San Sebastian College Recoletos

Manila

2015 Case Digest

for
Civil Law Review 2

Submitted to:
Atty. Crisostomo Uribe

Submitted by:
Earl Justin B. Concepcion
Class number: 8

Table of Contents
NORLINDA S. MARILAG v. MARCELINO B. MARTINEZ
3
RUKS KONSULT AND CONSTRUCTION vs.
ADWORLD SIGN AND ADVERTISING CORPORATION and TRANSWORLD MEDIA
ADS, INC., 4
GEORGE C. FONG vs. JOSE V. DUEAS
5
MARITO T. BERNALES, VS. NORTHWEST AIRLINES
6
PHILIPPINE TRUST COMPANY VS. FLORO ROXAS AND EUFEMIA ROXAS
7
BANK OF THE PHILIPPINE ISLANDS VS. AMADOR DOMINGO
8
MILAGROS C. REYES VS. FELIX P. ASUNCION
9
YULIM INTERNATIONAL COMPANY LTD., JAMES YU, JONATHAN YU, AND
ALMERICK TIENG LIM, VS. INTERNATIONAL EXCHANGE BANK (NOW UNION
BANK OF THE PHILIPPINES), 10
FIRST OPTIMA REALTY CORPORATION, Petitioner, vs. SECURITRON SECURITY
SERVICES, INC.,11
CEBU STATE COLLEGE OF SCIENCE AND TECHNOLOGY (CSCST),
REPRESENTED BY ITS INCUMBENT PRESIDENT VS. LUIS S. MISTERIO, GABRIEL
S. MISTERIO, FRANCIS S. MISTERIO, THELMA S. MISTERIO, AND ESTELA S.
MISTERIO-TAGIMACRUZ 12
MANUEL JUSAYAN,ALFREDO JUSAYAN, AND MICHAEL JUSAYAN, VS. JORGE
SOMBILLA, 13
SPOUSES SALVADOR ABELLA AND ALMA ABELLA,VS. SPOUSES ROMEO
ABELLA AND ANNIE ABELLA
14
BANGKO SENTRAL NG PILIPINAS, PETITIONER, VS. AGUSTIN LIBO-ON,
RESPONDENT. 15
MAYBANK PHILIPPINES, INC. (FORMERLY PNB-REPUBLIC BANK VS. SPOUSES
OSCAR AND NENITA TARROSA,
16
NEW WORLD DEVELOPERS AND MANAGEMENT, INC., VS. AMA COMPUTER
LEARNING CENTER, INC.,
AMA COMPUTER LEARNING CENTER, INC., VS. NEW WORLD DEVELOPERS
AND MANAGEMENT, INC.,
17
DR. JAIME T. CRUZ, v. FELICISIMO V. AGAS, JR.,
18

2
NORLINDA S. MARILAG, Petitioner, v. MARCELINO B. MARTINEZ, Respondent.
G.R. No. 201892, July 22, 2015
PERLAS-BERNABE, J.
FIRST DIVISION
Solutio Indebiti
Facts:
On July 30, 1992, Rafael Martinez (Rafael), respondent's father, obtained
from petitioner a loan in the amount of P160,000.00, with a stipulated
monthly interest of five percent (5%), payable within a period of six (6)
months. The loan was secured by a real estate mortgage over a parcel of
land covered by Transfer Certificate of Title (TCT) No. T-208400. Rafael failed
to settle his obligation upon maturity and despite repeated demands,
prompting petitioner to file a Complaint for Judicial Foreclosure of Real Estate
Mortgage before the RTC of Imus, Cavite, Branch 907 (RTC-Imus) on
November 10, 1995,8 docketed as Civil Case No. 1208-95 Gudicial
foreclosure case) Meanwhile, prior to Rafael's notice of the above decision,
respondent agreed to pay Rafael's obligation to petitioner which was pegged
at P689,000.00. After making a total payment of P400,000.00, he executed a
promissory note dated February 20, 1998 (subject PN), binding himself to
pay on or before March 31, 1998 the amount of P289,000.00, "representing
the balance of the agreed financial obligation of [his] father to
[petitioner]." After learning of the January 30, 1998 Decision, respondent
refused to pay the amount covered by the subject PN despite demands,
prompting petitioner to file a complaint for sum of money and damages
before the court a quo on July 2, 1998, docketed as Civil Case No. 98-0156
(collection case).

Issue: Whether the payment of Rafael constitutes solutio indebiti

Held:
Yes. Thus, as of January 30, 1998, only the amount of P265,600.00 was due
under the loan contract, and the receipt of an amount more than that
renders petitioner liable for the return of the excess. Respondent, however,
made further payment in the amount of P100,000.00 on the belief that the
subject loan obligation had not yet been satisfied. Such payments were,
therefore, clearly made by mistake, giving rise to the quasi-contractual
obligation of solutio indebiti under Article 2154 in relation to Article 2163 of

3
the Civil Code. Not being a loan or forbearance of money, an interest of 6%
p.a. should be imposed on the amount to be refunded and on the damages
and attorney's fees awarded, if any, computed from the time of demand until
its satisfaction. Consequently, petitioner must return to respondent the
excess payments in the total amount of P134,400.00, with legal interest at
the rate of 6% p.a. from the filing of the Answer on August 6,
1998 interposing a counterclaim for such overpayment, until fully settled.

RUKS KONSULT AND CONSTRUCTION, Petitioner,

vs.
ADWORLD SIGN AND ADVERTISING CORPORATION* and TRANSWORLD MEDIA
ADS, INC., Respondents.
G.R. No. 204866 January 21, 2015
FIRST DIVISION
PERLAS-BERNABE, J.:
Joint and Solidary Obligation
Facts:
Adworld alleged that it is the owner of a 75 ft. x 60 ft. billboard structure
located at EDSA Tulay, Guadalupe, Barangka Mandaluyong, which was
misaligned and its foundation impaired when, on August 11, 2003, the
adjacent billboard structure owned by Transworld and used by Comark
collapsed and crashed against it. Resultantly, on August 19, 2003, Adworld
sent Transworld and Comark a letter demanding payment for the repairs of
its billboard as well asloss of rental income. On August 29, 2003, Transworld
sent its reply, admitting the damage caused by its billboard structure on
Adworlds billboard, but nevertheless, refused and failed to pay the amounts
demanded by Adworld. Transworld averred that the collapse of its billboard
structure was due to extraordinarily strong winds that occurred instantly and
unexpectedly, and maintained that the damage caused to Adworlds
billboard structure was hardly noticeable. Transworld likewise filed a Third-
Party Complaint against Ruks, the company which built the collapsed
billboard structure in the formers favor.1Ruks admitted that it entered into a
contract with Transworld for the construction of the latters billboard
structure but It contended that when Transworld hired its services, there was
already an existing foundation for the billboard and that it merely finished
the structure according to the terms and conditions of its contract with the
latter
Issue: Whether Rusks should be jointly and severally liable with Transworld
Held: Yes.

4
In this case, the CA correctly affirmed the RTCs finding that Transworlds
initial construction of its billboards lower structure without the proper
foundation, and that of Rukss finishing its upper structure and just merely
assuming that Transworld would reinforce the weak foundation are the two
(2) successive acts which were the direct and proximate cause of the
damages sustained by Adworld. Worse, both Transworld and Ruks were fully
aware that the foundation for the formers billboard was weak; yet, neither of
them took any positive step to reinforce the same. They merely relied on
each others word that repairs would be done to such foundation, but none
was done at all. Clearly, the foregoing circumstances show that both
Transworld and Ruks are guilty of negligence in the construction of the
formers billboard, and perforce, should be held liable for its collapse and the
resulting damage to Adworlds billboard structure. As joint tortfeasors,
therefore, they are solidarily liable to Adworld. Verily, "[j]oint tortfeasors are
those who command, instigate, promote, encourage, advise, countenance,
cooperate in, aid or abet the commission of a tort, or approve of it after it is
done, if done for their benefit. They are also referred to as those who act
together in committing wrong or whose acts, if independent of each other,
unite in causing a single injury. Under Article 219429 of the Civil Code, joint
tortfeasors are solidarily liable for the resulting damage. In other words, joint
tortfeasors are each liable as principals, to the same extent and in the same
manner as if they had performed the wrongful act themselves
GEORGE C. FONG, Petitioner,
vs.
JOSE V. DUEAS, Respondent.
G.R. No. 185592 June 15, 2015
SECOND DIVISION
BRION, J.:
Resolution
Facts:
Dueas and Fong entered into a verbal joint venture contract where they
agreed to engage in the food business and to incorporate a holding company
under the name Alliance Holdings, Inc. (Alliance or the proposed
corporation). Its capitalization would be Sixty Five Million Pesos (P65 Million),
to which they would contribute in equal parts. Fong wrote Dueas informing
him of his decision to cancel the joint venture agreement. He also asked for
the refund of the P5 Million that he advanced.14 In response, Dueas
admitted that he could not immediately return the money since he used it to
defray the business expenses of Danton and Bakcom. To meet Fongs
demand, Dueas proposed several schemes for payment of the P5 Million
IIssue: Whether the parties failed to comply with their respective obligation
Held: Yes
The Court holds that the joint venture agreement between Fong and Dueas
is deemed extinguished through rescission under Article 1192 in relation with
Article 1191 of the Civil Code. Dueas must therefore return the P5 Million
that Fong initially contributed since rescission requires mutual restitution.
After rescission, the parties must go back to their original status before they

5
entered into the agreement. Dueas cannot keep Fong's contribution as this
would constitute unjust enrichment.
No damages shall be awarded to any party in accordance with the rule under
Article 1192 of the Civil Code that in case of mutual breach and the first
infractor of the contract cannot exactly be determined, each party shall bear
his own damages.

MARITO T. BERNALES, PETITIONER, VS. NORTHWEST AIRLINES, RESPONDENT.

G.R. No. 182395 | 2015-10-05
BRION, J.:
Second division
Fortuitous Event
Facts:
The petitioner Marito T. Bernales is a lawyer, a university dean, and a board
member of theSangguniang Panlalawigan of Camarines Sur. On 1 October
2002, he and several other prominent personalities from Bicol were on their
way to Honolulu, Hawaii, as the delegates of a trade and tourism mission for
the province. They were economy class passengers of Northwest Airlines
Flight No. 10 from Manila to Honolulu via Narita, Japan At around 6:00 p.m., a
typhoon hit Japan, leading to the cancellation of most flights, including NWA
Flight No. 10. However, NWA did not cancel Flight No. 22, also bound for
Honolulu later that night, to minimize delays and to accommodate stranded
passengers in case the typhoon would subside.
The passengers of Flight 22 were called for boarding at around 11:00 p.m.
and the delegates boarded the shuttle taking them to the airplane. But
before the shuttle bus could leave, NWA Customer Service Agent Tsuruki
Ohashi entered the shuttle and informed the petitioner that he could not take
Flight 22 as no available seat was left for him. the petitioner filed a complaint
for moral and exemplary damages against the respondent NWA for breach of
their contract of carriage. The petitioner alleged that Ohashi's rude

6
treatment, his ejection from the shuttle bus, the resulting missed obligations
due to the flight's delay, and the humiliation from the ordeal caused him
immense mental anguish and moral shock.

Issue: Whether the storm is an event in which NWA can be exempt from
liabilities.
Held:
Yes.
The petitioner paints the dismal picture that he was forced to use the public
comfort rooms and sleep on the floor like "the beggars of Quiapo and
Baclaran." He fails to mention though that the 1,500 other stranded
passengers had to endure the same discomforts that he experienced; NWA
did not maliciously single him out. All the stranded passengers suffered the
same experience because of Typhoon Higos. NWA did the next best thing it
could and provided the passengers with blankets, snacks, and other comforts
available under the circumstances.

The arrival of Typhoon Higos was an extraordinary and unavoidable event. Its
occurrence made it impossible for NWA to bring the petitioner to Honolulu in
time for his commitments. We cannot hold the respondent liable for a breach
of contract resulting from a fortuitous event. Moreover, we find that NWA did
not act in bad faith or in a wanton, fraudulent, reckless, or oppressive
manner. On the contrary, it exerted its best efforts to accommodate the
petitioner on Flight No. 22 and to lessen the petitioner's discomfort when he
and the other passengers were left to pass the night at the terminal. Thus,
the CA did not err in dismissing the complaint.

7
PHILIPPINE TRUST COMPANY, PETITIONER, VS. FLORO ROXAS AND EUFEMIA
ROXAS, RESPONDENTS.
G.R. No. 171897 | 2015-10-14
JARDELEZA, J.:
Third division
Legal compensation
Facts:
On April 10, 1979, the Spouses Roxas, PTC, and Roben Construction and
Furnishing Group, Inc. entered into "a contract of building construction,"
under which PTC granted an additional loan of Php 900,000 to the Spouses
Roxas to enable them to finish their ongoing housing projects. This was
superseded by a new "contract of building construction" where Rosendo P.
Dominguez, Jr. ("Dominguez") substituted Roben Construction as the
contractor under the same terms and conditions. The new contract stipulated
that PTC may only release the proceeds of the loan for the purchase of
materials and supplies when requested by Dominguez and with the
conformity of the Spouses Roxas. Invoices covering materials previously
purchased with the funds should also be submitted to PTC before any
subsequent release of funds is made
PTC, however, released to Dominguez the sum of Php 870,000 out of the Php
900,000 although the Spouses Roxas had agreed only to the release of not
more than Php 450,000, as evidenced by a promissory note dated April 11,
1979.

The Spouses Roxas did not finish the housing project, which led to missed
amortization payments in their loans from PTC.
Issue: Whether there is legal compensation between PTCs loan credit and
the judgment credit.
Held: No.
Although legal compensation takes place by operation of law, it must be
alleged and proved as a defense by the debtor who claims its benefits. Only
after it is proved will its effects retroact to the moment when all the
requisites under Article 1279 of the Civil Code have concurred.
Nonetheless, not all requisites of legal compensation are present in this case.
Under Article 1279, in order for legal compensation to take place, the
following requisites must concur:
(a) that each one of the obligors be bound principally, and that he be at the
same time a principal creditor of the other;
(b) that both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the
latter has been stated;
(c) that the two debts be due;
(d) that they be liquidated and demandable; and
(e) that over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor.

8
 Here, the fourth requisite is absent. A debt is liquidated when its existence
and amount are determined. Compensation can only take place between
certain and liquidated debts; it cannot extend to unliquidated, disputed
claims. Since the loan obligation, including its amount and demandability, is
still being disputed in CA-G.R. CVNo. 30340, PTC's credit cannot be
considered liquidated as of yet. Consequently, no legal compensation could
have taken place between PTC's loan credit and the Spouses Roxas'
judgment credit.

9
BANK OF THE PHILIPPINE ISLANDS, PETITIONER, VS. AMADOR DOMINGO,
RESPONDENT.
G.R. No. 169407 | 2015-03-25
FIRST DIVISION
Leonardo De Castro , J.:
Noavation
Facts:
Amador admitted that his wife bought a car and was mortgaged to Far East
Bank and Trust Company While they were still paying for the car, Carmelita
Gonzales got interested to buy the car and is willing to assume the
mortgage. After furnishing the bank [with] the Deed of Sale duly notarized,
Carmelita Gonzales subsequently issued a check payable to Far East Bank
and Trust Company and the remaining postdated checks were returned to
them. Based on the application of payment prepared by [BPI's] witness,
Carmelita Gonzales made payments from November 14, 1995 to December
1995. Aside from these payments on May 19, 1997, Carmelita Gonzales
issued a check to Far East Bank in the amount of P385,431.60. In 1996, he
received a phone call from a certain Marvin Orence asking for their
assistance to locate the car which Carmelita Gonzales bought from them. His
lawyer went to Land Transportation Office for assistance. From the time Ms.
Gonzales started to pay, they never received any demand letter from Far
East Bank. Thereafter, on February 29, 1997, they received a demand letter
from Espino Law Office [on] behalf of [FEBTC]. His lawyer made a reply on
March 31, 1997 stating therein that the motor vehicle for which the loan was
obtained had been sold to Carmelita Gonzales as of July 5, 1994 with the
knowledge and approval of their client.
Issue: Whether or not there had been a novation of the loan obligation with
chattel mortgage of the spouses Domingo to BPI so that the spouses
Domingo were released from said obligation and Carmelita was substituted
as debtor.
Held: No
The burden of establishing a novation is on the party who asserts its
existence. Contrary to the findings of the Court of Appeals and the RTC,
Amador failed to discharge such burden as he was unable to present proof of
the clear and unmistakable consent of BPI to the substitution of debtors.
First, that BPI (or FEBTC) had a copy of the Deed of Sale and Assumption of
Mortgage executed between Mercy and Carmelita in its file does not mean
that it had consented to the same. The very Deed itself states:
That the VENDEE [Carmelita] assumes as he/she had assumed to pay the
aforecited mortgage in accordance with the original terms and conditions of
said mortgage, and the parties hereto [Mercy and Carmelita] have agreed to
seek the conformity of the MORTGAGEE [FEBTC].[30]
This brings the Court back to the original question of whether there is proof
of the conformity of BPI.
The Court notes that the documents of BPI concerning the car loan and
chattel mortgage are still in the name of the spouses Domingo. No new
promissory note or chattel mortgage had been executed between BPI (or

10
FEBTC) and Carmelita. Even the account itself is still in the names of the
spouses Domingo.
The absence of objection on the part of BPI (or FEBTC) cannot be presumed
as consent. Jurisprudence requires presentation of proof of consent, not mere
absence of objection. Amador cannot rely on Babst which involved a different
factual milieu.

MILAGROS C. REYES, PETITIONER, VS. FELIX P. ASUNCION, RESPONDENT.

G.R. No. 196083 | 2015-11-11
Third division
PERALTA, J.:
Simulated Contracts
Facts:
Petitioner claimed that since the early 80s, she and her late husband were
the owners, with the right to occupy and possess a parcel of land (subject
land), which is also a sugarcane plantation, with an area of more or less 3.5
hectares located at Patling, Capas, Tarlac and forms part of a U.S. Military
Reservation. Sometime in 1986, petitioner hired respondent as a caretaker of
the subject land. In 1997, the Bases Conversion and Development Authority
(BCDA) launched a resettlement program for the victims of the Mt. Pinatubo
eruption and began to look for possible resettlement sites in Tarlac and the
subject lot was among those considered.

Thereafter, according to petitioner, in order to prevent the BCDA from

converting her property into a resettlement site, she and respondent
executed a contract, antedated on June 15, 1993, transferring her rights over
the subject land to the respondent.
Issue: whether the transfer of the land to respondent is a simulated contract
that will void the transfer

Held: No.
So far, appellant's averments evince an obvious knowledge and
voluntariness on her part to enter into the alleged simulated contract.
Without the slightest doubt, appellant, as plaintiff in the court below, utterly
foiled to adduce any evidence of appellee's bad faith or fraud in procuring
her signature to the contract or that he violated their real intention, if any, in
executing it. It must be stressed that the determination of whether one acted
in bad faith is evidentiary in nature. Indeed, the unbroken jurisprudence is
that "[b]ad faith [or fraud] under the law cannot be presumed; it must be
established by clear and convincing evidence. The allegation of simulation of
contract as well as lack of consent and/or vitiated consent remains to be
proven. As it stands, We perceive that the contract by its very terms and
conditions, on June 15, 1993, appellant simply intended to transfer the
subject land to appellee. It is a cardinal rule that if the terms of a contract
are clear and leave no doubt as to the intention of the contracting parties,
the literal meaning of its stipulation shall control

11
12
YULIM INTERNATIONAL COMPANY LTD., JAMES YU, JONATHAN YU, AND
ALMERICK TIENG LIM, PETITIONERS, VS. INTERNATIONAL EXCHANGE BANK
(NOW UNION BANK OF THE PHILIPPINES), RESPONDENT.
G.R. No. 203133 | 2015-02-18
THIRD DIVISION
Dacion en Pago
REYES, J.:
Facts:
On June 2, 2000, iBank, a commercial bank, granted Yulim, a domestic
partnership, a credit facility in the form of an Omnibus Loan Line for
P5,000,000.00, as evidenced by a Credit Agreement which was secured by a
Chattel Mortgage over Yulims inventories in its merchandise warehouse at
106 4th Street, 9th Avenue, Caloocan City. As further guarantee, the
partners, namely, James, Jonathan and Almerick, executed a Continuing
Surety Agreement in favor of iBank. Yulim defaulted on the said note. On
April 5, 2002, iBank sent demand letters to Yulim, through its President,
James, and through Almerick, but without success. iBank then filed a
Complaint for Sum of Money with Replevin against Yulim and its sureties. On
October 2, 2002, the petitioners moved to dismiss the complaint insisting
that their loan had been fully paid after they assigned to iBank their
Condominium Unit No. 141, with parking space, at 20 Landsbergh Place in
Tomas Morato Avenue, Quezon City.

Issue: Whether there is Dacion en pago in the assignment of the

condominium unit

Held:
No. Nowhere can it be remotely construed that the letter even intimates an
understanding by iBank that the Deed of Assignment would serve to
extinguish the petitioners loan. Otherwise, there would have been no need
for iBank to mention therein the three collaterals or supports provided by
the petitioners, namely, the Deed of Assignment, the Chattel Mortgage and
the Continuing Surety Agreement executed by the individual petitioners. In
fact, Section 2.01 of the Deed of Assignment expressly acknowledges that it
is a mere interim security for the repayment of any loan granted and those
that may be granted in the future by the BANK to the ASSIGNOR and/or the
BORROWER, for compliance with the terms and conditions of the relevant
credit and/or loan documents thereof.The condominium unit, then, is a mere
temporary security, not a payment to settle their promissory notes.

13
FIRST OPTIMA REALTY CORPORATION, Petitioner, vs. SECURITRON SECURITY
SERVICES, INC., Respondent. G.R. No. 199648 January 28, 2015
SECOND DIVISION
DEL CASTILLO, J.:
Earnest money
Facts:
The petitioner looking to expand business and add to its existing offices,
respondent through its General Manager, Antonio Eleazar (Eleazar) sent a
letter to the petitoner offering to purchase the subject property at P6,000.00
per square meter. A series of telephone calls ensued, but only between
Eleazar and Youngs secretary; Eleazar likewise personally negotiated with a
certain Maria Remoso (Remoso), who was an employee of petitioner. At this
point, Eleazar was unable to personally negotiate with Young or the
petitioners board of directors.
Sometime thereafter, Eleazar personally went to petitioners office offering to
pay for the subject property in cash, which he already brought with him.
However, Young declined to accept payment, saying that she still needed to
secure her sisters advice on the matter. 10She likewise informed Eleazar
that prior approval of petitioners Board of Directors was required for the
transaction, to which remark Eleazar replied that respondent shall instead
await such approval.11
On February 4, 2005, respondent sent a Letter of even date to petitioner. It
was accompanied by Philippine National Bank Check No. 24677, issued
for P100,000.00 and made payable to petitioner. The check was eventually
deposited with and credited to petitioners bank account Thereafter,
respondent through counsel demanded in writing that petitioner proceed
with the sale of the property
Issue: Whether there is a contract of sale when the respondent accepted the
supposed earnest money.
Held No.
In the present case, the parties never got past the negotiation stage. Nothing
shows that the parties had agreed on any final arrangement containing the
essential elements of a contract of sale, namely, (1) consent or the meeting
of the minds of the parties; (2) object or subject matter of the contract; and
(3) price or consideration of the sale.34
Respondents subsequent sending of the February 4, 2005 letter and check
to petitioner without awaiting the approval of petitioners board of directors
and Youngs decision, or without making a new offer constitutes a mere
reiteration of its original offer which was already rejected previously; thus,
petitioner was under no obligation to reply to the February 4, 2005 letter. It
would be absurd to require a party to reject the very same offer each and
every time it is made; otherwise, a perfected contract of sale could simply
arise from the failure to reject the same offer made for the hundredth
time.1wphi1 Thus, said letter cannot be considered as evidence of a
perfected sale, which does not exist in the first place; no binding obligation

14
on the part of the petitioner to sell its property arose as a consequence. The
letter made no new offer replacing the first which was rejected.

CEBU STATE COLLEGE OF SCIENCE AND TECHNOLOGY (CSCST),

REPRESENTED BY ITS INCUMBENT PRESIDENT, PETITIONER, VS. LUIS S.
MISTERIO, GABRIEL S. MISTERIO, FRANCIS S. MISTERIO, THELMA S. MISTERIO,
AND ESTELA S. MISTERIO-TAGIMACRUZ, RESPONDENTS.
G.R. No. 179025 | 2015-06-17
THIRD DIVISION
PERALTA, J.:
Right of Redemtion
Facts:
On March 18, 1960, the Provincial Board of Cebu donated 41 parcels of land,
covering 104.5441 hectares of the Banilad Friar Lands Estate to the SAHS
subject to two (2) conditions: (1) that if the SAHS ceases to operate, the
ownership of the lots would automatically revert to the province, and (2) that
the SAHS could not alienate, lease or encumber the properties. In the
meantime, the Province of Cebu sought to recover the 41 parcels of land it
previously donated to SALIS on the basis of an initial report of its provincial
attorney that SAHS had no personality to accept the donation, and thus, the
deed it executed was void. On August 19, 1988, respondents Luis, Gabriel,
Francis, Thelma,-all surnamed Misterio, and Estella S. Misterio-Tagimacruz, as
heirs of the late Asuncion Sadaya, informed the then Governor of the
Province of Cebu, Emilio Osmena, through a letter, of their intention to
repurchase the subject property as stipulated in the Deed of Sale Thereafter,
on March 13, 1990, respondents,informed petitioner of their 'intention to
exercise their right to repurchase under the Deed of Sale on the ground that
the SAHS had ceased to exist. However, petitioner's Vocational School
Superintendent II, Jesus T. Bonilla, informed respondents that SAHS still
existed as only the name of the school was changed.
Issue: Whether can the right to redeem the property still exist
Held:No. In the Decision dated June 23, 2005, this Court ruled that since,
petitioner and respondents in this case did not agree on any period for the
exercise of the right to repurchase the property herein, respondents may use
said right within four (4) years from the happening of the allocated
conditions contained in their Deed of Sale: (a) the cessation of the existence
of the SAHS, or (b) the transfer of the school to other site.[28] However, due
to respondents' failure to exercise their right to redeem the property within
the required four (4) years from the time when SAHS had ceased to exist, or
from June 10, 1983, the date of effectivity of BP Blg. 412, this Court held that
respondents are barred by prescription.
Xxx To repeat, Article 1606 expressly provides that in the absence of an
agreement as to the period within which the vendor a retro may exercise his
right to repurchase, the same must be done within four (4) years from the
execution of the contract. In the event the contract specifies a period, the
same cannot exceed ten (10) years. Thus, whether it be for a period of four
(4) or ten (10) years, this Court consistently implements the law and limits

15
the period within which the right to repurchase may be exercised, adamantly
striking down as illicit stipulations providing for an unlimited right to
repurchase. Indubitably, it would be rather absurd to permit respondents to
repurchase the subject property upon the occurrence of the second
suspensive condition, particularly, the relocation of SAHS on October 3,
1997, the time when petitioner ceded the property to the Province of Cebu,
which is nearly forty-one (41) years after the execution of the Deed of Sale
on December 31, 1956. This Court must, therefore, place it upon itself to
suppress these kinds of attempts in keeping with the fundamentally
accepted principles of law
MANUEL JUSAYAN,ALFREDO JUSAYAN, AND MICHAEL JUSAYAN, PETITIONERS,
VS. JORGE SOMBILLA, RESPONDENT.
G.R. No. 163928 | 2015-01-21
FIRST DIVISION
BERSAMIN, J.:
Lease
Facts:
Wilson Jesena (Wilson) owned four parcels of land situated in New Lucena,
Iloilo. On June 20, 1970, Wilson entered into an agreement with respondent
Jorge Sombilla (Jorge), wherein Wilson designated Jorge as his agent to
supervise the tilling and farming of his riceland in crop year 1970-1971. On
August 20, 1971, before the expiration of the agreement, Wilson sold the
four parcels of land to Timoteo Jusayan (Timoteo). Jorge and Timoteo verbally
agreed that Jorge would retain possession of the parcels of land and would
deliver 110 cavans of palay annually to Timoteo without need for accounting
of the cultivation expenses provided that Jorge would pay the irrigation fees.
From 1971 to 1983, Timoteo and Jorge followed the arrangement. In 1975,
the parcels of land were transferred in the names of Timoteos sons, namely;
Manuel, Alfredo and Michael (petitioners). In 1984, Timoteo sent several
letters to Jorge terminating his administration and demanding the return of
the possession of the parcels of land.
Issue: Whether or not the relationship between the petitioners and
respondent is that of agency or agricultural leasehold
Held: Agricultural lease.
The claim of Timoteo that Jorge was his agent contradicted the verbal
agreement he had fashioned with Jorge. By assenting to Jorges possession of
the land sans accounting of the cultivation expenses and actual produce of
the land provided that Jorge annually delivered to him 110 cavans of palay
and paid the irrigation fees belied the very nature of agency, which was
representation. The verbal agreement between Timoteo and Jorge left all
matters of agricultural production to the sole discretion of Jorge and
practically divested Timoteo of the right to exercise his authority over the
acts to be performed by Jorge. While in possession of the land, therefore,
Jorge was acting for himself instead of for Timoteo. Unlike Jorge, Timoteo did
not benefit whenever the production increased, and did not suffer whenever
the production decreased. Timoteos interest was limited to the delivery of

16
the 110 cavans of palay annually without any concern about how the
cultivation could be improved in order to yield more produce.

17
SPOUSES SALVADOR ABELLA AND ALMA ABELLA, PETITIONERS, VS. SPOUSES
ROMEO ABELLA AND ANNIE ABELLA, RESPONDENTS.
G.R. No. 195166 | 2015-07-08
SECOND DIVISION
LEONEN, J.:
Mutuum
Facts:
The petitioners alleged that respondents obtained a loan from them in the
amount of P500,000.00. The loan was evidenced by an acknowledgment
receipt dated March 22, 1999 and was payable within one (1) year.
Petitioners added that respondents were able to pay a total of P200,000.00
P100,000.00 paid on two separate occasionsleaving an unpaid balance of
P300,000.00. The respondents claimed that they were approached by
petitioners, who proposed that if respondents were to "undertake the
management of whatever money [petitioners] would give them, [petitioners]
would get 2.5% a month with a 2.5% service fee to [respondents]." The 2.5%
that each party would be receiving represented their sharing of the 5%
interest that the joint venture was supposedly going to charge against its
debtors. Respondents further alleged that the one year averred by
petitioners was not a deadline for payment but the term within which they
were to return the money placed by petitioners should the joint venture
prove to be not lucrative. Moreover, they claimed that the entire amount of
P500,000.00 was disposed of in accordance with their agreed terms and
conditions and that petitioners terminated the joint venture, prompting them
to collect from the joint venture's borrowers. They were, however, able to
collect only to the extent of P200,000.00; hence, the P300,000.00 balance
remained unpaid.
Issue: Whether what has been contracted by the parties is a mutuum.
Held: Yes.
On March 22, 1999, respondents executed an acknowledgment receipt to
petitioners, which states:
Batan, Aklan
March 22, 1999
This is to acknowledge receipt of the Amount of Five Hundred Thousand
(P500,000.00) Pesos from Mrs. Alma R. Abella, payable within one (1) year
from date hereof with interest.

Annie C. Abella (sgd.) Romeo M. Abella (sgd.)[33]

(Emphasis supplied)

The text of the acknowledgment receipt is uncomplicated and

straightforward. It attests to: first, respondents' receipt of the sum of
P500,000.00 from petitioner Alma Abella; second, respondents' duty to pay
tack this amount within one (1) year from March 22, 1999; and third,
respondents' duty to pay interest. Consistent with what typifies a simple

18
loan, petitioners delivered to respondents with the corresponding condition
lat respondents shall pay the same amount to petitioners within one (1) year.

BANGKO SENTRAL NG PILIPINAS, PETITIONER, VS. AGUSTIN LIBO-ON,

RESPONDENT.
G.R. No. 173864 | 2015-11-23
Third Division
REYES, J.:
Forclosure of Real Estate Mortgage
Facts:
Agustin Libo-on, together with his wife, Mercedes Libo-on (Spouses Libo-on),
secured loans from the Rural Bank of Hinigaran, Inc., in the amounts of
P100,000.00 and P300,000.00, respectively. The Spouses Libo-on executed
promissory notes payable to. the order of the Rural Bank for a period of 360
days or until August 24, 1998 and September 12, 1998, respectively. As
security for the loan, the Spouses Libo-on likewise executed a Deed of Real
Estate Mortgage over a parcel of land with Transfer Certificate of Title No. T-
67129 in favor of the Rural Bank of Hinigaran.

Meanwhile, on September 19, 1997[6] and October 17, 1997, the Rural Bank
of Hinigaran, in turn, secured a loan with now petitioner, Bangko Sentral ng
Pilipinas (BSP) in the amount of P800,000.00 and P640,000.00, respectively.
The Rural Bank of Hinigaran executed a document denominated as
"promissory note with trust receipt agreement."[8] As a security for the loan,
the Rural Bank of Hinigaran pledged and deposited to BSP promissory notes
with supporting TCTs, including the promissory note and TCT of the Spouses
Libo-ons mortgaged with the former.

Issue: Whether the pledge of Rural Bank of Hinigaran gave the Bangko
Sentral ng Pilipinas the right to forclose the mortgage.

Held:
No. The mere pledge and deposit of the mortgage contract, transfer
certificate of title and promissory note executed by the the Rural Bank of
Hinigaran in favor o'f BSP, does not produce the effect of giving BSP the
authority to intervene with the transaction between the Spouses Libo-on and
the Rural Bank of Hinigaran, much less foreclose the mortgaged property of
the Spouses Libo-on. In the absence of a notarized deed of assignment, BSP
cannot be considered as an assignee who can proceed against the Spouses
Libo-on's property.

Moreover, the Rural Bank of Hinigaran in fact has no authority to pledge the
security documents to BSP during the term of the real estate mortgage
contract between the Rural Bank of Hinigaran and the Spouses Libo-on
because if it is within the term of the contract, the mortgaged property

19
remains to be the property of the latter.

It must be stressed that for a contract of pledge to be valid, it is necessary

that:
(1)the pledge is constituted to secure the fulfillment of a principal
obligation;. (2) the pledgor be the absolute owner of the thing pledged;
and (3) the person constituting the pledge has the free disposal of his
property, and in the absence thereof, that he be legally authorized for the
purpose.
MAYBANK PHILIPPINES, INC. (FORMERLY PNB-REPUBLIC BANK VS. SPOUSES
OSCAR AND NENITA TARROSA,
G.R. No. 213014 | 2015-10-14
First Division
PERLAS-BERNABE, J.:
Forclosure of Real Estate Mortgage
Facts:
(Maybank), a loan in the amount of P91,000.00. The loan was secured by a
Real Estate Mortgage dated January 5, 1981 (real estate mortgage) over a
500-square meter parcel of land situated in San Carlos City, Negros
Occidental (subject property), covered by TCT No. T-5649,[7] and the
improvements thereon.

After paying the said loan, or sometime in March 1983, Sps. Tarrosa obtained
another loan from Maybank in the amount of P60,000.00 (second loan),
[9] payable on March 11, 1984.However, Sps. Tarrosa failed to settle the
second loan upon maturity.
Maybank commenced extrajudicial foreclosure proceedings. Respondents
averred that the second loan was unsecured and Maybanks right to
foreclose is barred by laches. Maybank countered the second loan was
secured by the same real estate mortgage under a continuing security
provision therein when the loan became past due, Sps. Tarrosa promised to
pay and negotiated for a restructuring of their loan, but failed to pay despite
demands; and Sps. Tarrosa's positive acknowledgment and admission of
their indebtedness controverts the defense of prescription.

Issue: Whether Maybank right to foreclose the real estate mortgage has not
yet elapsed

Held: Yes. An action to enforce a right arising from a mortgage should be

enforced within ten (10) years from the time the right of action
accrues, i.e., when the mortgagor defaults in the payment of his obligation to
the mortgagee; otherwise, it will be barred by prescription and the
mortgagee will lose his rights under the mortgage. However, mere
delinquency in payment does not necessarily mean delay in the legal
concept. To be in default is different from mere delay in the grammatical
sense, because it involves the beginning of a special condition or status

20
which has its own peculiar effects or results.

In order that the debtor may be in default, it is necessary that:

(a) the obligation be demandable and already liquidated;

(b) the debtor delays performance; and

(c) the creditor requires the performance judicially or extrajudicially, unless

demand is not necessary
NEW WORLD DEVELOPERS AND MANAGEMENT, INC., VS. AMA COMPUTER
LEARNING CENTER, INC.,
AMA COMPUTER LEARNING CENTER, INC., PETITIONER, VS. NEW WORLD
DEVELOPERS AND MANAGEMENT, INC., RESPONDENT.
G.R. No. 187930 and G.R. No. 188250 | 2015-02-23
FIRST DIVISION
SERENO, C.J.:
Liquidated Damages
Facts:
New World is the owner of a commercial building located at No. 1104-1118
Espaa corner Paredes Streets, Sampaloc, Manila. In 1998, AMA agreed to
lease the entire second floor of the building for its computer learning center,
and the parties entered into a Contract of Lease covering the eight-year
period from 15 June 1998 to 14 March 2006.
The monthly rental for the first year was set at P181,500, with an annual
escalation rate equivalent to 15% for the succeeding years. It was also
provided that AMA may preterminate the contract by sending notice in
writing to New World at least six months before the intended date. In case of
pretermination, AMA shall be liable for liquidated damages in an amount
equivalent to six months of the prevailing rent.
On the evening of 6 July 2004, AMA removed all its office equipment and
furniture from the leased premises. The following day, New World received a
letter from AMA dated 6 July 2004[10] stating that the former had decided to
preterminate the contract effective immediately on the ground of business
losses due to a drastic decline in enrollment. AMA also demanded the refund
of its advance rental and security deposit.
Issue: Whether AMA is liable for liquidated damages
Held: Yes.
Item No. 14 of the Contract of Lease states:
That [AMA] may pre-terminate this Contract of Lease by notice in writing to
[New World] at least six (6) months before the intended date of pre-
termination, provided, however, that in such case, [AMA] shall be liable to

21
[New World] for an amount equivalent to six (6) months current rental as
liquidated damages;
Quite notable is the fact that AMA never denied its liability for the payment
of liquidated damages in view of its pretermination of the lease contract with
New World. What it claims, however, is that it is entitled to the reduction of
the amount due to the serious business losses it suffered as a result of a
drastic decrease in its enrollment.
xxx
It is quite easy to understand the reason why a lessor would impose
liquidated damages in the event of the pretermination of a lease contract.
Pretermination is effectively the breach of a contract, that was originally
intended to cover an agreed upon period of time. A definite period assures
the lessor a steady income for the duration. A pretermination would suddenly
cut short what would otherwise have been a longer profitable relationship.
Along the way, the lessor is bound to incur losses until it is able to find a new
lessee, and it is this loss of income that is sought to be compensated by the
payment of liquidated damages.
DR. JAIME T. CRUZ, Petitioner, v. FELICISIMO V. AGAS, JR., Respondent.
G.R. No. 204095, June 15, 2015
SECOND DIVISION
MENDOZA, J.
Res Ipsa Liquitor
Facts:
In his Complaint-Affidavit5 for Serious Physical Injuries through Reckless
Imprudence and Medical Malpractice against Dr. Agas, Dr. Cruz alleged,
among others, that sometime in May 2003, he engaged the services of St.
Luke's Medical Center (SLMC) for a medical check-up; that after being
admitted in SLMC on May 28, 2003, he underwent stool, urine, blood, and
other body fluid tests conducted by the employees and doctors of the said
hospital; that on May 29, 2003, he was sent to the Gastro-Enterology
Department for a scheduled gastroscopy and colonoscopy; that because the
specialist assigned to perform the procedure was nowhere to be found, he
gave the colonoscopy results to the attending female anesthesiologist for the
information and consideration of the assigned specialist; that, thereafter, he
was sedated and the endoscopic examination was carried out; that when he
regained consciousness, he felt that something went wrong during the
procedure because he felt dizzy, had cold clammy perspiration and
experienced breathing difficulty; that he could not stand or sit upright
because he felt so exhausted and so much pain in his abdomen; that when
he was about to urinate in the comfort room, he collapsed; that he tried to
consult the specialist who performed the colonoscopy but he was nowhere to
be found; and that his cardiologist, Dra. Agnes Del Rosario, was able to
observe his critical condition and immediately referred him to the surgical
department which suspected that he had hemorrhage in his abdomen and
advised him to undergo an emergency surgical operation.

22
Issue: Whether res ispa liquitor applies in the colonoscopy and the internal
bleeding sustatined by Dr. Curz
Held:
No. Dr. Agas was able to establish that the internal bleeding sustained by Dr.
Cruz was due to the abnormal condition and configuration of his sigmoid
colon which was beyond his control considering that the said condition could
not be detected before a colonoscopic procedure. Dr. Agas adequately
explained that no clinical findings, laboratory tests, or diagnostic imaging,
such as x-rays, ultrasound or computed tomography (CT) scan of the
abdomen, could have detected this condition prior to an endoscopic
procedure. Specifically, Dr. Agas wrote:chanRoblesvirtualLawlibrary
On the other hand, in the present case, the correlation between petitioner's
injury, i.e., tear in the serosa of sigmoid colon, and the colonoscopy
conducted by respondent to the petitioner clearly requires the presentation
of an expert opinion considering that no perforation of the sigmoid colon was
ever noted during the laparotomy. It cannot be overemphasized that the
colonoscope inserted by the respondent only passed through the inside of
petitioner's sigmoid colon while the damaged tissue, i.e., serosa, which
caused the bleeding, is located in the outermost layer of the colon. It is
therefore impossible for the colonoscope to touch, scratch, or even tear the
serosa since the said membrane is beyond reach of the colonoscope in the
absence of perforation on the colon.13
Dr. Cruz failed to rebut this.

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