TITLE I – OBLIGATIONS

CHAPTER 1: GENERAL PROVISIONS

NO. 1

Title: United Muslim and Christian Urban Poor Association, Inc. (UMCUPAI) vs. BRYC-V
Development Corporation and Sea Foods Corporation

Case: G.R. No. 179653

Date of Decision: July 31, 2009

FACTS:

a. Sea Foods Corporation (SFC) owns Lot No. 300 in Zamboanga City, and UMCUPAI
consists of squatters investing in its purchase.

b. In 1991, UMCUPAI negotiated with SFC to buy Lot No. 300, indicating it would fund
the purchase through a loan from NHMF.

c. Both parties signed a Letter of Intent to Sell by SFC and a Letter of Intent to Purchase by
UMCUPAI, specifying a price of P105 per square meter.

d. UMCUPAI’s loan application failed due to some members’ unwillingness to join.

e. UMCUPAI suggested subdividing Lot No. 300. Consequently, it was subdivided into Lot
Nos. 300-A, 300-B, and 300-C.

f. UMCUPAI purchased Lot No. 300-A but failed to buy Lot No. 300-C within the agreed
timeframe even after an extension.

g. SFC sold Lot No. 300-C to BRYC-V Development Corporation after UMCUPAI’s
extended timeframe to secure funds lapsed.

h. UMCUPAI petitioned the RTC to annul the sale of Lot No. 300-C to BRYC, claiming the
Letter of Intent gave it a preferred right.

i. The RTC dismissed UMCUPAI’s complaint, interpreting the Letter of Intent as a non-
binding preliminary agreement, not a bilateral reciprocal contract.

j. The Court of Appeals affirmed the RTC’s decision, leading UMCUPAI to seek certiorari
with the Supreme Court.

ISSUES:

a. Whether or not the Letter of Intent constitutes a bilateral reciprocal contract under Article
1479, first paragraph of the Civil Code.

b. Whether or not UMCUPAI had a prior and better right to purchase Lot No. 300-C based
on the Letter of Intent.

c. Whether the factual findings of the lower courts, when affirmed by the appellate court,
warrant a reversal given the presented exceptions.

RULING:

a. Letter of Intent as Bilateral Reciprocal Contract:

 The Supreme Court ruled that the Letter of Intent did not amount to a bilateral reciprocal
contract. It merely documented the mutual intentions of the parties (SFC to sell and
UMCUPAI to buy) but did not bind them to complete the sale.

b. Preferred Right to Purchase:

The Court dismissed the notion that UMCUPAI had a better right to purchase Lot No.
300-C based on the Letter of Intent. SFC retained ownership until full payment, and
UMCUPAI’s failure to secure funding nullified any preferential claim.

c. Reevaluation of Factual Findings:

The Court upheld the factual findings of both lower courts, as the conditions for a
reversal were not met. There was no grave abuse of discretion, nor manifest errors that
warranted a review.

DOCTRINE:

The Court clarified that:

a. Letter of Intent is generally not binding as a formal contract but serves as a preliminary
understanding.

b. Article 1479 of the Civil Code distinguishes between a unilateral promise (needing
distinct consideration) and a bilateral reciprocal contract (where mutual promises can be
demanded). The Letter of Intent falls short of either a contract to sell or a conditional
contract of sale.

c. Factual determinations by lower courts are typically conclusive, barring exceptions like
grave errors or abuse of discretion.

NO. 2

Title: Office of the Solicitor General vs. Ayala Land Incorporated, et al

Case: G.R. No. 177056

Date of Decision: September 18, 2009

FACTS:

a. The case involves a petition filed by the Office of the Solicitor General (OSG) against
major shopping mall operators: Ayala Land Incorporated, Robinson’s Land Corporation,
Shangri-La Plaza Corporation, and SM Prime Holdings, Inc., seeking to compel them to
provide free parking spaces in their malls.

b. The mall operators maintain parking facilities, for which they charge fees.

c. The Senate Committees on Trade and Commerce and on Justice and Human Rights
conducted investigations into the legality and practice of charging parking fees by
shopping malls, culminating in Senate Committee Report No. 225, which recommended
that the OSG take action to enjoin the collection of parking fees, deemed contrary to the
National Building Code.

d. Respondent SM Prime, anticipating legal action based on the Senate Committee’s

recommendations, preemptively filed a Petition for Declaratory Relief, aiming to
establish its right to charge parking fees.

e. Subsequently, the OSG also filed a petition seeking to prohibit the mall operators from
charging parking fees, asserting that such practice violates the National Building Code.
 f. The two cases were consolidated at the Regional Trial Court (RTC) of Makati, which
ultimately decided that the mall operators were not obligated to provide free parking, a
decision affirmed by both the Court of Appeals and the Supreme Court.

ISSUES:

a. Whether or not the OSG has the capacity to initiate proceedings against the mall
operators for charging parking fees.

b. Whether or not the National Building Code and its Implementing Rules and Regulations
(IRR) mandate that mall operators provide parking facilities free of charge.

c. Whether or not the refusal of malls to provide free parking constitutes a taking of
property without just compensation.

RULING:

a. The Supreme Court affirmed the decisions of both the lower court and the Court of
Appeals, holding that the National Building Code and its IRR do not impose an
obligation on mall operators to provide parking spaces free of charge.

b. The Court reasoned that the Code only sets minimum standards for buildings, including
the provision of parking spaces, but does not stipulate that such spaces should be offered
for free. The request to mandate free parking was seen as an overreach of police power,
tantamount to taking private property without just compensation.

DOCTRINE:

The case established that statutory provisions must be interpreted according to their literal
meaning if they are clear and unambiguous. Obligations derived from law are not
presumed but must be expressly stated. The regulation of property use under police
power does not extend to a taking or confiscation of property without just compensation
under the principle of eminent domain.

NO. 3

Title: De Leon v. Roqson Industrial Sales, Inc.

Case: G.R. No. 234239

Date of Decision: November 23, 2021

FACTS:

a. On August 25, 2006, petitioner Benjamin T. De Leon, Jr. issued RCBC Check No.
0201234 worth P436,800.00 to respondent Roqson Industrial Sales, Inc. The check was
for oil product deliveries to RB Freight International, Inc., where De Leon served as
managing director.

b. The check was dishonored because it was already a closed account.

c. Respondent sent a demand letter on September 15, 2006, to RB Freight and De Leon. RB
Freight’s administrative manager, Ms. Mean Ramos, proposed a payment scheme in
response.

d. Subsequent letters included a counter-proposal from respondent and RB Freight’s

rejection letter, requesting a “debt moratorium.”

e. Due to unresolved payment, respondent filed a criminal case for violation of Batas
Pambansa Blg. 22 (B.P. 22) against De Leon.
 f. The Quezon City METC, in its May 28, 2013, Decision, acquitted De Leon due to
reasonable doubt but held him civilly liable for the check amount plus interest, lawyer’s
fees, and court costs.

g. The judgment was appealed, and the RTC affirmed the METC’s decision but modified
the interest rate based on judicial demand from October 3, 2007.

h. De Leon further contested this in the CA, which also affirmed the RTC’s decision but
adjusted interest rates in line with the Nacar ruling.

i. De Leon’s motion for reconsideration was denied, prompting a petition for review to the
Supreme Court.

ISSUES:

a. Whether or not De Leon be held civilly liable despite acquittal on B.P. 22 charges.

b. Whether or not De Leon is personally liable for a corporate debt.

c. What is the applicable legal interest rate on the civil liability?

RULING:

a. The Supreme Court affirmed the acquittal did not necessarily extinguish civil liability.
Acquittal occurred due to lack of proof beyond reasonable doubt regarding notice of
dishonor. The civil liability is based on factors outside criminal guilt, such as contractual
obligations and roles within the transaction.

b. The court ruled De Leon liable as an accommodation party under Section 29 of the
Negotiable Instruments Law (NIL), having issued his personal check to pay RB Freight’s
corporate debt. Despite acting in a corporate capacity, personal issuance signifies
accommodation liability.

c. Applicable Legal Interest Rates: As affirmed by Nacar v. Gallery Frames, the interest rate
would be 12% per annum from October 3, 2007, until June 30, 2013, and 6% per annum
thereafter until full payment.

DOCTRINE:

a. Under Section 29 of the NIL, an accommodation party who issues a check without value
for the purpose of lending their name is liable to a holder in due course, even when the
party accommodated defaults.

NO. 4

Title: ABS-CBN Broadcasting Corporation, Eugenio Lopez Jr. vs. Office of the Ombudsman

Case: G.R. No. 133347

Date of Decision: October 15, 2008

FACTS:
 a. On April 18 and 26, 1994, petitioners Eugenio Jr., Oscar and Augusto Lopez, on behalf
of ABS-CBN, executed separate affidavits charging private respondents of Execution of
Deeds by Means of Violation or Intimidation, Estafa, Theft, Robbery, Occupation of Real
Property or Usurpation of Real Rights in Property, and Other Deceits.

b. On April 5, 1999 and June 13, 2000, the respective counsel for respondents Tan and
Benedicto informed the Court of their clients’ demise. Benedicto’s counsel filed a Notice
of Death with Prayer for Dismissal moving that Benedicto be dropped as respondent in
the case for the reason that the pending criminal cases are actions which do not survive
the death of the party accused.

c. Petitioners opposed the move to drop Benedicto as respondent citing Torrijos v. CA

which held that “civil liability of the accused survives his death: because death is not a
valid cause for the extinguishment of civil obligations.”

ISSUE:

a. Whether or not the death of an accused extinguishes civil liabilities.

RULING:

a. The death of an accused pending appeal of his conviction extinguishes his criminal
liability as well as the civil liability based solely thereon. As opined by Justice Regalado,
in this regard, “the death of the accused prior to final judgment terminates his criminal
liability and only the civil liability directly arising from and based solely on the offense
committed, i.e., civil liability ex delicto in senso strictiore.”

b. The Supreme Court denied the Motion to Refer the Case to the Court en banc and the
Motion for Reconsideration.

DOCTRINE:

a. Where the civil liability survives, an action for recovery therefor may be pursued but only
by way of filing a separate civil action and subject to Sec. 1, Rule 11 of the 1985 ROC.
The separate civil action may be enforced either against the executor/administrator or the
estate of the accused, depending on the source of obligation upon which the same is
based.

b. Finally, the private offended party need not fear a forfeiture of his right to file this
separate civil action by prescription, in cases where during the prosecution of the criminal
action and prior to its extinction, the private-offended party instituted together therewith
the civil action. In such case, the statute of limitations on the civil liability is deemed
interrupted during the pendency of the criminal case, conformably with provisions of
Article 1155 of the Civil Code, that should thereby avoid any apprehension on a possible
deprivation of right by prescription.”

c. Applying the foregoing rules, ABS-CBN’s insistence that the case at bench survives
because the civil liability of the respondents subsists is stripped of merit.

d. To begin with, there is no criminal case as yet against the respondents. The Ombudsman
did not find probable cause to prosecute respondents for various felonies in the RPC. As
such, the rule that a civil action is deemed instituted along with the criminal action unless
the offended party: (a) waives the civil action, (b) reserves the right to institute it
separately, or (c) institutes the civil action prior to the criminal action, is not applicable.

e. In any event, the death of the accused necessarily calls for the dismissal of the criminal
case against him, regardless of the institution of the civil case with it. The civil action
 which survives the death of the accused must hinge on other sources of obligation
provided in Article 1157 of the Civil Code. In such a case, a surviving civil action against
the accused founded on other sources of obligation must be prosecuted in a separate civil
action. In other words, civil liability based solely on the criminal action is extinguished,
and a different civil action cannot be continued and prosecuted in the same criminal
action.

NO. 5

Title: Metropolitan Bank and Trust Company vs. Ana Grace Rosales and Yo Yuk To

Case: G.R. No. 183204

Date of Decision: January 13, 2014

FACTS:

a. Metropolitan Bank and Trust Company (Metrobank) is a Philippine banking corporation.

Respondents Ana Grace Rosales and her mother, Yo Yuk To, are clients of Metrobank
with both peso and dollar accounts. In 2003, an unauthorized withdrawal of US$75,000
from Liu Chiu Fang’s account occurred at the Escolta Branch, where Rosales allegedly
served as interpreter. Metrobank filed a criminal case of Estafa against Rosales, believing
she was involved in the fraud. Prior to the filing, on July 31, 2003, Metrobank issued a
“Hold Out” order against Rosales and Yo Yuk To’s accounts.

b. In response, on September 10, 2004, Rosales and her mother filed a civil case for the
release of their funds and for damages due to Metrobank’s refusal to allow withdrawal
from their accounts. The trial court ruled in favor of the respondents, ordering Metrobank
to release the deposits and pay damages. Metrobank appealed to the Court of Appeals
(CA), which upheld the trial court’s decision but deleted the award for actual damages
related to the Estafa case fee.

c. Metrobank then filed a Petition for Review with the Supreme Court challenging the CA’s
decision, arguing that the “Hold Out” clause justified freezing the respondents’ accounts
and contended that it was not negligent.

ISSUES:

a. Whether or not the “Hold Out” clause in the deposit contract applies to the case;

b. Whether or not, the Metrobank’s employees were negligent in facilitating the

unauthorized withdrawal;

c. The propriety of the awards for moral and exemplary damages and attorney’s fees.

RULING:

The Supreme Court denied Metrobank’s petition and affirmed the CA’s decision. The Court held
that the “Hold Out” clause could not be invoked as it was meant for actual and existing
obligations, not for a pending and unresolved criminal case. Next, Metrobank’s negligence in
releasing the funds was not discussed by the Court as the Supreme Court focused on the breach
of contract issue. Finally, the Court found that Metrobank breached its contract with the
respondents by issuing the “Hold Out” order without legal basis and in bad faith, justifying the
award for damages and attorney’s fees.

DOCTRINE:
Bank deposits are in the nature of a loan and are to be paid upon the depositor’s demand. A bank
cannot withhold the funds without a valid and existing obligation. The obligation does not arise
from an un-finalized criminal case. In instances where a bank breaches its contract by improperly
issuing a “Hold Out” order, it may be held liable for moral and exemplary damages and
attorney’s fees.

NO. 6

Title: Metropolitan Bank and Trust Company vs. Ana Grace Rosales and Yo Yuk To

Case: G.R. No. 183204

Date of Decision: January 13, 2014

FACTS:
a. Metropolitan Bank and Trust Company (Metrobank) is a Philippine banking corporation.
Respondents Ana Grace Rosales and her mother, Yo Yuk To, are clients of Metrobank with both
peso and dollar accounts. In 2003, an unauthorized withdrawal of US$75,000 from Liu Chiu
Fang’s account occurred at the Escolta Branch, where Rosales allegedly served as interpreter.
Metrobank filed a criminal case of Estafa against Rosales, believing she was involved in the
fraud. Prior to the filing, on July 31, 2003, Metrobank issued a “Hold Out” order against Rosales
and Yo Yuk To’s accounts.

b. In response, on September 10, 2004, Rosales and her mother filed a civil case for the
release of their funds and for damages due to Metrobank’s refusal to allow withdrawal from their
accounts. The trial court ruled in favor of the respondents, ordering Metrobank to release the
deposits and pay damages. Metrobank appealed to the Court of Appeals (CA), which upheld the
trial court’s decision but deleted the award for actual damages related to the Estafa case fee.

c. Metrobank then filed a Petition for Review with the Supreme Court challenging the CA’s
decision, arguing that the “Hold Out” clause justified freezing the respondents’ accounts and
contended that it was not negligent.

ISSUES:
a. Whether or not the “Hold Out” clause in the deposit contract applies to the case;
b. Whether or not, the Metrobank’s employees were negligent in facilitating the
unauthorized withdrawal;
c. The propriety of the awards for moral and exemplary damages and attorney’s fees.
RULING:
The Supreme Court denied Metrobank’s petition and affirmed the CA’s decision. The Court held
that the “Hold Out” clause could not be invoked as it was meant for actual and existing
obligations, not for a pending and unresolved criminal case. Next, Metrobank’s negligence in
releasing the funds was not discussed by the Court as the Supreme Court focused on the breach
of contract issue. Finally, the Court found that Metrobank breached its contract with the
respondents by issuing the “Hold Out” order without legal basis and in bad faith, justifying the
award for damages and attorney’s fees.

DOCTRINE:

Bank deposits are in the nature of a loan and are to be paid upon the depositor’s demand. A bank
cannot withhold the funds without a valid and existing obligation. The obligation does not arise
from an un-finalized criminal case. In instances where a bank breaches its contract by improperly
issuing a “Hold Out” order, it may be held liable for moral and exemplary damages and
attorney’s fees.

NO. 7

Title: St. Martin Polyclinic, Inc. v. LWV Construction Corporation

Case: G.R. No. 217426

Date of Decision: December 04, 2017

FACTS:

a. LWV Construction Corporation (respondent) engaged in recruiting Filipino workers for

deployment to Saudi Arabia, referred Jonathan V. Raguindin for a pre-deployment
medical examination to St. Martin Polyclinic, Inc. (petitioner), an accredited member of
the Gulf Cooperative Council Approved Medical Centers Association (GAMCA) on
January 10, 2008. Petitioner found Raguindin “fit for employment”, leading to his
deployment and incurring expenses amounting to P84,373.41 by the respondent.
However, Raguindin tested positive for the hepatitis C virus (HCV) in Saudi Arabia,
leading to his repatriation.

b. Respondent filed a Complaint for damages against petitioner in the Metropolitan Trial
Court of Mandaluyong City (MeTC), which ruled in favor of the respondent, ordering
petitioner to pay for damages and attorney’s fees. Petitioner’s appeal to the Regional
Trial Court (RTC) and subsequent petition to the Court of Appeals (CA) were both
dismissed, affirming the MeTC’s decision but modifying the damages awarded to
temperate damages.

ISSUES:

a. Whether or not the petitioner was negligent in issuing a Medical Report declaring
Raguindin “fit for employment”.

b. Whether or not the petitioner should be held liable for damages due to purported
negligence.

RULING:

a. The Supreme Court granted the petition, reversing the CA and RTC decisions. It ruled
that respondent failed to prove petitioner’s negligence as per Article 2176 of the Civil
Code, discussing the nature of negligence and the requirement for its proof. The courts
improperly admitted evidence and misapplied the relevant laws concerning damages due
to alleged negligence.

DOCTRINE:

The SC reiterated the doctrine on negligence from Article 2176 of the Civil Code, emphasizing
the need for a clear act or omission causing damage due to fault or negligence without any pre-
existing contractual relation. Additionally, it mentioned standards for admitting foreign
documents as evidence and clarified misconceptions on establishing negligence and damage
awards based on unauthenticated or poorly substantiated findings

NO. 8

Title: Tagaytay Realty Co., Inc. vs Arturo G. Gacutan

Case: G.R. No. 160033

Date of Decision: July 1, 2015

FACTS:

a. Arturo Gacutan entered into a contract to sell with Tagaytay Realty Co. Inc. for the
purchase on installment of a residential lot that was then being developed by the latter.

b. Tagaytay Realty executed an express undertaking in favor of Gacutan whereby the latter
has the option to suspend payment of the monthly amortization without interest if the
former failed to complete the development due to force majeure or fortuitous event.

c. In a letter dated November 12, 1979, Gacutan notified the petitioner that he was
suspending amortizations because the amenities had not been constructed in accordance
with the undertaking. Tagaytay Realty did not reply despite requests for updates on the
progress of the construction.

d. On June 10, 1985 Tagaytay Realty sent a statement of account to Gaputan demanding the
balance of the price plus interest and penalty; Gacutan refused to pay the interest and
penalty.

e. On October 4, 1990, Gacutan sued Tagaytay Realty for specific performance in the
HLURB, praying that the latter be ordered to accept his payment of the balance without
interest and penalty, and to deliver the title of the property to him.

f. Tagaytay Realty stated that it had purposely suspended the construction of the amenities
which would have deteriorated at any rate because its lot buyers had not constructed their
houses in the subdivision.

g. HLURB Arbiter ruled in favor of Gacutan on march 22, 1995; Tagaytay Realty appealed
to the Office of the President.

h. The OP denied Tagaytay Realty’s motion for reconsideration on December 6, 2001.

i. The Court of Appeals affirmed the the OP and the petition was dismissed for lack of
merit; and so the case was elevated to the Supreme Court.

ISSUES:

a. Whether or not the petitioner is released from its obligation to construct the amenties in
the Foggy Heights Subdivision.

RULING:

a. No. The petitioner, Tagaytay Realty Co.,Inc. was not relieved from its statutory and
contractual obligations to complete the amenities.

b. Section 20 of PD No. 957 or the Subdivision and Condominium Buyer’s Decree states
that every owner or developer is mandated to complete their subdivision projects,
including the amenities , within one year from the issuance of their license for the
subdivision or condominium project or such other period of time as may be fixed by the
authority. Mere inconvenience or increased expenses to save itself from the cost did not
suffice to relieve the petitioner from fulfilling its obligation.

c. Hence, the Supreme Court denied the petition of Tagaytay Realty and affirmed the
decision of the Court of Appeals with modifications.
d. It was ruled that Gacutan shall pay only the remaining balance amounting to PhP
19,965.60, and Tagaytay Realty Co. Inc. shall execute the deed of absolute sale together
with the certificate of title.

NO. 9

Title: Go vs. Remotigue

Case: A.M. No. P-05-1969

Date of Decision: June 12, 2008

FACTS:

a. Complainant Aurora B. Go filed an administrative complaint against respondent

Teresita C. Remotigue, Clerk of Court in the Municipal Trial Court in Cities,
Cebu City, for Conduct Unbecoming a Court Employee.

b. On February 26, 2003, complainant and respondent entered into a lending

business agreement targeting court personnel in Cebu City as clients.

c. The agreement was formalized through a Trust Agreement dated June 10, 2003,
where complainant contributed P150,000 as capital.

d. The agreement stipulated that the 10% monthly interest earned on loans would
be equally divided between the parties.

e. Respondent ceased remitting complainant's 50% share of the interest collected

from clients.

f. In July 2003, complainant sought to terminate the partnership and demanded the
return of her capital and accrued interest.

g. Despite verbal and written demands, respondent failed to comply. In a

handwritten letter dated May 12, 2004, complainant reiterated her demand, but
respondent refused to pay.

h. Respondent admitted to entering into a lending agreement but denied targeting

court personnel. She claimed the business was with her cousin, Conchita Pepito,
and not exclusive to court employees.

i. Respondent asserted that she remitted complainant's share until March 2004 and
ceased only after complainant expressed her intent to terminate the partnership.

j. She provided 21 deposit slips as evidence of payments made to complainant.

k. The OCA found that respondent violated Administrative Circular No. 5, which
prohibits judiciary employees from engaging in private business.

l. The OCA recommended a one-month suspension without pay for respondent after
having been found violating Administrative Circular No. 5 by engaging in a
private lending business, deemed Conduct Unbecoming a Court Employee.

ISSUES:

a. The main issue in this case was whether or not the respondent’s failure to perform her
duties in accordance with her obligations as Clerk of Court could be considered a breach
of her legal and professional obligations, and whether this failure created an obligation to
rectify the situation, including compensating the complainant for the harm caused by her
inaction.

Ruling:

a. The Supreme Court ruled in favor of the complainant, Aurora B. Go, and found the
respondent, Teresita C. Remotigue, guilty of gross neglect of duty. The Court emphasized
the importance of the legal duties of public officials and their obligation to perform their
functions properly and diligently, in accordance with their responsibilities. In this
 context, the Court applied the general provisions of Articles 1156-1162 of the Civil
Code, especially with respect to the nature of obligations and the consequences of failing
to perform them.

NO. 10

Title: Planters Development Bank (Now China Bank Savings, Inc.) vs Fatima D.G. Fuerte

Case: G.R. No. 259965

Date of Decision: October 7, 2024

FACT:

a. In 1997, respondent Fatima D.G. Fuerte obtained a loan from Planters Development
Bank (now China Bank Savings, Inc.) to finance her business operations. The loan was
secured by a real estate mortgage over her property.

b. Due to financial difficulties, Fuerte defaulted on her loan payments, leading the bank to
initiate foreclosure proceedings. Fuerte contested the foreclosure, arguing that the bank
failed to comply with the requirements set forth in the loan agreement and the law.

ISSUE:

a. Whether or not Planters Development Bank (now China Bank Savings, Inc.) complied
with the requirements of the loan agreement and applicable laws in initiating foreclosure
proceedings against respondent Fatima D.G. Fuerte.

RULING:

a. The Petition of Planters Development Bank (Now China Bank) is hereby GRANTED.
The Decision dated October 28, 2021 and Resolution dated March 30, 2022 of the Court
of Appeals in CA-G.R. CV No. 114507 are REVERSED and SET ASIDE. The
complaint filed by respondent Fatima D.G. Fuerte before the Regional Trial Court of
Pasig City in Civil Case No. 73363-PSG is DISMISSED for lack of merit.

NO. 11

Title: L.G. Foods Corporation vs. Hon. Philadelpha B. Pagapong-Agraviador, et al.

Case: G.R. No. 158995

Date of Decision: September 26, 2006

FACT:

a. On February 26, 1996, a Ford Fiera van owned by L.G. Foods Corporation and driven by
their employee, Vincent Norman Yeneza, hit Charles Vallejera, the 7-year-old son of
spouses Florentino and Theresa Vallejera, causing the child’s death.

b. An Information for Reckless Imprudence Resulting to Homicide was filed against

Vincent Norman Yeneza in the Municipal Trial Court in Cities (MTCC), Bacolod City,
docketed as Criminal Case No. 67787.

c. Before the trial’s conclusion, the accused driver committed suicide. Thus, the MTCC
dismissed the criminal case on September 30, 1998.
 d. On June 23, 1999, the Vallejeras filed a civil complaint against L.G. Foods Corporation
and its Vice-President, seeking damages for the negligence allegedly leading to their
son’s death. This was docketed as Civil Case No. 99-10845 in the RTC Bacolod City,
Branch 43.

e. In their Answer, the defendants claimed they exercised due diligence in the selection and
supervision of their employees, including the deceased driver. They later moved for
dismissal on grounds that the complaint was essentially a claim of subsidiary liability
under Article 103 of the Revised Penal Code, requiring a conviction of their employee,
which, given the driver’s death, had not occurred.

f. The defendants petitioned the Court of Appeals (CA) in CA-G.R. SP No. 67600, alleging
grave abuse of discretion by the RTC in not dismissing the case. The CA denied this
petition on April 25, 2003, reaffirmed in its resolution of July 10, 2003.

g. L.G. Foods Corporation then petitioned the Supreme Court for review on certiorari,
asserting errors in the CA’s affirmance of RTC’s decision.

ISSUES:

a. Whether the civil action filed by the spouses Vallejera is based on Article 103 of the
Revised Penal Code, requiring a criminal conviction for employer’s subsidiary liability,
or if it is founded on Articles 2176 and 2180 of the Civil Code, concerning quasi-
delicts.Law firm websites

b. Whether the lack of a reservation to file a separate civil action in the dismissed criminal
case affects the validity of the civil case.

RULING:

a. The Supreme Court ruled that the spouses Vallejera’s action was grounded in Articles
2176 and 2180 of the Civil Code, signifying a case of quasi-delict where the primary
responsibility of the employer is direct and independent of any criminal proceedings
against the employee.

b. The Court clarified that the complaint made no averment supportive of Art. 103 RPC
subsidiary liability, which necessitates an employee’s conviction. The suit was instead
based on the direct liability under Article 2180 CC for negligence in employee
supervision.

c. The Court found the lack of a reservation to file a separate civil action inconsequential.
Since the criminal case was dismissed due to driver’s death, rendering the situation as if
no criminal case existed, the civil case under a quasi-delict framework was duly
maintained.

DOCTRINE:

a. Negligence may spawn dual liabilities — ex delicto under the RPC, subject to a prior
conviction, or a civil one as quasi-delict under the Civil Code.

b. Under Article 2180 of the Civil Code, employer liability for employee negligence does
not depend on the latter being found guilty in a criminal context.

NO. 12

Title: International Flavors and Fragrances (Phil.), Inc. vs Merlin J. Argos and Jaja C, Pineda

Case: G.R. No. 13062

Date of Decision: September 10, 2001

FACT:

a. International Flavors and Fragrances (Phil.), Inc. (petitioner) and Merlin J. Argos and Jaja
C. Pineda (respondents) were involved in a dispute arising from an employment contract.
b. The petitioner, an employer, entered into a contract with the respondents as employees,
wherein certain obligations were specified, including terms regarding salaries and other
employment benefits. However, a disagreement emerged when the respondents claimed
that the petitioner failed to comply with the agreed terms, including the payment of the
full compensation owed to them.
c. The petitioner, on the other hand, argued that the respondents failed to meet certain
conditions under the contract, which led to non-payment or partial payment of the agreed
benefits.
d. The respondents filed a complaint for the unpaid benefits, asserting that the petitioner had
violated their contractual obligations.
e. The petitioner countered that they had fulfilled their obligations in good faith, and any
non-payment was justified based on the respondents' failure to comply with the
conditions stipulated in the contract.
f. The case ultimately escalated to the Supreme Court, which focused on the application of
Articles 1156-1162 of the Civil Code to determine whether the parties had validly
complied with their contractual obligations.

ISSUE:

Whether or not the petitioner was legally obligated to pay the respondents the full amount
of compensation, or whether the respondents' failure to meet certain conditions justified
the petitioner’s withholding of payment. The application of Articles 1156-1162 of the
Civil Code, concerning the nature and enforceability of obligations, was crucial in
determining the responsibilities of both parties.

RULING:

The Supreme Court ruled in favor of the respondents, ordering the petitioner to pay the
full amount of compensation owed to them. The Court’s ruling emphasized that the
petitioner had failed to comply with its obligations under the contract and that the
respondents had performed their duties as agreed. The Court applied Articles 1156-1162
of the Civil Code to establish the enforceability of the obligations and the legal
consequences of failing to perform them.

CHAPTER 2: NATURE AND EFFECTS OF OBLIGATIONS

NO. 1

G.R. No. L-17809, December 29, 1962

RESURRECCION DE LEON, ET AL., Plaintiffs-Appellees, vs. EMILIANA MOLO-

PECKSON, ET AL., Respondents-Appellants.

Facts:

a. In this case, Resurreccion de Leon (plaintiffs-appellees) filed a complaint for the

annulment of a sale of property with the intention to recover ownership. The respondents-
appellants, Emiliana Molo-Peckson and others, were involved in the sale of the property
in question. The plaintiffs-appellees argued that the respondents had violated the
provisions of the law governing contracts, including the proper execution and delivery of
property.
 b. At the heart of the dispute was a question of whether the respondents had complied with
the legal requirements regarding the sale of the property. The plaintiffs-appellees
contended that the sale should be annulled because it lacked certain necessary formalities,
while the respondents-appellants argued that the sale was valid and had been executed
properly.

c. The case involved the application of Articles 1163-1178 of the Civil Code, which
regulate the performance of obligations, the effects of contracts, and the consequences of
breach or non-performance. The Court considered whether these articles applied to the
situation and whether the respondents had met their obligations in good faith.
Issue:
a. The main issue in this case was whether the respondents properly performed their
obligations under the sale contract, and whether the plaintiffs were entitled to annul the
sale based on the failure to fulfill the required formalities. The application of Articles
1163-1178 of the Civil Code was central to resolving the issue of contract performance
and the effect of failure to meet contractual obligations.
Ruling:

a. The Supreme Court ruled in favor of the plaintiffs-appellees, declaring the sale void due
to the non-performance of the obligations and the failure to comply with the formalities
required by law. The Court applied Articles 1163-1178 of the Civil Code to determine
the responsibilities of the parties involved, especially with respect to the execution and
performance of the contract.

NO. 2

G.R. No. 133879, November 21, 2001

EQUATORIAL REALTY DEVELOPMENT, INC., Petitioner, vs. MAYFAIR THEATER,

INC., Respondent.

Facts:

a. Equatorial Realty Development, Inc. (petitioner) and Mayfair Theater, Inc. (respondent)
were involved in a contractual dispute regarding the lease agreement for a property. The
petitioner, as the lessor, and the respondent, as the lessee, entered into a lease contract
where the respondent was supposed to pay rent for the use of a theater. However, the
parties disagreed regarding the terms and obligations under the lease, particularly the
non-payment of rent by the respondent.

b. The petitioner claimed that the respondent had failed to comply with the payment terms
of the lease agreement, leading to the initiation of legal proceedings to enforce the
contract and seek payment of unpaid rent. On the other hand, the respondent argued that
they had complied with their obligations under the contract, and the petitioner was wrong
in its interpretation of the lease agreement.

c. The case ultimately reached the Supreme Court, which focused on the application of
Articles 1163-1178 of the Civil Code in determining the obligations of the parties under
the lease contract.

Issue:

a. The central issue in this case was whether the respondent had breached the lease contract
by failing to pay the rent as stipulated in the agreement, and whether the petitioner was
entitled to the enforcement of the lease contract based on the respondent's failure to
comply with the contractual obligations. The application of Articles 1163-1178 of the
 Civil Code was crucial in determining the parties' rights and obligations under the
contract, especially regarding the performance of obligations.

Ruling:

a. The Supreme Court ruled in favor of the petitioner, ordering the respondent to comply
with the terms of the lease agreement and pay the unpaid rent. The Court applied Articles
1163-1178 of the Civil Code to analyze the responsibilities of the parties under the
contract, particularly the obligation of the respondent to pay rent and the consequences of
their failure to fulfill this obligation.

b. In conclusion, the Supreme Court ruled that the respondent had breached the lease
agreement by failing to pay rent as required under the contract. The Court applied
Articles 1163-1178 of the Civil Code to establish that the respondent had an obligation to
perform in good faith, fulfill the contractual terms, and pay the rent. The petitioner was
entitled to enforce the contract and demand payment of the unpaid rent, along with any
additional damages arising from the respondent's failure to comply with the agreement.

No. 3

G.R. No. L-21601, December 17, 1966

NIELSON & COMPANY, INC., Plaintiff-Appellant, vs. LEPANTO CONSOLIDATED

MINING COMPANY, Defendant-Appellee.

Facts:

a. In this case, Nielson & Company, Inc. (plaintiff-appellant) and Lepanto Consolidated
Mining Company (defendant-appellee) were involved in a legal dispute regarding the
performance of obligations under a contract. The plaintiff claimed that the defendant had
breached the terms of their agreement, specifically concerning the supply of equipment
and materials, and had failed to pay for the goods provided. On the other hand, the
defendant argued that it was not liable for the payments as claimed by the plaintiff, and
that the performance of the contract had not been completed in accordance with the
agreed terms.

b. The issue primarily revolved around whether the defendant had properly fulfilled its
obligations under the contract and whether the plaintiff had the right to enforce the
agreement and claim payment for the goods supplied. The case required the application
of Articles 1163-1178 of the Civil Code, which govern the nature of obligations, their
fulfillment, and the consequences of non-performance.

Issue:

a. The main issue in this case was whether the defendant, Lepanto Consolidated Mining
Company, had failed to fulfill its obligations under the contract by not paying for the
goods provided by the plaintiff. The application of Articles 1163-1178 of the Civil Code
was crucial in determining whether the defendant's failure to pay amounted to a breach of
contract, and the rights of the plaintiff to enforce the obligation.

Ruling:

a. The Supreme Court ruled in favor of the plaintiff-appellant, Nielson & Company, Inc.,
ordering the defendant-appellee, Lepanto Consolidated Mining Company, to fulfill its
obligation under the contract. The Court applied Articles 1163-1178 of the Civil Code to
analyze the responsibilities of the parties and determine the enforceability of the
obligation to pay.

NO. 4
G.R. No. 124922, June 22, 1998

JIMMY CO, doing business under the name & style DRAGON METAL
MANUFACTURING, Petitioner, vs. COURT OF APPEALS and BROADWAY MOTOR
SALES CORPORATION, Respondents.

Facts:

a. The case involved a contractual dispute between Jimmy Co (petitioner), operating under
the name Dragon Metal Manufacturing, and Broadway Motor Sales Corporation
(respondent). The petitioner had entered into a contract to purchase vehicles from the
respondent, which the latter was supposed to deliver according to the agreed terms.
However, the petitioner alleged that the vehicles delivered were of inferior quality and
did not meet the specifications laid out in the contract. The petitioner then filed a
complaint for breach of contract and damages.

b. The respondent, Broadway Motor Sales Corporation, denied the claims of breach,
asserting that it had complied with the terms of the contract. The respondent argued that
the petitioner had not fully paid for the vehicles and that the dispute over the quality of
the goods was unfounded.

c. The case was brought before the Court of Appeals, which upheld the decision of the
lower court in favor of Broadway Motor Sales Corporation. The petitioner then elevated
the case to the Supreme Court, claiming that the Court of Appeals had erred in its
application of the law, particularly with regard to the performance of obligations under
the contract.

Issue:

a. The main issue in the case was whether Broadway Motor Sales Corporation had fulfilled
its obligations under the contract, specifically regarding the delivery of vehicles that met
the agreed specifications. The petitioner argued that the respondent had breached the
contract by failing to deliver goods of the required quality, and the dispute centered on
the application of Articles 1163-1178 of the Civil Code concerning the performance of
obligations and the consequences of non-performance.

Ruling:

a. The Supreme Court ruled in favor of Broadway Motor Sales Corporation, affirming the
decision of the Court of Appeals. The Court applied Articles 1163-1178 of the Civil
Code to assess the obligations of the parties under the contract.

b. The Supreme Court ruled that Broadway Motor Sales Corporation had not violated its
obligations under the contract, as the petitioner failed to provide convincing evidence of
non-performance or breach of contract. Consequently, the Court dismissed the
petitioner’s claim and upheld the decision of the Court of Appeals.

Conclusion:

a. In this case, the Supreme Court affirmed that Broadway Motor Sales Corporation had
fulfilled its obligations under the contract and that there was no breach of contract. The
Court applied Articles 1163-1178 of the Civil Code to establish that the performance of
obligations must adhere strictly to the contract's terms, and the petitioner failed to prove
that the respondent had not complied with the agreed-upon specifications for the delivery
of vehicles. Therefore, the Court ruled in favor of the respondent.

NO. 5
G.R. No. 224006, July 06, 2020

CJH DEVELOPMENT CORPORATION, Petitioner, vs. CORAZON D. ANICETO,

Respondent.

Facts:

a. CJH Development Corporation (petitioner) and Corazon D. Aniceto (respondent) were

involved in a dispute concerning the performance of obligations under a lease agreement.
The respondent was a lessee under a lease contract with the petitioner, which involved
the rental of commercial space in a property managed by the petitioner. The contract
contained provisions regarding the payment of rent, maintenance, and other duties of the
lessee.

b. The dispute arose when the petitioner claimed that the respondent had failed to pay rent
for several months and was in arrears under the contract. The respondent, on the other
hand, argued that the petitioner had not fulfilled its obligations under the lease agreement,
including maintaining the leased property as per the terms of the contract. The respondent
asserted that due to the petitioner’s failure to maintain the premises, she was entitled to
withhold payment of the rent.

c. The case was brought before the Supreme Court, where the petitioner contended that the
respondent had breached the contract by not paying rent, while the respondent raised the
issue of the petitioner’s failure to fulfill its obligations as the basis for withholding rent.
The application of Articles 1163-1178 of the Civil Code was pivotal in the Court's
analysis of the parties' rights and obligations under the lease.

Issue:

a. The central issue was whether the respondent had the right to withhold rent due to the
petitioner’s failure to perform its obligations under the lease contract, and whether the
petitioner was entitled to enforce payment of rent under the terms of the lease. The case
involved the application of Articles 1163-1178 of the Civil Code in determining the
obligations of the parties and the consequences of non-performance.

Ruling:

a. The Supreme Court ruled in favor of the petitioner, CJH Development Corporation,
holding that the respondent, Corazon D. Aniceto, was liable for the unpaid rent despite
the petitioner’s alleged failure to maintain the leased premises. The Court applied
Articles 1163-1178 of the Civil Code in assessing the parties' obligations under the
contract.

b. The Court ruled that while the petitioner may have failed in its obligations regarding
maintenance, this did not give the respondent the right to withhold rent unless the
contract expressly provided for such a remedy. Since the lease did not contain such
provisions, the Court held that the respondent was liable for the unpaid rent.

Conclusion:

The Supreme Court ruled that the respondent, Corazon D. Aniceto, was liable for the
unpaid rent under the lease agreement, despite the petitioner’s alleged failure to maintain
the leased property. The Court applied Articles 1163-1178 of the Civil Code to
emphasize that the respondent had a clear obligation to pay rent and could not withhold it
without legal justification. The petitioner was entitled to enforce the contract and demand
payment of the outstanding rent.

NO. 6

G.R. No. L-22797, September 22, 1966

TESTACY OF MAXIMA SANTOS VDA. DE BLAS. ROSALINA SANTOS (Executrix),
Petitioner and Appellee, vs. FLORA BLAS DE BUENAVENTURA (Legatee), Oppositor
and Appellant.

Facts:

a. This case involves the probate proceedings of the will of Maxima Santos Vda. de Blas,
where the petitioner, Rosalina Santos (the executrix), sought to execute the provisions of
the will. The will named Flora Blas de Buenaventura as a legatee who was entitled to
certain properties. However, Flora Blas de Buenaventura contested the validity and the
interpretation of the will, leading to a dispute over the disposition of the estate.

b. The oppositor, Flora Blas de Buenaventura, challenged the terms of the will, claiming
that the legacy was not properly executed according to the testator’s intentions and was
not legally binding. The executrix, Rosalina Santos, argued that the will should be carried
out as written, in accordance with the wishes of the decedent. The case involved the
interpretation of the provisions of the will, and the application of Articles 1163-1178 of
the Civil Code was central to the determination of the obligations of the parties in
carrying out the provisions of the will and whether there was a breach in the performance
of the duties by the executrix.

Issue:

a. The main issue in this case was whether the will of Maxima Santos Vda. de Blas should
be executed according to its terms, despite the objections raised by Flora Blas de
Buenaventura. The legal questions revolved around the enforceability of the obligations
contained in the will, and the proper performance of those obligations by the executrix.
The application of Articles 1163-1178 of the Civil Code was crucial in determining
whether the executrix had performed her duties as prescribed by law and whether the
legacy to the oppositor was enforceable.

Ruling:

a. The Supreme Court ruled in favor of the executrix, Rosalina Santos, affirming the
validity of the will and the enforcement of its provisions. The Court applied Articles
1163-1178 of the Civil Code in its analysis of the obligations involved, particularly in
relation to the execution of the will and the duties of the executrix to carry out the terms
of the will.

b. The Court concluded that the will should be executed as per the decedent's instructions
and that the executrix had fulfilled her duty in attempting to do so. The objections raised
by the legatee, Flora Blas de Buenaventura, were dismissed as lacking sufficient legal
basis to invalidate the provisions of the will.

Conclusion:

The Supreme Court ruled that the will of Maxima Santos Vda. de Blas should be
executed according to its terms, as the testator's wishes were legally binding. The Court
emphasized the application of Articles 1163-1178 of the Civil Code to uphold the
obligations of the executrix in fulfilling the decedent's will. The objections of the legatee
were overruled, and the Court affirmed that the legal obligation of the executrix was to
perform the duties outlined in the will.

NO. 7

G.R. No. 176917, August 4, 2009

CONTINENTAL CEMENT CORP., Petitioner, vs. FILIPINAS (PREFAB) SYSTEMS,

INC., Respondent.
Facts:

a. Continental Cement Corporation (petitioner) and Filipinas (Prefab) Systems, Inc.

(respondent) entered into a contract for the construction of a prefabricated concrete plant.
The contract contained a provision requiring the respondent to deliver and install certain
prefabricated components for the petitioner’s plant. Disputes arose during the
performance of the contract due to the alleged failure of the respondent to deliver the
components in accordance with the specifications and deadlines set forth in the
agreement.

b. The petitioner filed a complaint against the respondent, claiming that the latter had failed
to meet its obligations under the contract. The respondent, in turn, raised the defense that
the petitioner had failed to make timely payments for the construction work done and had
caused delays in the project. The issues revolved around the performance of obligations
by both parties and the alleged breach of contract.

c. The case was brought before the Supreme Court, where the petitioner argued that the
respondent had not fulfilled its obligations under the contract, and the respondent
contended that the petitioner’s failure to pay was the cause of the delays and non-
performance. The application of Articles 1163-1178 of the Civil Code was central to the
analysis of the rights and obligations of the parties, as well as the consequences of non-
performance.

Issue:

The central issue was whether the respondent had fulfilled its obligations under the
contract and whether the petitioner was entitled to damages for the alleged breach. The
case also involved the application of Articles 1163-1178 of the Civil Code, focusing on
whether either party had properly performed its duties under the contract and what the
legal consequences of non-performance were.

Ruling:

The Supreme Court ruled in favor of the petitioner, Continental Cement Corporation,
holding that the respondent, Filipinas (Prefab) Systems, Inc., failed to fulfill its
obligations under the contract, and therefore, the petitioner was entitled to damages. The
Court applied Articles 1163-1178 of the Civil Code in assessing the obligations of the
parties and determining the legal consequences of their failure to perform.

The Court ruled that the petitioner was entitled to recover damages resulting from the
delays caused by the respondent’s failure to perform its obligations under the contract.
The petitioner was also entitled to compensation for the losses incurred due to the
respondent’s breach of contract.

Conclusion:

The Supreme Court ruled in favor of the petitioner, Continental Cement Corporation, and held
that the respondent, Filipinas (Prefab) Systems, Inc., was liable for damages due to its failure to
perform its contractual obligations. The Court applied Articles 1163-1178 of the Civil Code to
assess the parties’ obligations and concluded that the respondent’s non-performance of its duties
under the contract had legal consequences, including the obligation to compensate the petitioner
for the resulting damages.

NO. 8

G.R. No. 188027, August 9, 2017

SWIRE REALTY DEVELOPMENT CORPORATION, Petitioner, v. SPECIALTY

CONTRACTS GENERAL AND CONSTRUCTION SERVICES, INC. and JOSE
JAVELLANA, Respondents.

Facts:

a. Swire Realty Development Corporation (petitioner) and Specialty Contracts General and
Construction Services, Inc. (respondent) entered into a contract for the construction of a
building. In the course of construction, issues arose regarding the performance of
obligations by the construction company. The petitioner claimed that the contractor had
failed to meet the agreed construction timeline and did not adhere to the terms and
specifications laid out in the contract. The contractor, represented by Jose Javellana,
disputed these claims, stating that the petitioner’s actions, particularly delays in
payments, contributed to the delay in construction.

b. The case focused on the non-performance of contractual obligations by both parties,

particularly the failure of the respondent to deliver the work in the manner and time
frame stipulated in the contract. Both parties invoked Articles 1163-1178 of the Civil
Code to argue their respective positions regarding performance, breach of contract, and
damages.

Issue:

The central issue in this case was whether the respondent (contractor) had breached the
contract by failing to perform its obligations according to the terms and conditions set out
in the agreement. Additionally, the case dealt with whether the petitioner’s delays in
payments contributed to the delays in the construction work and whether the contractor
was entitled to compensation for those delays. The application of Articles 1163-1178 of
the Civil Code was crucial in determining the legal consequences of the breach of
contract and the rights and duties of the parties.

Ruling:

The Supreme Court ruled in favor of the petitioner, Swire Realty Development
Corporation, holding that the contractor, Specialty Contracts General and Construction
Services, Inc., had breached its obligations under the contract. The Court applied Articles
1163-1178 of the Civil Code to evaluate the performance of obligations by both parties
and the legal consequences of non-performance.

Conclusion:

The Supreme Court ruled in favor of Swire Realty Development Corporation, finding that
the contractor, Specialty Contracts General and Construction Services, Inc., had breached
its obligations under the contract by failing to perform the work according to the agreed-
upon terms. The Court applied Articles 1163-1178 of the Civil Code to determine that
the contractor’s non-performance of its duties resulted in legal consequences, including
liability for damages. The petitioner was entitled to compensation for the losses caused
by the delays in the construction project.

NO. 9

G.R. No. 183872, November 17, 2014

OWEN PROSPER A. MACKAY, Petitioner, vs. SPOUSES DANA CASWELL and

CERELINA CASWELL, Respondents.

Facts:

a. Owen Prosper A. Mackay (petitioner) and Spouses Dana Caswell and Cerelina Caswell
(respondents) were involved in a dispute regarding the payment of a debt. The petitioner
had loaned a sum of money to the respondents, and the terms of the agreement required
 the respondents to pay the loan under specified conditions. However, the respondents
failed to settle their debt in full within the stipulated time frame. The petitioner filed a
complaint seeking to enforce the repayment of the loan and the interest due.

b. The respondents, in their defense, argued that the petitioner had not adhered to the terms
of the contract and that they were not obligated to pay the remaining balance due to the
alleged failure of the petitioner to perform his side of the agreement. The case revolved
around the enforcement of the debt obligation and the performance of the terms of the
agreement.

c. The dispute primarily centered on the interpretation and application of Articles 1163-
1178 of the Civil Code, which govern obligations and contracts, particularly those
involving debt repayment and the consequences of non-performance.

Issue:

The main issue in this case was whether the respondents had fulfilled their obligation to
repay the debt and whether the petitioner was entitled to the enforcement of the debt
repayment based on the terms of the contract. Additionally, the case involved the
application of Articles 1163-1178 of the Civil Code in determining the rights and
responsibilities of the parties in terms of performance, breach of contract, and damages.

Ruling:

The Supreme Court ruled in favor of the petitioner, Owen Prosper A. Mackay, and held
that the respondents, Spouses Dana Caswell and Cerelina Caswell, were obligated to
repay the debt as stipulated in their agreement. The Court applied Articles 1163-1178 of
the Civil Code to determine the legal consequences of the respondents’ failure to meet
their repayment obligations.

Conclusion:

The Supreme Court ruled in favor of the petitioner, Owen Prosper A. Mackay, and held
that the respondents, Spouses Dana Caswell and Cerelina Caswell, were obligated to
repay the loan as stipulated in their contract. The Court applied Articles 1163-1178 of the
Civil Code to conclude that the respondents’ failure to fulfill their repayment obligations
resulted in a breach of contract, and they were liable for the damages and financial loss
caused by this non-performance. The petitioner was entitled to the enforcement of the
debt repayment, with interest, as agreed upon in the contract.

NO. 10

G.R. No. 127206, September 12, 2003

PERLA PALMA GIL, VICENTE HIZON, JR., AND ANGEL PALMA GIL, Petitioners,
vs. HON. COURT OF APPEALS, HEIRS OF EMILIO MATULAC, CONSTANCIO
MAGLANA, AGAPITO PACETES & THE REGISTER OF DEEDS OF DAVAO CITY,
Respondents.

Facts:

a. The case involved a dispute over the ownership and possession of a parcel of land. The
petitioners (Perla Palma Gil, Vicente Hizon Jr., and Angel Palma Gil) sought to assert
their ownership over a property they claimed to have acquired through a deed of sale.
However, the respondents, including the heirs of Emilio Matulac, Constancio Maglana,
Agapito Pacetes, and the Register of Deeds of Davao City, contested the validity of the
petitioners’ title and possession. The respondents argued that the sale was invalid due to
lack of proper transfer of title and that the petitioners had no legal right over the land in
question.
 b. In resolving the dispute, the parties invoked Articles 1163-1178 of the Civil Code,
particularly focusing on the performance of obligations, transfer of rights, and
consequences of non-performance or breach of contract.

Issue:

The main issue in this case was whether the petitioners' claim to the property, based on
their deed of sale, was valid and enforceable. The case also involved determining whether
the petitioners or the respondents had the rightful claim to ownership, and how the
performance of the obligations of the parties in the contract of sale would impact the
resolution of the dispute.
Ruling:

The Supreme Court ruled in favor of the petitioners, recognizing their rights over the
property based on the deed of sale. The Court, in its ruling, applied Articles 1163-1178
of the Civil Code to evaluate the validity of the sale, the obligations of the parties
involved, and the legal consequences of non-performance.

Conclusion:

The Supreme Court ruled in favor of the petitioners, Perla Palma Gil, Vicente Hizon Jr.,
and Angel Palma Gil, recognizing their right to the property based on the deed of sale.
The Court applied Articles 1163-1178 of the Civil Code to emphasize that the
respondents were obligated to transfer the title to the petitioners and that their failure to
perform this obligation resulted in a breach of contract. The petitioners were entitled to
the enforcement of the contract and any damages arising from the respondents’ non-
performance.

NO. 11

G.R. No. 229262, July 07, 2021

H. S. POW CONSTRUCTION AND DEVELOPMENT CORP., Petitioner, vs.

SHAUGHNESSY DEVELOPMENT CORPORATION, Respondent.

Facts:

a. H. S. Pow Construction and Development Corporation (petitioner) entered into a

construction contract with Shaughnessy Development Corporation (respondent). The
contract concerned the construction of certain facilities for the respondent. However, a
dispute arose concerning the performance of obligations under the contract, specifically
the payment for services rendered.

b. The petitioner claimed that the respondent failed to fully pay for the work completed,
leading the petitioner to file a complaint for the payment of the outstanding balance. The
respondent, on the other hand, argued that the petitioner did not fulfill certain contractual
obligations, particularly in terms of the quality and timeliness of the work, which justified
withholding the remaining payment.

c. The parties argued over the enforcement of their respective obligations, with particular
focus on the performance and fulfillment of the terms of the contract.

Issue:

The primary issue in the case was whether the respondent, Shaughnessy Development
Corporation, was liable to pay the outstanding balance to H. S. Pow Construction and
Development Corporation for the work done, and whether the petitioner had fulfilled its
contractual obligations, particularly with regard to quality and timeliness of work. The
case raised the question of whether the performance of the obligations under the contract
 was in compliance with the agreement and what consequences arose from any breach of
those obligations.

Ruling:

The Supreme Court ruled in favor of the petitioner, H. S. Pow Construction and
Development Corporation, and ordered the respondent, Shaughnessy Development
Corporation, to pay the outstanding balance. The Court applied Articles 1163-1178 of the
Civil Code to evaluate the parties’ respective obligations and the consequences of their
performance or non-performance.
Conclusion:

The Supreme Court ruled in favor of the petitioner, H. S. Pow Construction and
Development Corporation, and ordered the respondent, Shaughnessy Development
Corporation, to pay the outstanding balance. The Court applied Articles 1163-1178 of the
Civil Code to affirm that the respondent’s failure to fulfill its obligation to pay for the
work completed was a breach of contract. As a result, the respondent was liable for the
amount due, and the petitioner was entitled to enforce the contract and seek compensation
for the services rendered.

NO. 12

G.R. No. 205007, September 16, 2019

THE MERCANTILE INSURANCE CO., INC., Petitioner, vs. DMCI-LAING
CONSTRUCTION, INC., Respondent.

Facts:

a. The case arose from an insurance contract between The Mercantile Insurance Co., Inc.
(petitioner) and DMCI-Laing Construction, Inc. (respondent), wherein the petitioner
issued a surety bond to guarantee the performance of the respondent in a construction
project.

b. The respondent, DMCI-Laing Construction, was engaged in a construction project and

had secured the performance bond to ensure the completion of the work. However, issues
arose when the project faced delays, and the petitioner was required to settle the bond for
the performance guarantees as stipulated in the agreement.

c. The petitioner argued that the delay in project completion was caused by the respondent's
failure to comply with its obligations under the construction contract. On the other hand,
the respondent contended that they were not at fault, as certain delays were due to
unforeseen circumstances and that the petitioner was wrongfully claiming a breach of the
bond.

Issue:

a. The main issue in the case was whether the respondent, DMCI-Laing Construction, had
failed to fulfill its obligations under the contract in such a manner that would require the
petitioner, The Mercantile Insurance Co., Inc., to pay the performance bond.

b. The parties also debated whether the non-performance or delay in performance was
excusable under the terms of the contract, and how the performance bond should be
interpreted in light of the delay.

Ruling:

The Supreme Court ruled in favor of the petitioner, The Mercantile Insurance Co., Inc.,
and held that the respondent, DMCI-Laing Construction, had failed to meet the
requirements stipulated in the construction contract. The Court ruled that the petitioner
was justified in claiming that the bond had been triggered due to the respondent's failure
to perform as per the contract. The Court specifically applied Articles 1163-1178 of the
 Civil Code to address the obligations of the parties and the consequences of non-
performance.

Conclusion:

The Supreme Court ruled in favor of the petitioner, The Mercantile Insurance Co., Inc.,
and held that the respondent, DMCI-Laing Construction, had breached its obligation to
complete the construction project as stipulated in the contract. The Court applied Articles
1163-1178 of the Civil Code to affirm that the non-performance of the respondent
justified the enforcement of the performance bond. The petitioner was entitled to claim
payment under the bond due to the respondent’s failure to perform its obligations in good
faith and in a timely manner.

NO. 12

G.R. No. 174387

BF CORPORATION, Petitioner, vs. WERDENBERG INTERNATIONAL

CORPORATION, Respondent.

Facts:

a. BF Corporation (petitioner) and Werdenberg International Corporation (respondent)

entered into a contract for the sale of goods.

b. The petitioner delivered the goods as stipulated in the contract, but the respondent failed
to fulfill its obligation to pay for the goods. As a result, the petitioner filed a complaint
seeking payment for the goods delivered.

c. The respondent, however, argued that there were issues with the goods’ quality, which
justified withholding payment.

d. The parties thus disagreed over the performance of their respective obligations under the
contract.

Issue:

The key issue in the case was whether the respondent was justified in withholding
payment for the goods delivered by the petitioner based on the claim that the goods did
not conform to the specifications in the contract. The case raised questions regarding the
performance of obligations as outlined in the contract, specifically whether the goods met
the agreed-upon terms and whether the respondent's withholding of payment was legally
justified.

Ruling:

The Supreme Court ruled in favor of the petitioner, BF Corporation, and ordered the
respondent, Werdenberg International Corporation, to pay for the goods delivered. The
Court applied Articles 1163-1178 of the Civil Code to determine the obligations of the
parties and the consequences of non-performance.

Conclusion:

The Supreme Court ruled in favor of the petitioner, BF Corporation, and ordered the respondent,
Werdenberg International Corporation, to pay for the goods delivered. The Court applied
Articles 1163-1178 of the Civil Code, emphasizing that the respondent’s failure to pay was a
breach of contract. The petitioner fulfilled its obligation by delivering the goods as agreed, and
the respondent’s withholding of payment was unjustified. Consequently, the respondent was
ordered to pay the amount due for the goods delivered under the terms of the contract.

NO. 14
G.R. No. 199666, October 07, 2019

CAMARINES SUR TEACHERS AND EMPLOYEES ASSOCIATION, INC.,

REPRESENTED BY ITS PRESIDENT, DR. ANTONIO A. RALUTA, PETITIONER, vs.
PROVINCE OF CAMARINES SUR, REPRESENTED BY GOVERNOR LUIS
RAYMUND F. VILLAFUERTE, JR., RESPONDENT.

Facts:

a. The Camarines Sur Teachers and Employees Association, Inc. (petitioner) filed a case
against the Province of Camarines Sur (respondent) to compel the latter to pay the full
amount of the cash equivalent of their mid-year bonuses, as stipulated by law. The
petitioner argued that the respondent, despite the legal obligation to grant the mid-year
bonuses, had failed to provide the correct amount to its members, violating the law and
the rights of the employees.

b. The respondent contended that it had paid the bonus in accordance with the available
budget and was not obligated to pay the full amount requested by the petitioner.

Issue:

The primary issue was whether the Province of Camarines Sur was legally obligated to
pay the full amount of the mid-year bonuses to the petitioner’s members, as prescribed
under existing laws. The case focused on the proper performance of contractual and
statutory obligations, as well as the respondent’s failure to comply with the established
norms regarding compensation and bonuses.

Ruling:

The Supreme Court ruled in favor of the petitioner, Camarines Sur Teachers and
Employees Association, Inc., and ordered the respondent, the Province of Camarines Sur,
to pay the full amount of the mid-year bonuses as prescribed by law. The Court’s ruling
involved the application of Articles 1163-1178 of the Civil Code in relation to the
statutory obligation of the respondent to comply with the legal requirements regarding
bonuses and employee compensation.

Conclusion:

The Supreme Court ruled in favor of the petitioner, Camarines Sur Teachers and
Employees Association, Inc., and ordered the Province of Camarines Sur to pay the full
amount of the mid-year bonuses to the petitioner’s members, as mandated by law. The
Court applied Articles 1163-1178 of the Civil Code, focusing on the legal duty of the
respondent to perform its obligation to pay the bonuses in full. The failure of the
respondent to comply with the legal requirement was deemed a breach of contract, which
resulted in the legal obligation to settle the amount due to the employees.

NO. 15

G.R. No. 134692, August 1, 2000

ELISEO FAJARDO, JR., and MARISSA FAJARDO, petitioners, vs. FREEDOM TO

BUILD, INC., respondent.

Facts:

a. Eliseo and Marissa Fajardo (petitioners) entered into a contract with Freedom to Build,
Inc. (respondent) for the construction of a house.
 b. The petitioners made advance payments to the respondent in accordance with the
agreement. However, the construction was delayed, and there were concerns about the
quality of the work completed by the respondent. As a result, the petitioners filed a
complaint seeking the rescission of the contract and a refund of the payments made,
asserting that the respondent failed to perform its obligations under the contract.

c. The respondent, on the other hand, argued that the delay was due to unforeseen
circumstances and that it had substantially completed the project. The respondent also
countered that the petitioners were not entitled to a refund since some payments had
already been used for the work done.

Issue:

The central issue was whether the petitioners were entitled to rescind the contract and
demand a refund of the payments made, considering the respondent’s alleged failure to
perform the obligations under the contract as agreed.

Ruling:

The Supreme Court ruled in favor of the petitioners, Eliseo and Marissa Fajardo, and
ordered the rescission of the contract with Freedom to Build, Inc., and the return of the
payments made. The Court applied Articles 1163-1178 of the Civil Code in determining
the legal obligations and consequences of the failure to perform contractual obligations.

Conclusion:

The Supreme Court ruled in favor of the petitioners, Eliseo and Marissa Fajardo, and
rescinded the contract with Freedom to Build, Inc., ordering the return of the payments
made. The Court applied Articles 1163-1178 of the Civil Code to conclude that the
respondent’s failure to perform the contractual obligations, such as timely construction
and quality of work, justified the rescission of the contract and a refund of the amounts
paid.

NO. 17

G.R. No. 268143, August 12, 2024

GOLDLAND TOWER CONDOMINIUM CORPORATION, Petitioner, vs. EDWARD L.

LIM and HSIEH HSIU-PING, Respondents.

Facts:

a. Goldland Tower Condominium Corporation (petitioner) and Edward L. Lim and Hsieh
Hsiu-Ping (respondents) entered into a contract for the sale of a condominium unit.

b. The respondents made the required payments, but the petitioner failed to deliver the unit
as agreed. The respondents sought rescission of the contract and a refund of their
payments, citing the petitioner's non-performance.

Issue:

Whether the petitioner is liable for the non-performance of its obligation to deliver the
condominium unit and whether the respondents are entitled to rescind the contract and
receive a refund.

Ruling:

The Supreme Court ruled in favor of the respondents, ordering the rescission of the
contract and the return of the payments made. The Court applied Articles 1163-1178 of
the Civil Code to determine the rights and obligations of the parties.
Conclusion:

The Supreme Court upheld the respondents' right to rescind the contract and ordered the
return of their payments, emphasizing the importance of fulfilling contractual obligations
in good faith.

NO. 16

G.R. No. 107737, October 1, 1999

JUAN L. PEREZ, LUIS KEH, CHARLIE LEE, and ROSENDO G. TANSINSIN, JR.,
petitioners, vs. COURT OF APPEALS, LUIS CRISOSTOMO, and VICENTE
ASUNCION, respondents.

Facts:

a. The case arose from a dispute over the enforcement of a contract for the sale of shares of
stock. Petitioners Juan L. Perez, Luis Keh, Charlie Lee, and Rosendo G. Tansinsin, Jr.
(petitioners) entered into an agreement with respondents Luis Crisostomo and Vicente
Asuncion (respondents) for the sale of shares in a corporation. After payment was made
by the respondents, the petitioners failed to transfer the shares as agreed upon.

b. The petitioners contended that the agreement had been rescinded and that they were
entitled to retain the payment made by the respondents. On the other hand, the
respondents argued that the failure to transfer the shares amounted to a breach of
contract, entitling them to either specific performance or damages.

c. The petitioners invoked the defense of rescission, claiming that the contract was voided
due to the respondents' actions, which they alleged to be in violation of the terms of the
agreement.

Issue:

The main issue in the case was whether the petitioners were correct in invoking rescission
as a remedy and whether they were entitled to retain the payment made by the
respondents despite not performing their obligation to transfer the shares.

Ruling:

The Supreme Court ruled in favor of the respondents and held that the contract was valid
and enforceable. The Court applied Articles 1163-1178 of the Civil Code in determining
the rights and obligations of the parties. The Court emphasized the importance of
performance and non-performance of contractual obligations, especially in cases
involving the sale of property such as shares in a corporation.

Conclusion: The Supreme Court ruled that the contract between the petitioners and the
respondents was valid, and that the petitioners had failed to perform their obligation to transfer
the shares. The Court applied Articles 1163-1178 of the Civil Code, focusing on the petitioners'
non-performance of their contractual obligation and the legal consequences of this breach. The
Court held that the respondents were entitled to either specific performance or rescission, and the
petitioners were liable for failing to honor their contractual commitments.

NO. 18

G.R. No. 218966, August 01, 2022

SOUTHSTAR CONSTRUCTION AND DEVELOPMENT CORPORATION, Petitioner,

vs. PHILIPPINE ESTATES CORPORATION, Respondent.

Facts:
 a. Southstar Construction and Development Corporation (petitioner) entered into a contract
with Philippine Estates Corporation (respondent) for the construction of various
buildings. The parties had agreed on certain terms and conditions for the project,
including a payment schedule. However, issues arose when the petitioner allegedly failed
to meet the construction timeline and the project was delayed. The respondent, Philippine
Estates Corporation, sought to enforce the terms of the contract, demanding that the
petitioner perform according to the terms or face penalties for the delay.

b. The petitioner, on the other hand, argued that the delays were due to circumstances
beyond its control, such as unforeseen events and problems with the supply of materials.

c. The petitioner also contended that it had fulfilled its obligations as best as it could under
the circumstances and that the contract should not be rescinded or penalized.

Issue:

The primary issue in this case was whether the petitioner was liable for the delay in
performance and whether the respondent was entitled to enforce penalties, rescind the
contract, or seek damages based on the petitioner's failure to meet its obligations under
the contract.

Ruling:

The Supreme Court ruled in favor of the respondent, Philippine Estates Corporation, and
held that the petitioner was liable for the delay in the construction project. The Court
applied Articles 1163-1178 of the Civil Code to address the contractual obligations,
performance, and non-performance of the parties.

Conclusion:

The Supreme Court ruled in favor of the respondent, Philippine Estates Corporation,
confirming that Southstar Construction and Development Corporation had failed to meet
its obligations under the contract in terms of timely performance. The Court applied
Articles 1163-1178 of the Civil Code to highlight the importance of fulfilling contractual
obligations in good faith, within the terms agreed upon, and the consequences of failing
to do so. The petitioner was found liable for the delay and was subject to the penalties
outlined in the contract, as well as any damages arising from the non-performance of the
construction obligations.

NO. 19.

G.R. No. 224235, June 28, 2021

RICHARDSON STEEL CORPORATION, AYALA INTEGRATED STEEL

MANUFACTURING CO., INC., ASIAN FOOTWEAR AND RUBBER CORP., AND
SPOUSES RICARDO O. CHENG AND ELEANOR S. CHENG, Petitioners, vs. UNION
BANK OF THE PHILIPPINES, Respondent.

Facts:

a. This case stems from a loan agreement where Richardson Steel Corporation, Ayala
Integrated Steel Manufacturing Co., Inc., Asian Footwear and Rubber Corp., and the
spouses Ricardo O. Cheng and Eleanor S. Cheng (petitioners) executed promissory notes
in favor of Union Bank of the Philippines (respondent). The petitioners failed to pay their
outstanding obligations as per the terms of the loan agreement.

b. Respondent Union Bank filed a complaint for the collection of the loan and its
corresponding interest. The petitioners, in their defense, invoked the validity of the loan
agreement but argued that their inability to pay was due to financial difficulties beyond
their control. They claimed that there had been no clear explanation on the imposition of
 penalties and interest, and that the contract should be reviewed for fairness, given their
circumstances.

c. The case revolves around the enforcement of the loan agreement, particularly focusing on
the obligations of the petitioners to pay the loan with its agreed interest and the penalties
imposed by the respondent for non-payment.

Issue:

The central issue is whether the petitioners are liable for the payment of the loan,
including penalties and interest, and whether the respondent is entitled to enforce the
terms of the loan agreement based on the petitioners' non-performance of their
obligations.

Ruling:

`The Supreme Court ruled in favor of Union Bank of the Philippines, affirming the
enforcement of the loan agreement and the payment of the outstanding obligations by the
petitioners. The Court applied Articles 1163-1178 of the Civil Code to determine the
rights and obligations of the parties and the consequences of non-performance.

Conclusion:

The Supreme Court ruled that Union Bank of the Philippines was entitled to enforce the
loan agreement, including the payment of the outstanding loan, interest, and penalties.
The Court applied Articles 1163-1178 of the Civil Code to establish that the petitioners
had a legal obligation to pay the loan and could not avoid their responsibilities due to
financial difficulties. The imposition of penalties and interest was valid, and the
petitioners were held accountable for their failure to perform their contractual obligations.

NO. 20

G.R. No. 191937, August 9, 2017

ORIENT FREIGHT INTERNATIONAL, INC., Petitioner, v. KEIHIN-EVERETT

FORWARDING COMPANY, INC., Respondent.

Facts:

a. In October 2001, Keihin-Everett Forwarding Company, Inc. (Keihin-Everett) entered into

a Trucking Service Agreement with Matsushita Communication Industrial Corporation of
the Philippines (Matsushita).

b. Keihin-Everett subcontracted its trucking services to Orient Freight International, Inc.

(Orient Freight) through a separate agreement. In April 2002, a truck carrying
Matsushita's goods was hijacked.

c. Orient Freight initially misreported the incident as a mere breakdown and towing, failing
to disclose the hijacking. Upon discovery of the theft, Matsushita terminated its contract
with Keihin-Everett, citing loss of confidence. Keihin-Everett sued Orient Freight for
damages, alleging that Orient Freight's negligence led to the termination of its contract
with Matsushita.

Issue:

Whether Orient Freight's negligence in failing to properly investigate and report the
hijacking incident constitutes a breach of its contractual obligations to Keihin-Everett,
thereby justifying Keihin-Everett's claim for damages.

Ruling:
 The Supreme Court ruled in favor of Keihin-Everett, affirming the lower courts' decisions
that Orient Freight's negligence in handling the hijacking incident breached its
contractual obligations. The Court held that Orient Freight's failure to properly
investigate and report the incident led to the termination of Keihin-Everett's contract with
Matsushita, resulting in actual damages.

Conclusion:

The Supreme Court's decision underscores the importance of fulfilling contractual

obligations with due diligence and good faith. Orient Freight's negligence in handling the
hijacking incident breached its contractual duties to Keihin-Everett, justifying the award
of damages.

NO. 21

G.R. No. 212690, February 20, 2017

SPOUSES ROMEO PAJARES and IDA T. PAJARES, Petitioners, v. REMARKABLE

LAUNDRY AND DRY CLEANING, represented by ARCHEMEDES G. SOLIS,
Respondent.

Facts:

a. On September 8, 2011, Spouses Romeo and Ida Pajares (petitioners) entered into a
"Remarkable Dealer Outlet Contract" with Remarkable Laundry and Dry Cleaning
(respondent). Under this agreement, the petitioners were to act as a dealer outlet,
accepting and receiving laundry items for processing by the respondent.

b. The contract stipulated that the petitioners were required to produce at least 200 kilos of
laundry items weekly. However, on April 30, 2012, the petitioners ceased operations due
to a lack of personnel, violating the contract's terms.

c. The respondent made written demands for payment of penalties as provided in the
contract, but the petitioners failed to comply. Consequently, the respondent filed a
complaint for "Breach of Contract and Damages" against the petitioners before the
Regional Trial Court (RTC) of Cebu City, seeking a total of PHP 280,000.00 in damages.

Issue:

Whether the RTC has jurisdiction over the case, considering that the total amount of
damages claimed is below the PHP 300,000.00 threshold for RTC jurisdiction.

Ruling:

The Supreme Court ruled that the RTC correctly dismissed the case for lack of
jurisdiction. The Court held that the complaint was primarily for damages, which are
capable of pecuniary estimation, and since the total claim was below the jurisdictional
threshold of PHP 300,000.00, the case fell under the jurisdiction of the Municipal Trial
Court (MTC). The Court emphasized that the nature of the principal action determines
jurisdiction, and in this case, the principal relief sought was the payment of damages.

Conclusion:

The Supreme Court's decision underscores the importance of fulfilling contractual

obligations in good faith. The petitioners' failure to perform their duties as stipulated in
the contract led to their liability for damages. Additionally, the Court highlighted the
significance of jurisdictional thresholds in determining the appropriate court for filing
claims.
NO. 22

G.R. No. 206306, April 3, 2024

MIGUEL KIM, Petitioner, v. SLIMMERS WORLD INTERNATIONAL, ALBERT

CUESTA, AND DINAH QUINTO, Respondents.

Facts:

a. Adelaida Kim, a 59-year-old member of Slimmers World International, enrolled in a 12-

session personal training program in June 2000, with Albert Cuesta as her trainer. On
July 25, 2000, during her final session, Adelaida experienced a headache and nausea
shortly after her workout.

b. The gym staff measured her blood pressure, which was high, and she took her
hypertension medication. While changing clothes, she vomited, prompting the staff to
transport her to Our Lady of Grace Hospital (OLGH) in a tricycle. At OLGH, she was
diagnosed with essential hypertension and later transferred to Chinese General Hospital
(CGH) for better medical facilities. There, a CT scan revealed a brain mass, and three
days later, Adelaida died from cerebral hemorrhage and severe hypertension.

c. Following her death, Miguel Kim, Adelaida's husband, sent a demand letter to Slimmers
World, Cuesta, and Dinah Quinto, the managing director, seeking damages for
negligence. When they denied liability, Miguel filed a complaint in the Regional Trial
Court (RTC) on November 28, 2000.

d. The defendants argued that Adelaida had concealed her hypertension and that they had
followed proper emergency procedures.

Issue:

Whether Slimmers World International, Albert Cuesta, and Dinah Quinto should be held
liable for damages resulting from the death of Adelaida Kim due to alleged negligence.

Ruling:

The Supreme Court ruled that Slimmers World International, Albert Cuesta, and Dinah
Quinto were not liable for damages. The Court found that the petitioners failed to
establish that the respondents' actions were the proximate cause of Adelaida's death. The
Court emphasized that while the respondents may have been negligent in certain aspects,
such as not verifying Adelaida's health status before allowing her to participate in the
program, there was insufficient evidence to directly link their negligence to her death.

Conclusion:

The Supreme Court's decision underscores the importance of establishing a direct causal
link between alleged negligence and the resulting harm. In this case, despite certain
negligent actions by Slimmers World and its staff, the Court found insufficient evidence
to hold them liable for the death of Adelaida Kim. This highlights the necessity for clear
and convincing evidence when asserting claims of negligence leading to damages.

NO. 23

G.R. No. 206327, July 6, 2022

INTERNATIONAL EXCHANGE BANK, Petitioner, v. RUDY S. LABOS AND

ASSOCIATES, INC., SPS. RODOLFO S. LABOS AND CONSUELO R. LABOS, AND
ROCKWELL LAND CORPORATION, Respondents.
Facts:

a. International Exchange Bank (IEB) extended a credit line of ₱10 million to Rudy S.
Labos & Associates, Inc. (RSLAI), secured by a condominium unit, Unit 23-A Luna
Gardens, located in Rockwell Center, Makati City.

b. The Deed of Assignment executed on July 2, 2003, stipulated that RSLAI could not sell
or transfer the assigned property without IEB's consent. RSLAI defaulted on several
promissory notes, leading IEB to demand payment. Subsequently, RSLAI transferred the
condominium unit to JHL & Sons Realty, Inc. without IEB's consent.

c. IEB filed a complaint against RSLAI, the spouses Rodolfo and Consuelo Labos, and
Rockwell Land Corporation, seeking to hold them jointly and severally liable for the
unpaid loan. The Regional Trial Court (RTC) ruled in favor of IEB, holding RSLAI and
the spouses Labos liable but absolving Rockwell.

d. The Court of Appeals (CA) initially reversed the RTC's decision, holding Rockwell
jointly liable, but later reconsidered and upheld the RTC's ruling. IEB appealed to the
Supreme Court.

Issue:

Whether Rockwell Land Corporation is liable for the unpaid loan of RSLAI, considering
the Deed of Assignment and the transfer of the condominium unit without IEB's consent.

Ruling:

The Supreme Court upheld the CA's decision, affirming that Rockwell Land Corporation
is not liable for the unpaid loan. The Court emphasized the principle of relativity of
contracts, stating that contracts bind only the parties involved and do not impose
obligations on third parties. It clarified that Rockwell's signature on the Deed of
Assignment was merely a consent to the assignment and did not create any liability for
RSLAI's debts. The Court also noted that there was no novation of the original
obligation, and Rockwell did not act in bad faith.

Conclusion:

The Supreme Court's decision underscores the importance of fulfilling contractual

obligations in good faith and adhering to the terms of agreements. While RSLAI was held
liable for the unpaid loan, Rockwell Land Corporation was not, due to the principle of
relativity of contracts and the absence of bad faith. This case highlights the necessity for
clear and explicit terms in contracts to avoid disputes and ensure that obligations are
properly enforced.

NO. 24

G.R. No. 138569, September 11, 2003

THE CONSOLIDATED BANK AND TRUST CORPORATION, Petitioner, v. COURT OF

APPEALS and L.C. DIAZ AND COMPANY, CPA's, Respondents.

Facts:

a. L.C. Diaz and Company, CPA's (L.C. Diaz), a professional partnership, maintained a
savings account with Consolidated Bank and Trust Corporation (Solidbank). On August
14, 1991, L.C. Diaz's cashier, Mercedes Macaraya, instructed their messenger, Ismael
Calapre, to deposit funds at Solidbank.

b. Due to time constraints, Calapre left the passbook with Solidbank's Teller No. 6 and
proceeded to another bank. Upon his return, he was informed that someone else had taken
 the passbook. Later that day, L.C. Diaz discovered an unauthorized withdrawal of
₱300,000 from their account, executed using a withdrawal slip bearing the forged
signatures of authorized signatories. L.C. Diaz demanded the return of the funds from
Solidbank, which was refused.

c. The Regional Trial Court (RTC) absolved Solidbank, citing adherence to bank rules and
contributory negligence by L.C. Diaz. The Court of Appeals (CA) reversed this decision,
holding Solidbank liable for negligence and breach of fiduciary duty. Solidbank appealed
to the Supreme Court.

Issue:

Whether Solidbank is liable for the unauthorized withdrawal from L.C. Diaz's account,
considering the bank's adherence to its internal procedures and the alleged contributory
negligence of L.C. Diaz.

Ruling:

The Supreme Court upheld the CA's decision, affirming Solidbank's liability for the
unauthorized withdrawal. The Court emphasized that banks, as fiduciaries, are required to
exercise a high degree of diligence in safeguarding depositor accounts. Solidbank's
failure to return the passbook to Calapre, its authorized representative, constituted
negligence. The Court also noted that while L.C. Diaz exhibited contributory negligence
by not securing the withdrawal slip, Solidbank's breach of duty was the proximate cause
of the unauthorized withdrawal. Consequently, Solidbank was held liable for 60% of the
actual damages, with L.C. Diaz bearing 40% due to contributory negligence.

Conclusion:

The Supreme Court's decision underscores the high standard of care required from banks
in managing depositor accounts. While contributory negligence by L.C. Diaz was
acknowledged, Solidbank's primary breach of duty was the proximate cause of the
unauthorized withdrawal. This case highlights the importance of strict adherence to
banking procedures and the fiduciary responsibilities banks owe to their clients.

NO. 25

G.R. No. 191458, July 3, 2017

CHINATRUST (PHILS.) COMMERCIAL BANK, Petitioner, v. PHILIP TURNER,

Respondent.

Facts:

a. On September 13, 2004, Philip Turner, a British national, initiated a telegraphic transfer
of US$430.00 through Chinatrust (Philippines) Commercial Bank (Chinatrust) to the
account of "MIN TRAVEL/ESMAT AZMY" at Citibank, Heliopolis Branch in Cairo,
Egypt. This transfer was intended as partial payment for a travel tour for Turner and his
wife. An additional service fee of US$30.00 was also paid, with both amounts debited
from Turner's dollar savings account.

b. Chinatrust remitted the funds through Union Bank of California to Citibank-New York,
which then credited the funds to Citibank-Cairo. On September 17, 2004, Chinatrust
received a telex from Citibank-Cairo indicating a mismatch between the beneficiary
name provided by Turner and their records, leading to a "discrepancy notice."

c. Chinatrust informed Turner of this discrepancy on September 20, 2004, and requested
him to verify the correct account name with his beneficiary.

d. On September 22, 2004, Turner allegedly contacted Esmat Azmy, who confirmed receipt
of the funds. However, due to his wife's illness, Turner canceled the trip and requested a
 refund from Chinatrust. Chinatrust informed him that since the funds had already been
credited to the beneficiary's account, they could not be retrieved without Citibank-Cairo's
consent.

e. Chinatrust required a written certification from the travel agency denying receipt of the
funds before processing Turner's request, but he failed to provide this despite repeated
reminders. On October 28, 2004, Chinatrust received confirmation from Citibank-Cairo
that the funds had been credited to Min Travel's account on September 15, 2004.

f. Turner filed a complaint against Chinatrust on March 7, 2005, seeking a refund and
damages. The Metropolitan Trial Court dismissed Turner's complaint for lack of merit,
finding that Chinatrust had complied with its obligation to remit the funds.

g. Turner appealed, and the Regional Trial Court reversed the dismissal, finding Chinatrust
negligent for not addressing Turner's concerns and awarding him damages. Chinatrust's
motion for reconsideration was denied, leading to an appeal to the Court of Appeals,
which upheld the Regional Trial Court's decision.

Issue:

Whether Chinatrust is liable for the unauthorized withdrawal from Turner's account,
considering the bank's adherence to its internal procedures and the alleged contributory
negligence of Turner.

Ruling:

The Supreme Court ruled in favor of Chinatrust, finding no negligence on the part of the
bank. The Court emphasized that issues not raised in the lower court cannot be decided
for the first time on appeal, ensuring fairness in legal proceedings. The Court also noted
that the Regional Trial Court's findings were based on facts not alleged or proven before
the lower court, violating the rule against raising new issues on appeal. Consequently, the
Court reversed the decisions of the lower courts and dismissed Turner's complaint.

Conclusion:

The Supreme Court's decision underscores the importance of adhering to established

procedures and ensuring that all issues are properly raised and proven in the lower courts
before being considered on appeal. Chinatrust's compliance with its contractual
obligations and good faith actions led to the dismissal of Turner's complaint.

NO. 26

G.R. No. 194533, April 19, 2017

PHILIPPINE STEEL COATING CORP., Petitioner, v. EDUARD QUIÑONES,

Respondent.

Facts:

a. In early 1994, Richard Lopez, a sales engineer from Philippine Steel Coating Corporation
(PhilSteel), introduced Eduard Quiñones, owner of Amianan Motors, to a new product:
primer-coated, long-span, rolled galvanized iron (G.I.) sheets. Quiñones expressed
concerns about the compatibility of these sheets with the Guilder acrylic paint process
used in his bus manufacturing.

b. PhilSteel's sales manager, Ferdinand Angbengco, assured Quiñones that the product was
superior and compatible with the existing paint process, citing laboratory tests. Relying
on these assurances, Quiñones purchased the primer-coated sheets.

c. By 1995, Quiñones received customer complaints about paint peeling off the buses. He
attributed the issue to the incompatibility of the primer-coated sheets with the paint
 process and incurred expenses to repair the damaged buses. PhilSteel contended that the
damage resulted from errors in the painting application by Quiñones.

d. Quiñones filed a complaint for damages against PhilSteel, alleging breach of warranty.
The Regional Trial Court (RTC) ruled in favor of Quiñones, finding that PhilSteel's
assurances constituted an express warranty under Article 1546 of the Civil Code.

e. The RTC concluded that the paint damage was due to the incompatibility of the products
and awarded damages to Quiñones. The Court of Appeals affirmed the RTC's decision.

Issue:

Whether PhilSteel's oral statements constituted an express warranty under Article 1546 of
the Civil Code, justifying Quiñones' claim for damages.

Ruling:

The Supreme Court affirmed the decisions of the lower courts, holding that PhilSteel's
oral statements constituted an express warranty under Article 1546 of the Civil Code. The
Court emphasized that an express warranty can be made through any affirmation of fact
or promise by the seller relating to the goods, which induces the buyer to purchase the
goods. In this case, Angbengco's assurances about the product's compatibility and quality
were positive affirmations of fact that induced Quiñones to purchase the primer-coated
sheets. The Court also noted that Quiñones was justified in refusing to pay the balance of
the purchase price due to PhilSteel's breach of warranty. The award of attorney's fees was
deleted because there was no specific factual basis to justify it.

Conclusion:

The Supreme Court's decision underscores the importance of sellers' express warranties
and their binding effect on the parties. PhilSteel's assurances about the compatibility and
quality of the primer-coated sheets constituted an express warranty, and its failure to
fulfill this warranty entitled Quiñones to damages. The application of Articles 1163-1178
of the Civil Code highlights the legal framework governing obligations and warranties in
contracts of sale.

No. 27

G.R. No. 162467, May 8, 2009

Mindanao Terminal and Brokerage Service, Inc. v. Phoenix Assurance Company of New
York/McGee & Co., Inc.

Facts:

a. Del Monte Philippines, Inc. contracted Mindanao Terminal and Brokerage Service, Inc.
(Mindanao Terminal) to load and stow a shipment of fresh bananas and pineapples onto
the vessel M/V Mistrau for transport to Inchon, Korea.

b. The cargo was insured under an "open cargo policy" with Phoenix Assurance Company
of New York and McGee & Co., Inc. Upon arrival in Korea, it was discovered that a
significant portion of the cargo was damaged. Phoenix and McGee compensated Del
Monte Produce under the insurance policy and subsequently filed a subrogation claim
against Mindanao Terminal for the damages.

Issue:

Whether Mindanao Terminal was liable for the damage to the cargo due to alleged
negligence in loading and stowing, and whether the degree of diligence required was
ordinary or extraordinary.

Ruling:
 The Supreme Court ruled in favor of Mindanao Terminal, reinstating the decision of the
Regional Trial Court (RTC) that dismissed the complaint. The Court held that Mindanao
Terminal was only required to exercise ordinary diligence, not the extraordinary diligence
required of common carriers and warehousemen. The Court found that Phoenix and
McGee failed to prove by a preponderance of evidence that Mindanao Terminal acted
negligently. The damage to the cargo was attributed to a typhoon encountered during the
voyage, and Mindanao Terminal had no contractual relationship with Del Monte
Produce. Therefore, the Court concluded that Mindanao Terminal was not liable for the
damages.

Conclusion:

The Supreme Court's decision underscores the importance of the degree of diligence
required in the performance of contractual obligations. Mindanao Terminal was required
to exercise ordinary diligence in loading and stowing the cargo. The Court found no
evidence of negligence and attributed the damage to a fortuitous event, thereby absolving
Mindanao Terminal of liability. This case highlights the application of Articles 1163-
1178 of the Civil Code concerning the performance of obligations and the standard of
care required.

NO. 28

G.R. No. 147324, May 25, 2004

Philippine Communications Satellite Corporation v. Globe Telecom, Inc.

Facts:

a. Philippine Communications Satellite Corporation (Philcomsat) and Globe Telecom, Inc.

(formerly Globe McKay Cable and Radio Corporation) entered into a contract where
Philcomsat provided telecommunications services to Globe.
b. The agreement included the provision of communication services, which were subject to
payment under agreed terms.
c. Disputes arose regarding the payment for services rendered, and Philcomsat sued Globe
for the outstanding payments.
d. Globe argued that it had already paid the amounts due, and the case reached the courts for
resolution.
Issue:

Whether Globe Telecom is liable for the payment of the outstanding amounts for services
rendered by Philcomsat based on the contract, and whether the obligations under the
contract were properly fulfilled by both parties.
Ruling:

a. The Supreme Court ruled that the parties were bound by their contractual obligations, and
the failure of Globe to pay the agreed amount resulted in the breach of contract.
b. The Court emphasized that the payment terms, as established in the contract, must be
honored in good faith.
c. The Court held Globe liable for the payment of the outstanding amounts.
Conclusion:
 The Supreme Court upheld that Globe Telecom was bound by its contractual obligation
to pay Philcomsat for the services rendered. The case highlighted the application of
Articles 1163-1178 of the Civil Code, emphasizing that contracts must be honored in
good faith and failure to perform obligations, such as payment, leads to liability for
damages.

NO. 29

G.R. No. 185110, August 19, 2024

Premiere Development Bank v. Spouses Engracio T. Castañeda and Lourdes E. Castañeda

Facts:

a. Spouses Engracio T. Castañeda and Lourdes E. Castañeda obtained a personal loan of

₱2.6 million from Premiere Development Bank (PDB).

b. On September 20, 2000, they tendered two checks: one for ₱2.6 million to fully settle
their personal loan and another for ₱6 million intended for the corporate loans of Casent
Realty and Development Corp. and Central Surety and Insurance Company Inc., where
Engracio held key positions.

c. PDB applied the total payment of ₱8.6 million across four loans, including the personal
loan, without honoring the spouses' explicit instruction to allocate the ₱2.6 million solely
to their personal loan.

d. This misapplication led to the accrual of additional interest and penalties on the personal
loan.

Issue:

Whether PDB's refusal to apply the ₱2.6 million payment exclusively to the spouses'
personal loan, as directed, constitutes a breach of contract and bad faith.

Ruling:

The Supreme Court ruled in favor of the spouses, directing PDB to accept the ₱2.6
million check as full payment for their personal loan.

The Court emphasized that borrowers have the right to specify how their payments
should be applied, as per Article 1252 of the Civil Code. By disregarding the spouses'
instructions, PDB acted in bad faith, causing undue interest accrual and penalties.

The Court awarded moral and exemplary damages amounting to ₱4 million, plus ₱50,000
in attorney’s fees.

Conclusion:

The Supreme Court's decision underscores the importance of honoring payment

instructions in financial transactions. By disregarding the spouses' explicit directive, PDB
breached its contractual obligation, leading to the accrual of additional charges and
justifying the award of damages. This case highlights the application of Articles 1163-
1178 of the Civil Code concerning the performance of obligations and the standard of
care required.

NO. 30

G.R. No. 194642, April 6, 2015

Nunelon R. Marquez v. Elisan Credit Corporation

Facts:

a. On December 16, 1991, Nunelon R. Marquez secured a loan of ₱53,000 from Elisan
Credit Corporation, payable over 180 days with a 26% annual interest rate. The loan was
secured by a chattel mortgage on a motor vehicle. Subsequently, Marquez obtained a
second loan of ₱55,000 from the same lender, also secured by the same vehicle. Both
loans stipulated a 10% monthly penalty for unpaid amounts and a 25% attorney's fee on
the unpaid balance. Marquez made payments exceeding the required amounts, but Elisan
applied these payments primarily to interest and penalties, rather than reducing the
principal balances. This led to the accrual of substantial interest and penalties, resulting in
the repossession of the vehicle.

Issue:

Whether Elisan Credit Corporation's application of Marquez's payments primarily to

interest and penalties, rather than to the principal balances of the loans, was proper under
the terms of the loan agreements.

Ruling:

The Supreme Court ruled in favor of Marquez, ordering Elisan to accept the payments as
full settlement of the loans. The Court found that Elisan's application of payments to
interest and penalties, rather than to the principal, was improper and resulted in the unjust
accrual of excessive charges.

The Court also declared the chattel mortgage invalid for the second loan, as it was
executed after the first loan and did not cover the second loan. The Court reduced the
excessive interest rates, penalties, and fees, and ordered the return of the repossessed
vehicle.

Conclusion:

The Supreme Court's decision underscores the importance of adhering to the terms of
loan agreements, particularly regarding the application of payments. Elisan Credit
Corporation's failure to apply Marquez's payments appropriately led to the accrual of
excessive charges and the repossession of the vehicle. The Court's application of Articles
1163-1178 of the Civil Code highlights the necessity for good faith in the performance of
contractual obligations and the consequences of non-compliance.

NO. 31

G.R. No. 176479, October 6, 2010

Rizal Commercial Banking Corporation v. Pedro P. Buenaventura

Facts:

a. Pedro P. Buenaventura, a businessman, obtained a loan from Rizal Commercial Banking

Corporation (RCBC) amounting to ₱9,000,000 for his business operations.
b. The loan was secured by a real estate mortgage on his property.
c. Buenaventura defaulted on the loan and failed to settle the outstanding balance, despite
the maturity of the loan agreement.
d. RCBC filed a petition for the foreclosure of the real estate mortgage to recover the unpaid
loan.
e. Buenaventura contested the foreclosure on the grounds that he was misled by the bank
into believing that the loan would be restructured or renewed.
Issue:
 Whether RCBC’s actions regarding the loan agreement and the subsequent foreclosure
were proper, and if Buenaventura’s claims regarding misrepresentation or
misunderstanding are valid under the law.
Ruling:

a. The Supreme Court ruled in favor of RCBC, affirming that the bank's actions were proper
and legal. The Court found that the loan agreement was clear in its terms, and the bank
had fulfilled its obligations under the contract.
b. The Court emphasized that Buenaventura's failure to pay the loan on time was due to his
own fault and not because of any misrepresentation by the bank.
c. It was also highlighted that under the Civil Code, the terms of a contract must be
followed unless there is a valid reason for non-performance, such as duress, fraud, or
mistake, none of which were proven in this case.
d. Consequently, the Court allowed the foreclosure of the real estate mortgage to satisfy the
debt.
Conclusion:

The Court upheld the enforceability of the contract between RCBC and Buenaventura.
RCBC’s right to foreclose on the mortgage was affirmed as the loan terms were not
fulfilled by Buenaventura.
The application of Articles 1163-1178 of the Civil Code underlined the importance of
adhering to the obligations stated in a contract, emphasizing the necessity for good faith
and the consequences of failing to meet contractual duties.

NO. 32

G.R. No. 191178, March 13, 2013

Anchor Savings Bank (formerly Anchor Finance and Investment Corporation) v. Henry H.
Furigay, Gelinda C. Furigay, Herriette C. Furigay, and Hegem C. Furigay

Facts:

a. Henry H. Furigay and his family members (respondents) obtained a loan from Anchor
Savings Bank (formerly Anchor Finance and Investment Corporation) secured by a real
estate mortgage.
b. The respondents failed to pay the loan, leading the bank to file for the foreclosure of the
mortgaged property.
c. The respondents contested the foreclosure, claiming that the bank had agreed to a
restructuring of the loan, which would have allowed them to settle their debt under
different terms.
d. They argued that the bank’s refusal to honor the restructuring agreement was a violation
of their rights and led to the wrongful foreclosure.
Issue:

Whether the bank was justified in refusing to honor the loan restructuring agreement, and
whether the foreclosure was valid in light of the respondents’ claims.
Ruling:

a. The Supreme Court ruled in favor of the bank, upholding the validity of the foreclosure.
 b. The Court found that the respondents had failed to provide evidence that the loan
restructuring agreement was finalized and agreed upon by both parties.
c. The Court emphasized that under the Civil Code, a contract is not enforceable unless
there is mutual agreement between the parties on all essential terms, and the respondents
failed to prove that such an agreement was reached.
d. The foreclosure was thus justified as the respondents were in default under the original
loan agreement and had not presented any legally binding restructuring agreement to
avoid the foreclosure.
Conclusion:

The Court ruled that the foreclosure was valid and justified. The respondents' claim of a
restructuring agreement was unsupported by evidence, and they had not complied with
the terms of the original loan. The application of Articles 1163-1178 emphasized the
importance of honoring contractual obligations and the legal effects of non-performance,
which justified the bank’s actions in pursuing the foreclosure.