintiff by whatever means and under whatever law it arises or created, (b) an obligation on the part of the defendant to respect and not to violate such right; and, (c) an act or omission on the part of the defendant constituting a violation of the plaintiffs right or breach of the obligation of the defendant to the plaintiff.

Issue: Was the decision of the RTC to dismiss the case due to having no cause of action valid? - NO, A cause of action is the fact or combination of facts which affords a party a right to judicial interference in his behalf. - For the first loan it is a fact, that the ring was considered sold to Olivia Navoa 15 days after August

This case is with regard to Art 1162- Culpa Aquiliana Case of Metro Manila Transport Corporation and Apolinario Ajoc vs. C.A. and Col. Sabalburo et al

G.R.No. 141089, 01August2002

FACTS

causes damage or injury to another, there instantly arises a presumption juris tantum that there was negligence on the part of the employer, either in the selection of the employee (culpa in eligiendo) or the supervision over him after the selection (culpa in vigilando). Hence, to escape solidary liability for a quasi-delict committed by his employee, an employer must rebut the presumption by presenting convincing proof that in the selection and supervision of his employee, he has exercised the care and diligence of a good father of a family. In the present case, petitioner MMTC failed to rebut the presumption of negligence on its part.

Last December 24 1986 Florentina Sabalburo and her companions were making their way to Baclaran to buy foodstuffs for Noche Buena. Florentina Sabalburo and her companions waited for the traffic light to turn red so that they could cross the street to take a ride to Baclaran. Upon crossing the street during the red light, Florentina Sabalburo was hit by a fast moving MMTC bus, driven by Apolinario Ajoc. Ms. Sabalburo was then taken by the driver and conductress of the MMTC bus to San Juan de Dios hospital. The victim was not able to regain consciousness and she succumbed to her injuries on January 03, 1987. The Trial court decided in favor of Sabalburo et. al and ordered MMTC to pay damages. MMTC then appealed the case to the Court of Appeals which affirmed the decision of the trial court. ISSUES Was the RTC and CA correct in ordering MTCC to pay damages to the plaintiff? - Yes, According to the S.C. both courts are correct in awarding damages to the plaintiff. - Even though MMTC argues that the proximate cause of the victims death is her negligence thus requesting the court to apply Art 2179 of the civil code, instead of Art 2176, the S.C upheld the findings of the trial courts that the driver and MMTC had been negligent in its duties and it is this negligence that led to the death of the victim thus showing that Art 2176 is the more applicable provision in this case. - Also MMTC is liable for the death of the victim due to Art 2180 of the civil code, wherein the obligation imposed by Article 2176 is demandable not only for ones own acts or omissions-, but also for those of persons for whom one is responsible. - It should be shown that whenever an employees negligence

HELD: The Decision of the Court of Appeals is affirmed.

Obligations

and

Contracts

Terms:

CULPA AQUILIANA- refers to acts or omissions which cause damage to another, there being fault or negligence on the part of the defendant, who is obliged by law to pay for the damages done. Art 2176 of the Civil Code is applied if theres no preexisting contractual relation between the parties. Although the Supreme Court has already held that a quasi- delict can occur even if there is a contractual relation, since the act that lead to the breaking a contract may also be a tort

This case is with reference to Art 1160 of the New Civil CodeQuasi- Contracts

- It is also shown that the payment is limited to the actual cost of chargeable against funds authorized and certified for such purpose.

Case of FF. MAACOP CONSTRUCTION CO., INC. VS. C.A. and MIAA G.R.No. 122196, 15January1997 - Unliquidated claims present a justiciable question ripe for judicial determination which is beyond the powers of COA to adjudicate.

FACTS [ The difference between the Eslao case and this one, is that the matter was referred to the COA for the Eslao case because the matter on the exact amount was not at issue and the determination thereof involves a review of the factual findings and evidence in support thereof. For this case the Lower court has already determined the actual amount owed by MIAA to FMCC, so there was no need for referral to COA]

Ff Maacop Construction Company Inc, was contracted by MIAA to construct a perimeter fence from Asia Overseas Inc to Airscope Development Corp. for and in consideration of the quoted price of 307,440.00 Due to the urgency of the need, FFMCC proceeded with the fence construction even if the Notice to Proceed has not yet been signed by the General Manager. After the Feb 1986 Revolution, the new general manager of MIAA stopped the construction of said fence, by the time of the halt in construction it is already 95% finished which was worth 282,068.00. After making repeated demands to make MIAA pay for the constructed fence, FMCC filed a case against MIAA. During trial it has been found that MIAA is liable to pay 238,501.48 based upon quantum meruit since there is an absence of a written contract between parties. On appeal the Court agreed with MIAA with regard to the error of the trial court in the valuation of the obligation. According to the decision of the Appellate Court, the computation for the obligation owed by MIAA should be referred to the Commission on Audit, as was shown in the case of Eslao v. Commission on Audit. ISSUES Was the RTC correct in ordering MIAA to pay FMCC on the basis of Quantum Meuit? - Yes. The S.C. basing its decision on the Eslao case, it was shown the contract was not fraudulent or mala in se, also it has been shown that the project was already covered by a specific appropriation. - Property or benefit is not ultra vires (they can be a subject of an express contract and are within the contractual powers of the public body)

HELD: The decision of the Court of Appeals is set aside and the decision of the RTC is reinstated. Obligations and Contracts Terms:

Difference of Quantum Meruit from Quantum ValebantQuantum Meruit allows recovery of the reasonable value regardless of any agreement as to value. It entitles the party to as much as he, reasonable deserves , as distinguished from Quantum Valebant or to as much as what is reasonably worth.

- It is shown as well that MIAA was reaping the benefits from the scallop fence and wire placed by the petitioner.

This case is with reference to Art 1160 of the New Civil CodeQuasi- Contracts

code is the quasi contract premised on the roman maxim that nemo alterius detrimento locupletari potest

Case of Traders Royal Bank Employees Union- Independent vs NLRC and Emmanuel Noel A. Cruz G.R.No. 120592, 14March1997

FACTS

That TRB Employees Union, had a retainer agreement with Atty. Cruz, for 3,000.00 in consideration of the law firm s undertaking to render the services enumerated in their contract. During the existence of the agreement the union referred to the private respondent the claims of its members for holiday, mid-year and year-end bonuses against their employer TRB. The NLRC granted the petition of the union with regard to the demand for bonuses. After, the S.C. acting upon the challenge of TRBank of the NLRC decision in its decision on August 30, 1990 modified the decision of the NLRC by deleting the award of mid- year and year- end bonus differentials while affirming the award of holiday pay differential. After TRB voluntarily complied with the decision, respondent on September 18, 1990 notified the union, management, and the NLRC of his right to exercise enforce his attorney s lien over the award of holiday differential through a letter dated October 8, 1990. the TRB and pay

- As early as 1903 the court has allowed the payment of reasonable professional fees to an interpreter, not withstanding the lack of understanding with his client as to his remuneration, on the basis a quasi-contract. It is not necessary that the parties agree on a definite fee for the special services rendered by the firm in order that the union may be obligated to pay compensation. Equity and fair play dictate that petitioner should pay the same after it accepted, availed itself of, and benefited from the firm s services.

- The measure of compensation for private respondent s services as against his client should be properly addressed by the rule of quantum meruit is used as the basis for determining the lawyer s professional fees in the absence of a contract.

HELD: The resolution of the NLRC with regard to the attorney s fees is modified, and Union is hereby ordered to pay 10,000 for the firm s rendered services. Obligations and Contracts Terms:

ISSUES Was the lien made by the respondent attorney over the award as attorney s fees valid?

General Retaining Fee- is the fee paid to a lawyer to secure his future services as general counsel for any ordinary legal problem that may arise from routinary business of the client and referred to him for legal action. The reason for the remuneration is that the lawyer is deprived of the opportunity of rendering services for a fee to the opposing party or other parties. It is a compensation for lost opportunities. This case is with reference to Art 1157 of the New Civil CodeSources of Contracts Case of Luis Pichel vs. G.R.No. L- 36902 30January1982 Prudencio Alonzo

- Yes, Because the contract between the Union and the attorney stipulates that the 3,000.00 paid as retainer fees is intended merely as a consideration for the law firm s commitment to render the services enumerated on PART A and B of the retainer agreement. - The retainer fee paid by the Union is not a payment for the firm s execution or performance of the services listed in the contract, subject to the particular qualifications.

FACTS

- Obligations do not emanate only from contracts. One of the sources of extra- contractual obligations found in our civil

That Prudencio Alonzo (VENDOR) executed a deed of sale for the coconut fruits of his land in Balactasan Plantation in Lamitan, Basilan, in favor of Luis Pichel (VENDEE). The

land from which the subject coconut fruits are derived from was subjected to a cancellation of the award in 1965, due to the reason of violation of the law that disallows alienation of land (the vendors rights to the land were reinstated in 1972) The vendor and his wife sold to the vendee the fruits of the coconut trees from 1968 to 1976 for consideration of 4,200. Even during the date of sale, the land was still leased to one Ramon Sua, and it was part of the agreement of the sale that the sum of 3,650.00 was to be paid by the vendor to Ramon Sua as to release the land. The RTC decided in favor of the vendor, due to the fact that the deed of sale that was executed was invalid, due to its supposed violation of RA No. 477, in which they equated the deed of sale executed by the parties as a contract of lease. ISSUES Was the Deed of Sale valid?

Contract of Lease- defined as giving or the concession of the enjoyment or use of a thing for a specified time and fixed price.

- Yes, The RTC erred in constructing the deed of sale as a contract of lease. - There was no need on the part of the RTC to interpret the contract, since there was no ambiguity, it merely contracts the sale of the fruits of the land, not the land itself. - The S.C. relied upon ART 1370 of the Civil Code, regarding the rule on interpreting contracts. - Its interpretation in express form is the preferred. Construction shall be employed when such literal interpretation is impossible. - The possession of the coconut fruits for 7 years is different from possession of the land, since the coconut fruits are mere accessories and the land is the principal- a transfer of accessories does not necessarily mean a transfer of principal, it is the other way around. - The vendor after having received the consideration for the sale of his coconut fruits cannot be allowed to impugn the validity of the contracts he entered into, to the prejudice of petitioner who contracted in good faith and consideration

HELD: This case is with reference to Art 1159 of the New Civil Code Case of FGU INSURANCE CORPORATION vs. G.P.S TRUCKING CORPORATION and LAMBERT M. EROLES G.R.No. 141910, 06August2002

The Judgment of the lower court has been set aside, and another one entered in its place, dismissing the complaint. Obligations and Contracts Terms:

FACTS Difference between a contract of sale and a lease of things: that the delivery of the thing sold transfers ownership, while in a lease no such transfer of ownership results as the rights of the lessee are limited to the use and enjoyment of the thing leased. G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994 thirty (30) units of Condura S.D. white refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles. While the truck was traversing the north

diversion road along McArthur highway in Barangay Anupol, Bamban, Tarlac, it collided with an unidentified truck, causing it to fall into a deep canal, resulting in damage to the cargoes. FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries, Inc., the value of the covered cargoes: P204, 450.00. FGU, in turn, being the subrogee of the rights and interests of the insured sought reimbursement of the amount, from GPS. Since GPS failed to heed the claim, FGU filed a complaint for damages and breach of contract of carriage against GPS and its driver with the Regional Trial Court, Branch 66, of Makati City. In its answer, respondents asserted that GPS was the exclusive hauler only of Concepcion Industries, Inc., since 1988, and it was not so engaged in business as a common carrier. Respondents further claimed that the cause of damage was purely accidental. GPS, instead of submitting its evidence, filed with leave of court a motion to dismiss the complaint by way of demurrer to evidence on the ground that petitioner had failed to prove that it was a common carrier. The RTC and CA both ruled in favor of the Respondent. ISSUES WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR A PRIVATE CARRIER, MAY BE PRESUMED TO HAVE BEEN NEGLIGENT WHEN THE GOODS IT UNDERTOOK TO TRANSPORT SAFELY WERE SUBSEQUENTLY DAMAGED WHILE IN ITS PROTECTIVE CUSTODY AND POSSESSION.

The decision of the lower courts insofar as Lambert M. Eroles is concerned is affirmed but assailed decision with regard to GPS trucking is reversed. It, is hereby ordered to pay FGU Insurance Corporation the value of the damaged and lost cargoes in the amount of P204, 450.00 Obligations and Contracts Terms: expectation interest- the interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed reliance interest- the interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made Restitution interest- which is his interest in having restored to him any benefit that he has conferred on the other party. Subrogee- the person or entity that assumes the legal right to attempt to collect a claim of another (subrogor) in return for paying the other's expenses or debts which the other claims against a third party. A subrogee is usually the insurance company which has insured the party whose expenses were paid.

- In culpa contractual, upon which the action of petitioner rests as being the subrogee of Concepcion Industries, Inc., the mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a corresponding right of relief. Thus, FGU has a claim for the amount paid out. - The law, recognizing the obligatory force of contracts, will not permit a party to be set free from liability for any kind of misperformance of the contractual undertaking or a contravention of the tenor thereof - GPS recognizes the existence of a contract of carriage between it and petitioner s assured, and admits that the cargoes it has assumed to deliver have been lost or damaged while in its custody. In such a situation, a default on, or failure of compliance with, the obligation in this case, the delivery of the goods in its custody to the place of destination - gives rise to a presumption of lack of care and corresponding liability on the part of the contractual obligor the burden being on him to establish otherwise. GPS has failed to do so. HELD:

Elcano vs Hill 77 SCRA 100 May 26, 1977 Torts and Damages Civil Liability from Quasi Delicts vs Civil Liability from Crimes Reginald Hill, a minor, caused the death of Agapito (son of Elcano). Elcano filed a criminal case against Reginald but Reginald was acquitted for lack of intent coupled with mistake. Elcano then filed a civil action against Reginald and his dad (Marvin Hill) for damages based on Article 2180 of the Civil Code. Hill argued that the civil action is barred by his sons acquittal in the criminal case; and that if ever, his civil liability as a parent has been extinguished by the fact that his son is already an emancipated minor by reason of his marriage. ISSUE: Whether or not Marvin Hill may be held civilly liable under Article 2180. HELD: Yes. The acquittal of Reginald in the criminal case does not bar the filing of a separate civil action. A separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, if accused is actually charged also criminally, to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary. In other words, the extinction of civil liability referred to in Par. (e) of Section 3, Rule 111, refers exclusively to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil liability for the same act considered as a quasi-delict only and not as a crime is not extinguished even by a declaration in the criminal case that the criminal act charged has not happened or has not been committed by the accused. Briefly stated, culpa aquiliana includes voluntary and negligent acts which may be punishable by law. While it is true that parental authority is terminated upon emancipation of the child (Article 327, Civil Code), and under Article 397, emancipation takes place by the marriage of the minor child, it is, however, also clear that pursuant to Article 399, emancipation by marriage of the minor is not really full or absolute. Thus Emancipation by marriage or by voluntary concession shall terminate parental authority over the childs person. It shall enable the minor to administer his property as though he were of age, but he cannot borrow money or alienate or encumber real property without the consent of his father or mother, or guardian. He can sue and be sued in court only with the assistance of his father, mother or guardian. Therefore, Article 2180 is applicable to Marvin Hill the SC however ruled since at the time of the decision, Reginald is already of age, Marvins liability should be subsidiary only as a matter of equity.

BLTB vs CA 64 SCRA 427 Torts and Damages Civil Liability from Quasi Delicts vs Civil Liability from Crimes In February 1963, Ilagan was driving a bus owned by Batangas Laguna Tayaban Bus Company along Manila South Super Highway. He sped pass a big cargo truck thereby taking the opposite lane and he hit the car driven by a certain de los Reyes which resulted to the latters death and the latters nieces death and causing serious injuries to the other car passengers. Ilagan was sued for homicide through reckless imprudence and while the case was pending in the CA the victims sued Ilagan and BLTB for damages via an independent civil action based on Article 2180. BLTB assailed the suit as it invoked the opinion penned by Justice Capistrano in Corpus vs Paje which states that under Article 33 of the Civil Code it excludes criminal negligence as one of those which an independent civil action can be filed, hence homicide through reckless imprudence or criminal negligence comes under the general rule that the acquittal of the defendant in the criminal action is a bar to his civil liability based upon the same criminal act notwithstanding that the injured party reserved his right to institute a separate civil action; and based on this, BLTB wanted the dismissal of the civil suits pending the criminal suit in the CA. ISSUE: Whether or not a civil suit can be filed independently of the criminal negligence case pending before the CA. HELD: Yes. The opinion of Justice Capistrano in Corpus vs Paje is not controlling because it is not doctrinal this is because the majority of the court did not agree with it. Also, the Corpus case was different because the damages claimed there were based on the same criminal negligence. But in the case at bar, the damages sought to be recovered were based on quasi-delict or Article 2176 & 2180 of the Civil Code which is an independent civil action.

American Airlines vs Court of Appeals 327 scra 482 Contract of Carriage

Private respondent Amadeo Seno purchased from Singapore Airlines in Manila conjunction tickets. In Geneva, the petitioner decided to forego his trip to Copenhagen, and go straight to New York, private respondent exchanged the unused portion of the conjunction ticket from International Air Transport Association clearing house in Geneva. Private respondent filed an action for damages before the RTC of Cebu for the alleged embarrassment and mental anguish he suffered at the Geneva Airport when the petitioners security officers prevented him from boarding the plane, detained him for about an hour and allowed him to board the plane only after all the passengers have boarded.

ISSUE: Whether or not the Philippine courts have jurisdiction over the action for damages.

HELD: The Supreme Court ruled that the case was properly filed in the Philippines. It held that the petitioner acted as an agent of the Singapore Airlines under IATA rules and as an agent of the principal carrier the petitioner may be held liable under contract of carriage in Manila.