G.R. No. 105567 November 25, 1993
GSIS v. CA AND SPS. RAUL AND ESPERANZA LEUTERIO
Facts: GSIS increased the purchase price stipulated in the Deed of Conditional Sale with the Sps., involving one of its house and lots in its village after the final construction costs. Because the Deed did not subject the price to change, where the marginal notation of such effect was only inserted, the agreement was only to pay the original price, which obligation the Sps had already complied with and which necessitates the execution of a Final Deed of Sale.
> Deed of Conditional Sale (1965) between GSIS and Sps. Raul and Esperanza Leuterio where the former would sell a house and lot to the latter ~ by virtue of a lottery for lots and housing units of GSIS’ Village on December 18, 1963 where Sps. Leuterios won > Certificate of Acknowledgement to purchase were issued to the Sps. (December 27, 1963) > CONDITIONS: Sps. to pay P19,740 within 15y, in 180 equal monthly installments (P168.53); Par. 11: “Upon full payment by the Vendee of the purchase price…the Vendor agrees to execute in favor of the Vendee a final Deed of Sale > Deed of Conditional Sale notarized after 3y > Completion of the Village ~ Board of Trustees increased the purchase price (allegedly due to the final costs of the construction) in accordance with (1) the marginal notation “subject to adjustment pending approval of the Board of Trustees” on the face of the Deed; (2) the recommendation of an ad hoc committee created by President Marcos to investigate the price increase which it found to be justified ~ pursuant to the petition of a group of vendees > SUIT for Specific Performance with Damages (May 20, 1984), after the Sps’ completion of payment of the original purchase price (plus taxes) and GSIS’ failure to execute a final deed of sale > CONTENTION OF THE SPS: Marginal notation was not there when they signed it > CONTENTION OF GSIS: Sps. was bound by the Ad hoc committee’s recommendation of the price increase > RTC Held in favour of Sps: Marginal notation was inserted without the Sps.’ knowledge or consent (such fact was not questioned during appeal to CA) > CA Upheld by virtue of estoppels
> FINAL DEED OF SALE SHOULD BE EXECUTED IN FAVOUR OF THE SPOUSES > Parties only agreed on the purchase price of P19,740 ~ the agreement was not made subject to any posterior event or condition > (A) Marginal Notation was not included in the contract when signed: Judicial admission by GSIS in (1) its Answer to the Complaint that it was only an honest mistake (made by the clerk who typed it) and in (2) its Petition for Review on Certiorari that it was only inserted >
(B) Also, Recommendation by the ad hoc committee was set aside by President Marcos (May 30, 1970) and GSIS’ reconsideration was denied (December 18, 1990) > HENCE, the obligation mutually agreed upon was the payment of
P19,740 > Art. 1473: GSIS cannot unilaterally adjust the price without the Sps’ knowledge and consent > Obligation was thus completed by the Sps. upon full payment
> Failure of GSIS to foresee the construction costs is due to their own fault > It cannot excuse itself from performing > BAD BUSINESS JUDGMENT IS NOT AN EXCUSES
G.R. No. 148599 March 14, 2005
PROFESSIONAL ACADEMIC PLANS, INC., FRANCISCO COLAYCO and BENJAMIN DINO v. DINNAH L. CRISOSTOMO
Facts: Sales associate Crisostomo negotiated with AFPSLAI and received commission for the initial MOA contracted, involving educational plans. When the MOA was amended, PAPI stopped her commission, alledging the
termination of the first MOA and hence, Crisostomo’s lack of right to said commissions. However, the second MOA was only a modification of the first since the abandonment of contracts must be mutual between the contracting parties. Crisostomo and the new president of AFPSLAI did not intend to rescind the contract and hence, the former remains entitled to her commission.
> Memorandum of Agreement (November 9, 1988) between PAPI and
AFPSLAI > District Manager of PAPI for MM, Dinnah L. Crisostomo, and VP for Sales, Guillermo Macariola, agreed to sell and AFPSLAI agreed to purchase educational plans from PAPI ~ Originally offered by Noel Rueda (PAPI’s sales consultant) but finalized by Crisostomo as his supervisor when he was
terminated > Commission for the contract was given to Crisostomo by the Executive Committee when Macariola declined (disqualified because she was an employee) in favor of Crisostomo (she receives no salary but is entitled to franchise commission worth 10% of remittances for every contract negotiated by her for PAPI) > Crisostomo received the commission from December 1988 to April 1989 > Commission was later reduced (to 5%, 4%, 3.75%, 2%) upon the instance of Benjamin Dino, Ass. VP for Marketing, allegedly to support operational expenses > Crisostomo was issued a Memorandum (February 7, 1991) by Dino and Cruz (VP for Finance and Admin) reducing the commission to 2% > Amendment of the MOA with AFPSLAI between the new AFPSLAI President and PAPI (April 1992) after the former wrote a letter and suspended the first MOA > Crisostomo no longer received her commission after the amendment > Crisostomo was issued a Memorandum (June 1, 1992), terminating her franchise commission on the transactions with AFPSLAI ~ WHY: (1) Amendment of the contract due to the sales associates’
misrepresentations; (2) Amendment was largely due to management’s efforts; (3) Crisostomo failed to complete 100 new plans as stipulated in the first MOA
> Insistence and Demand by Crisostomo for continued payment of her 2% commission ~ Proposed to resign for P5M or to resign but continue receiving the commission as royalty until the contract with AFPSLAI exists > PAPI denied her proposal, preventively suspended her and subsequently terminating her services > SUIT for sum of monet and damages (January 21, 1993) amounting to P183,867.34 as commission of AFPSLAI’s payment worth P9,193,367.20 as of October 2, 1992 > CONTENTIONS OF PAPI: (1) Crisostomo failed to complete 100 new paid plans; (2) Crisostomo’s right to commission was subject to the existene of a contrace and the Amended MOA with AFPSLAI was a new contract with the old one rescinded; (3) Crisostomo was not entitled to commission but was given only because those entitled were disqualified (as terminated and as an employee) > RTC Held in favor of Crisostomo > CA Upheld since (1) no cancellation of the first MOA that was only modified; (2) the requirement of 100 new paid plans was amended by the Memorandum which reduced the commission to 2%
> FIRST MOA NOT CANCELLED BUT ONLY MODIFIED BY THE SECOND > Letter of new AFPSLAI President only signified the suspension of the acceptance of new applications under the first MOA, until such time that a new agreement mutually beneficial to both parties was entered into ~ Only inconsistent provisions were rescinded or modified > Abandonment must be (1) Actually intended; (2) Mutually assented to by both contracting parties ~ Art. 1308 > Non-participation of Crisostomo in the negotiations is immaterial because the commission was granted as an incentive to the one who initiated and successfully negotiated the contract given that the agent remains connected with PAPI and that the commission was non-transferable > Crisostomo was still with PAPI and hence entitled to the commission even under the second MOA > No moral damages for absence of bad faith in the breach of contract > No exemplary damages due to absence of finding of moral, temperate or compensatory damages
G.R. No. 11318 October 26, 1918
MANILA RAILROAD CO. v. LA COMPANIA TRASATLANTICA and THE ATLANTIC, GULF & PACIFIC CO.
Facts: Atlantic, in negligently lifting the boiler of Company from the steamship of Compania, thereby damaging such boiler, is liable only to Compania and not to Company because the contract exists only between Atlantic and Compania. There was no contract with Company and hence, the latter cannot reinforce performance nor claim damages for damages arising from such breach of duty.
> Steamship of Compania arrived with Company’s two locomotive boilers but the former was not able to discharge the boilers because they were too heavy for its equipment > Compania thus hired Atlantic for the purpose > One boiler was severely damaged due to ineffective lifting that dropped the boiler twice (caused by improper adjustment of the sling due to Leyden’s gross negligence, the foreman in charge) ~ Had to be sent back to England for repair and shipped bank > Company spent P22,343.39 for the damage, repair and loss of use of the boiler > Company sued Compania and latter insisted that Atlantic be made its
codefendant > RTC ruled in favor of Company against Atlantic but absolved Compania
> Contract between Compania and Company > Former to transport safely the boiler from England to Manila, including its discharge from the ship >
Compania is liable for negligence, failing to exercise due diligence in delivering safely the boiler to the port of Manila > No ruling yet that the failure to comply with a contractual obligation can be excused by showing that such delinquency was due to the negligence of one to whom the contracting party had committed the performance of the contract
> Obligation of Atlantic to Compania > Atlantic agreed to render its service when Compania assumed all risk (of damages) incident to the discharge of the boilers ~ that while Atlantic would use all due care in getting the boilers out, no responsibility was assumed for damage done either to ship or cargo (testimony of Atlantic’s VP as the practice being customary to Atlantic) ~ BUT diligence is an implied obligation arising from law > Exemption from liability excludes those caused by negligence and referred to disasters which might result from some inherent hidden defect in the lifting apparatus or other unforeseen occurrence not directly attributable to negligence of Atlantic in the lifting operations > (1) Liability from negligence is demandable in all kinds of obligations (Art. 1103) > Contracts against liability for damages are not favored by the law (Crew v. Bradstreet Company) > (2) Exempted negligence, if so allowed, must have been not gross and such conditions must have been expressly declared; (3) Absolute exemption is inequitable and unfair; (4) Promise to exercise due care has a legal effect as much as the exemption promised > Art. 1903 which absolves liability by proving due care applies only to those acquired outside a contract
> No Obligation of Atlantic to Company > Contract was between Atlantic and Compania > No contract between Atlantic and Company > No right was conferred to Company for damages > No double responsibility of Atlantic to Compania (contract) and to Company (culpa aquiliana) because the liability arises only from its obligation to Compania which was authorized to contract
with Atlantic when Company impliedly assented to the employment of Atlantic (when it was informed about the need to hire a contractor to carry the boiler)
>> Culpa Aquiliana, those not growing out of preexisting duties of the parties to one another
>> Culpa Contractual, those growing out of relations already formed to give rise to duties
G.R. No. 118248 April 5, 2000
DKC HOLDINGS CORPORATION v. CA, VICTOR U. BARTOLOME and REGISTER OF DEEDS FOR METRO MANILA, DISTRIC III Facts: Son of land owner Encarnacion is bound to recognize the contract of lease between his mother and DKC over his mother’s land even after the death of her mother and even after he had inherited the same as sole heir. Property right is transmissible and thus, under Art. 1311, obligations arising from it binds heirs.
> Contract of Lease with Option to Buy (March 16, 1988) between Encarnacion Bartolome and DKC over the former’s parcel of land as a potential warehouse for the latter’s textile plant beside it > Conditions: DKC to (a) either lease the land for 6y, renewable for another 6y, or to lease with purchase the land ~ option to be exercised in 2y from the signing of the contract; (b) pay P3k/m for the reservation of its option > Death of Encarnacion (January 1990) > Payment of the P3k/m by DKC to Victor Bartolome, Encarnacion’s son > Victor refused to accept > Letter by DKC to Victor (March 14, 1990) notifying him of its intention to lease the land and tendering payment of P15k for the first 6y > Victor refused to accept and to surrender possession of the property > DKC deposited its payment to a bank account it had opened in China Banking Corporation under the name of Victor > DKC paid the Register to have the Title annotated but the Register refused to do so after > Suit (April 23, 1990) by DKC against Victor and Register for Specific Performance and Damages > Contention of Victor: The contract expired with Encarnacion and he is not bound by it as he was not a party to it
> Victor is bound by the contract > Art. 1311 ~ heirs are bound by contracts entered into by their predecessors-in-interest ~ Exception is when the right and obligation is NOT TRANSMISSIBLE by (1) its nature, (2) stipulation, (3) provision of law > No stipulation or law and the nature of the obligation is transmissible (property right and not personal right as defined below) > He who contracts does so for himself and his heirs > Principle: heirs cannot escape the
legal consequence of a transaction entered into by their predecessor-in-interest because they have inherited the property subject to the liability affecting their common ancestor (Carillo v. Salak de Paz) > Heirs only succeeds what rights the predecessor had ~ what is valid and binding against the latter is the same against the former
> DKC properly exercised its option to lease by paying the fees and informing Victor of its exercise
>> Intransmissible Contracts > Those which are purely personal, either by provision of law (partnerships and agency) or by the very nature of the
obligations arising therefrom (those requiring special personal qualifications of the obligor; acts require the special knowledge, genius, skill, taste, ability, experience, judgment, discretion, integrity or other personal qualification) > It may be stated that contracts for the payment of money debts are not transmitted to the heirs of a party but constitute a charge against his estate > Terminates on the death of the party required to render such service because it cannot be performed by the promissor’s personal representative
G.R. No. 9188 December 4, 1914
GUTIERREZ HERMANOS v. ENGRACIO ORENSE
Facts: Orense’s nephew sold his uncle’s land to Gutierrez without his written consent, thereby nullifying the contract, but due to Orense’s verbal declaration in Court, which was proven as fact during the estafa case against Duran, the defect was cured as allowed by Art. 1259.
> Deed of Sale (February 14, 1907) between Jose Duran (nephew of Engracio Orense and manager of his business) and Gutierrez Hermanos where Duran, allegedly with Orense’s knowledge and consent, sold the latter’s property as the absolute owner to Gutierrez with the right to repurchase for the same price of P1,500 after 4y > Contract of Lease where Gutierrez leased the property to Orense and Duran until February 14, 1911 ~ O,D continued to occupy the land > Gutierrez demanded a deed of conveyance of the property to perfect its title but Orense refused > Non-possession of the property and loss by Gutierrez of its value (P3k) and non-payment of Orense and Duran of the rentals after Feb. 14, 1911 > Previous Complaint by Gutierrez against Duran for estafa (allegedly misrepresenting himself as the owner) but latter was acquitted due to Orense’s testimony that he had consented to the sale > Complaint (March 5, 1913) by Gutierrez for declaration of his ownership, the execution of the deed of
conveyance, and the payment of rentals or damages > Contention of Orense: that the sale was executed without his knowledge and consent, express or implied ~ that he did not authorize Duran verbally or thru a special power of attorney and that he knew of the sale long after it was made
> Orense knew and consented to the sale: Ratification of the sale by means of Orense’s verbal declaration (March 14, 1912) that he gave consent during the estafa case against Duran ~ proven as fact during the trial and made the basis of Duran’s acquittal > Constitute an express grant of a power of agency to Duran to sell the property Despite lack of written authority > Consent is valid even if SUBSEQUENT to the sale > Art. 1259: No one can contract in the name of another without being authorized by him or without having his legal
representation according to law. A contract executed in the name of another by one who has neither his authorization nor legal representation shall be void, unless it should be ratified by the person in whose name it was executed before being revoked by the other contracting party. > Thought the sale was initially void, Orense’s subsequent consent cured the defect
> Testimony of Orense that verbally declared his consent to the sale was the basis of Duran’s acquittal and hence, Orense could not deny it thereafter because it would be unjust to Gutierrez who would thereby be a victim of estafa
G.R. No. 47806 April 14, 1941
LEONCIO GABRIEL v. MONTE DE PIEDAD Y CAJA DE AHORROS and CA
Facts: Chattel mortgage executed by Leoncio in favour of Monte de Piedad was valid for not being contrary to public policy, the law and morals, absent proof. > Chattel Mortgage (December 13, 1932) where Leoncio Gabriel, appraiser of jewels in the pawnshop of Monte de Piedad, promised to pay P14,679,07 (the value of the deficiencies due to erroneous appraisal of the pawned jewels), payable by P300/m > Alleged failure to pay > Termination of Leoncio allegedly without cause and notice > SUIT by Monte de Piedad against Leoncio for payment of the debt where the mortgage was insufficient > Contention of Leoncio: (1) the chattel mortgage was void because (a) it is contrary to law, morals and public policy; (b) he was made to sign it against his will and through misrepresentation where E. Marco (Director-General) signed in behalf of Monte de Piedad without the latter’s authority, (c) the subject matter and considerations of the mortgage do not exist, and (d) the payments already made allegedly for
the mortgage were in fact his salaries; (2) his acquittal in a criminal case that used the chattel mortgage as evidence of his liability was a bar to the present civil case
> Chattel Mortgage does not violate the law, morals or public policy
> Chattel Mortgage does not lack consideration > It was executed voluntarily to guarantee the deficiencies resulting from his erroneous appraisals of the jewels (CA Held) > Thus, a preexisting admitted liability is a good consideration for a promise > EXCEPTIONS: if the inadequacy of the consideration is so gross as to amount to fraud, oppression or undue influence, or when statutes require the consideration to be adequate
> Compliance with the Act 1508, Chattel Mortgage Law, Section 5 > Marco signed as Director-Manager with confirmation from the administration > Law on chattel mortgage contracts only need substantial compliance and not literal > No res judicata where acquittal in criminal case bars the present civil case > No identity of subject matter and no dependence of the civil to the criminal >> Public Policy > A contract which is neither prohibited by law nor condemned by judicial decision, nor contrary to public morals, contravenes no public policy > Violative of public policy if the contract has for its consideration a tendency to injure the public, or if it is against the public good, or if it contravenes some established interests of society, or is inconsistent with sound policy and good morals, or tends clearly to undermine the security of individual rights, whether of personal liability or of private property
>> Consideration > right, interest, benefit, or advantage conferred upon the promisor, to which he is otherwise not lawfully entitled, or any detriment, prejudice, loss, or disadvantage suffered or undertaken by the promise other than to such as he is at the time of consent bound to suffer
G.R. No. 61594 September 28, 1990
PAKISTAN INTERNATIONAL AIRLINES CORPORATION v. HON. BLAS F. OPLE (as Minister of Labor), HON. VICENTE LEOGARDO, JR. (as Deputy Minister), ETHELYNNE B. FARRALES and MARIA
MOONYEEN MAMASIG
Facts: PIA illegally dismissed Farrales and Mamasig because their termination was without clearance from MOLE. Despite the contractual agreement that
reserved the right of termination to PIA, labor is a matter of public policy and interests and hence, the Labor Code applies. The Labor Code prohibits the limitation of employment for the purpose of circumventing security of tenure and requires MOLE clearance for termination. Hence, the termination was illegal because the provision in the contract is facultative, dependent solely upon the will of PIA and thus preventing security of tenure of F,M, and because the termination was made without clearance, thus presumed to be without cause. > Two Contracts of Employment (signed December 2, 1978, effective January 9, 1979) between PIA, a foreign corporation with license in the Ph, and Ethelynne Farrales and Maria Mamasig as flight stewardesses for a 3y period > Conditions: Right of PIA to terminate employment given a 1m notice in writing or payment of 1m’s worth of salary; Applicability of Pakistan laws and sole jurisdiction of the Courts of Karachi in any matter arising from the agreement > Employment of Farrales and Mamasig until Notices of Termination (dated August 1, 1980, effective September 1, 1990) was served to them on August 2, 1980, 1y4m prior to the expiration of their contracts > JOINT SUIT by Farrales and Mamasig against PIA in Ministry of Labor and Employment for illegal dismissal and non-payment of benefits and bonuses > Contention of PIA: that F,M were habitual absentees, that they bring in sizeable quantities of personal effects from abroad, that customs officials warned Manila International Airport to advise F,M to stop the habit > MOLE, thru the Regional Director, ruled in favor of F,M (January 22, 1981), ordering their reinstatement because (1) their dismissal was (conclusively presumed to be) without just cause because it was without MOLE’s clearance (as required by Sec. 278, (Labor Code concerning regular employees), and hence, illegal; (2) the 3y period of employment violated the Labor Code (Art. 280-281) on regular and casual employment where F,M have become regular employees for having rendered continued services for more than 1y > Contention of PIA: (1) MOLE has no jurisdiction; (2) No due process due to no oral hearing; (3) order of reinstatement is a violation of their rights in the employment contracts
> SC HELD: Illegal Dismissal
> Ph Laws apply despite agreement that Pakistan laws should govern
BECAUSE Labor is a matter of public policy > Party Autonomy is not absolute > Contract is the law between the parties but Art. 1306 requires that they not be contrary to law, morals, good customs, public order or public policy > Laws relating to public policy are thus deemed written into the contract > Laws on labor and employment cannot thus be excluded from contracts especially where (1) the contracts were executed and performed in the Ph; (2) F,M are Ph citizens and are based in the Ph; (3) PIA is a resident of the Ph; (4) No proof of the relevant Pakistani laws and hence, they are presumed to be the same as the Ph’
> Par. 5&6 of the Contract, providing for the 3y period and right of PIA to termination, is void for circumventing the security of tenure of the employees > Condition is facultative ~ authority to shorten the term is solely dependent upon the will of PIA at any time and for any cause satisfactory to itself > Although a contract providing for employment with a fixed period is not necessarily unlawful, it must have no intent to circumvent the law(ie where the employee insists upon a period; where the nature of the engagement is such that a definite date of termination is a sine qua non ~ Otherwise, the law would restrict without reasonable distinctions the right of an employee to freely stipulate with his employer the duration of his engagement) > Evil sought to be avoided:
agreements entered into precisely to circumvent security of tenure > Must have been mutually and voluntarily made by the parties
> MOLE with jurisdiction > Regional Director given authority under Labor Code to reinstate employees who were illegally dismissed by reason of lack of clearance from MOLE
> Due process present > Opportunity to be heard in position papers > PIA did not choose to present evidence
G.R. No. L-15127 May 30, 1961
EMETERIO CUI v. ARELLANO UNIVERSITY
Facts: Contract of Waiver between Emeterio, law student/scholar, and Arellano University, where the former is granted scholarship but prohibited to transfer schools, is prohibited for being contrary to public policy, embodied in Memorandum No. 38 that deems scholarships as recognitions of merit and not as business schemes, and good morals, where such practice is not generally accepted.
> Emeterio Cui was a scholar in the College of Law of the Arellano University until the last semester of his final school year when he left with his uncle, Francisco R. Capistrano who was Dean of the College of Law, to transfer to the College of Law of Abad Santos University where his uncle became Dean and Chancellor > Arellano University subsequently refused to release his transcripts of records which Emeterio needed to apply for the bar exams until he has paid back the value of the scholarship which the latter refunded to him per semester, which amounted to P1,033.87 (Each tuition that Emeterio had paid at the start of the semester was refunded to him at the end of the semester for scholastic merit) > Memorandum No. 38 (August 16, 1949) of the Director of Private Schools prohibited the refund of scholarship when students transfer to other schools > Bureau of Private Schools advised Arellano University to release Emeterio’s
records without requiring him to pay the tuition fee > Arellano refused > Emeterio paid under protest in order to take the bar > SUIT by Emeterio for recovery of the amount > Contention of Arellano: Scholarship Contract of Waiver (September 10, 1951) with Emeterio provided that the latter, in consideration of the scholarship grant, waives any right to transfer to another school without having refunded to the University the equivalent of the scholarship cash
> Contract provision is Null and Void for violating public policy >
Memorandum of the Bureau of Private Schools, considered as a practice of government officials, is a factor in determining a public policy of the state > Director submitted (1) that the policy of the Memorandum was a sound policy where scholarships are awarded to recognize merit and help gifted students in whom society has an established interest or a first lien and not to keep
outstanding students in the school to bolster its prestige; (2) that Arellano treated the scholarship as a business scheme designed to increase its business potential; (3) that, thus, Arellano’s contract is contrary to public policy and even good morals
> Contrary to Public Policy > if its consideration contravenes the interests of society and in inconsistent with sound policy and good morals and tends to undermine the security of individual rights
> Contrary to Good Morals > if against good customs, those generally accepted principles of morality which have received some kind of social and practical confirmation
G.R. No. 10551 March 3, 1917 IGNACIO ARROYO v. ALFRED BERWIN
Facts: Agreement between Ignacio and Marcela, client of Alfred, where Ignacio agreed to have the case for theft (on appeal) against Marcela dismissed for some benefit is void. It is against public policy where the criminal justice system is perverted by the mere purchase of immunity by the accused from a private individual at the prejudice of the public.
> Judgment of theft against Marcela Juanez, represented by Alfred Berwin (as procurador judicial of the law office of Atty. John Bordman) and prosecuted by Ignacio Arroyo, for having the canes on the land of Ignacio cut > Verbal Agreement (August 14, 1914, during hearing for appeal) before Roque Samson where Marcela recognized Ignacio’s ownership of the land in which she ordered the canes therein cut and promised not to oppose Ignacio’s application for registration for a Torrens title; Ignacio agreed to dismiss the case > Requests for
the dismissal of the case > Non-compliance and refusal of Marcela to sign a written agreement > SUIT by Ignacio > RTC ruled in favor of Marcela due the illegality of the contract’s consideration
> Agreement contrary to public policy > Owner of stolen goods cannot stifle the prosecution of the accused charged with theft merely for a pecuniary or other valuable consideration > It is a public interest that criminals be prosecuted and punished > Hence, criminal proceedings should abide by the laws > It is a perversion of justice to allow the offender to purchase immunity from private individuals and escape the penalties prescribed by law > Art. 1255: conditions should not contravene the law, morals or public order > Art. 1275: Contracts with illicit considerations, or those contrary to law and good morals, are without effect
G.R. No. L-19638 June 20, 1966
FILIPINAS COMPANIA DE SEGUROS, ET AL v. HON. FRANCISCO Y. MANDANAS (as Insurance Commissioner) and AGRICULTURAL FIRE INSURANCE & SURETY CO., INC., ET AL
Facts: The power of the Ph Rating Bureau to refuse to do business with insurance companies that are not its members is valid because it is not contrary to law or public policy as it reasonably restraints competition merely by fixing rates which it has, in the first place, the license to do.
> Letters (March 11, 1960, April 11, 1960, April 9, 1961) by Insurance Commissioner Mandanas to the Ph Rating Bureau, requesting the deletion of Art. 22 of the Constitution of the Ph Rating Bureau because it was allegedly unlawful for allowing the Bureau to refuse representation or reinsurance from companies not members in good standing of the Bureau ~ otherwise he would suspend the license issued to the Bureau and its members > SUIT (May 16, 1961) by non-life insurance companies against Hon. Mandanas for Declaratory Relief re: constitutionality of Art. 22 of the Constitution of the Ph Rating Bureau, the former alleging its constitutionality while the former assailing its validity for being an illegal or undue restraint of trade
> Test of Legality of an Agreement restraining trade: (1) Reasonable Necessity in protecting the parties’ interests; (2) Effect on competition ~ to regulate and promote competition is valid while to suppress and destroy it is unlawful; BUT considering the particular circumstances of the case and the nature of the particular contract, where public interest and welfare are not involved > PURPOSE OF ART. 22 (testimony of Salvador Estrada, Chairman of the Bureau): to promote ethical practices in order to earn the respect of the public,
and to avoid the unethical practice of underrating of the insurance companies that resulted from intense competition BY coordinating with the various companies in fixing the rates and applying it as a standard to all > NOT ILLEGAL, IMMORAL, UNREASONABLE, or CONTRARY TO PUBLIC POLICY in both objectives and means
> FURTHERMORE, Circular No. 54 (February 26, 1954) requires the approval of the Insurance Commissioner before non-life insurance companies can implement its rates > Annual grant of license (April 28, 1954) by the Insurance Commissioner to the Bureau with knowledge of its constitution and with grant of authority to fix rates
G.R. No. 126800 November 29, 1999
NATALIA P. BUSTAMANTE v. SPOUSES RODITO F. ROSEL and NORMA A. ROSEL
Facts: Stipulation in the loan agreement where lender Sps. Rosel have the right to purchase the collateral property of the borrower Sps. Bustamante is void. Such condition is a pactum commissorium because it is an automatic appropriation of the mortgaged thing in case of non-payment which the law prohibits in order to protect the interests of the borrowers from lenders who seek to unjustly appropriate their properties.
> Loan Agreement with Option to Buy (March 8, 1987) between Norma Rosel and Sps. Natalia and late Ismael Bustamante where former lent P100k and the latter offered part of their land as collateral with right to purchase (for P200k, inclusive of the debt) in case of failure to pay ~ debt payable in 2y (starting March 1, 1987 and due March 1, 1989) > Exercise of Option to Purchase by Sps. Rosel when the loan was about to mature > Sps. Bustamante refused, requested an extension of time for the payment, and offered to sell instead another house another lot > Sps. Rosel refused because the offered lot were not owned by Sps. Bustamante (since the latter are only developers entitled to subdivision shares) and it was full of squatters > Tender of Payment by
Bustamante (March 1, 1989) ~ Rejected by Sps. Rosel who demanded a deed of absolute sale of the collateral > SUIT for Specific Performance with
Consignation (February 28, 1990) by Sps. Rosel and Demand Letter (March 4, 1990) to sell the collateral > Petition for Consignation (March 5, 1990) and Deposit (August 10, 1990) by Sps. Bustamante, worth P153k > Consignation of Sps. Rosel, worth P47,500 (Purchase price of P200k – P100k loan+P52,500 interests) > SC Previously ruled in favor of Sps. Rosel because the contract is the law between parties > Contention of Sps. Bustamante: that the purpose of
collateral as guarantee was similar to that of an equitable mortgage under Art. 1602
> Sale of the collateral as an obligation with a suspensive condition ~ happening of an event that is the failure of payment > Event did not happen ~ Sps.
Bustamante tendered payment but Sps. Rosel refused so the former consigned it with the court > Sps. Rosel thus do not have the right to demand the fulfillment of the obligation
> Contracts as Law between Parties > EXCEPTIONS (Art. 1306) > Stipulation of automatic right to purchase in case of failure to pay is a pactum
commissorium prohibited by law > Why is it a pactum commissorium: Intention of the party, Sps. Rosel to appropriate the collateral in the event of non-payment of the loan > Why prohibited: Under Art. 2088 ~ Intention: Protection of persons in need of money in entering contracts ~ intention to alleviate themselves of their financial burden ~ Purchase price of P200k for a 70sq.m. property in Congressional Ave, QC is unjust
*Automatic ~ happening of event, no need to do anything else
>> PACTUM COMMISSORIUM (Art. 2088) > Elements: (1) there should be a creditor-debtor relationship between the parties; (2) there should be property mortgaged by way of security for the payment of the principal obligation; (3) there should be a stipulation for automatic appropriation by the creditor of the thing mortgaged in case of non-payment of the principal obligation within the stipulated period proscribe
G.R. No. L-36821 June 22, 1978
JOSE P. DIZON v. ALFREDO G. GABORRO (Substituted by PACITA DE GUZMAN GABORRO as Judicial Administratrix of his Estate) and the DEVELOPMENT BANK OF THE PHILIPPINES
Facts: The two contracts between Dizon and Gaborro are innominate because both parties agreed to give and to do certain rights and obligations partaking the nature of antichresis.
> Two mortgages by Jose Dizon over his property to the DBP in order to secure a loan (P38k) and to the Ph National Bank to secure his debt to PNB
(P93,831.91) > Extrajudicial Foreclosure of mortgage by DBP after default in payment (sold at P31,459.21 on May 26, 1959 with issuance of a Certificate of Sale) > Deed of Sale (November 12, 1959) by Dizon in favor of DBP > Two instruments (October 6, 1959) between Jose Dizon and Alfredo Gaborro over the former’s foreclosed land: (1) Deed of Sale with Assumption of Mortgage,
where the former agreed to sell his land for P131,831.91 and latter agreed to purchase the same and to assume Dizon’s debt to DBP and PNB; (2) Option to Purchase Real Estate where Dizon was granted the right to repurchase the properties from Gaborro (from January 1965 to December 31, 1970) for the same amount plus 8% annual interest > Gaborro possessed the land > Letter (October 7, 1959) by Gaborro to DBP, informing the latter of his assumption of mortgage ~ Approved by the Board of Governors, DBP (October 21, 1959) ~ Conditional Sale of the Properties (July 11, 1960) between DBP and Gaborro, over the land for P36,090.95 ~ Assignment of Right of Redemption (January 7, 1960) by Dizon, as owner and mortgagor, to Gaborro of his right to redeem the land within 1y from the foreclosure > Payment and improvements by Gaborro > Letter-Offer to Reimburse (July 5, 1961) by Dizon, thru counsel, to Gaborro but without tender of payment ~ Gaborro refused > Contention of Dizon: agreement was not an absolute sale but merely an equitable mortgage by way of security for the reimbursement or refund by Dizon to Gaborro of any payments made by the latter for the mortgages ~ only a grant of possession and enjoyment of the property > Contention of DBP: Dizon’s right is limited to redemption because was no longer the owner of the land
> DBP’s Inchoate Right in the Property > Mortgage was foreclosed
extrajudicially and hence, debtor has 12m to redeem it (Act 3135, Sec. 6) during which he has the right of possession and enjoyment of the property and its fruits > the only rights that Dizon could have transferred to Gaborro: redemption, possession and enjoyment > Deed of Sale is invalid for lack of consideration (property because Dizon no longer has the full right and capacity to dispose of it as owner money, and money) > Gaborro thus has no more than these same rights to grant to Dizon under the Option to Repurchase > No transfer of full title and ownership between Dizon and Gaborro because DCB was already the owner > True intention of the parties: Gaborro to assume the debt of Dizon to DBP and PNB and Dizon to give Gaborro the possession and enjoyment of his properties until he had reimbursed Gaborro of the amounts the latter had paid > to pay the debts to the banks, to make the land productive, and to return the land to the original owner > Mutual Mistake by both Dizon and Gaborro in wording their deeds as one of absolute sale > Cause for reformation
> Grant of Reconveyance of Property to Dizon upon his payment to Gaborro of the principal obligation which the latter had paid to the banks within 1y from the decision’s finality
>> Innominate Contracts (Art. 1307) > agreement to give and to do certain rights and obligations respecting the land and mortgage debts of Dizon but partaking the nature of antichresis
G.R. No. L-40424 June 30, 1980
R. MARINO CORPUS v. COURT OF APPEALS and JUAN T. DAVID Facts: Atty. David is entitled to attorney’s fees despite the absence of an express contract providing for the same due to the principle of innominate contracts where he does and his client Corpus gives.
> Dismissal of R. Marino Corpus (March 1958 after suspension on March 18, 1958, pending investigation) by Governor of Central Bank, Miguel Cuaderno, Sr., despite the investigating committee’s finding that there was no merit, because he had lost confidence in him, by virtue of the Monetary Board’s resolution of July 20, 1959 > SUIT (August 18, 1959) by Corpus thru Atty. Alvarez for certiorari, mandamus and quo warranto with preliminary mandatory injuction and damages against Cuaderno and Mario Marcos who was appointed to his position ~ Dismissed (June 14, 1960) due to Corpus’ failure to exhaust, available administrative remedies > (Contention of David) Prior to the expiration of the period for appeal, Meeting between Atty. Juan T. David and Corpus’s father where the latter requested the former to handle the case of his son due to Atty. Alvarez’s disenchantment and desire to give it up ~ Atty. David accepted the request but only as a collaborating atty. with Atty. Alvarez > (Contention of Corpus that David approached him and offered his services) > Joint efforts of Atty. Alvarez and Atty. David > SC ruled in favor of Corpus (March 30, 1962) ~ dismissal reversed and case remanded > Letter (April 18, 1962) from Corpus to David where the former enclosed a check worth P2k “for legal services”, thanked David and stated that “I could give more but as you know we were banking on a SC decision reinstating me and reimburse my back wage…Looking forward to a continuation of the case in the lower court” > Reply-Letter (April 25, 1962) by David to Corpus where the former declined the check, explaining that his professional fee was not his primary motive but their friendship (“very intimate relations”) which you and I have enjoyed” > Remand of the Case ~ Ruled (June 24, 1963) illegal dismissal, Corpus’ reinstatement, and payment of his back salaries and allowances and award of P5k as attorney's fees ~ David appealed ~ SC affirmed (March 31, 1965) > Demand (April 19, 1965) by David’s law office for collection of 50% of the amount recovered by Corpus ~ Corpus refused due to his outstanding obligations and expectation to net only around P10k > Letter (April 19,1965) by David to the Governor of Central Bank, that the payment to Corpus be made out in two: one in favor of Corpus and the other representing the professional fees equivalent to 50% of the
said back salaries being claimed ~ ACTION by David (July 20, 1965) for certiorari to obtain a favorable decision from the Governor > RTC ruled in favor of David (September 4, 1967) for payment of P30k as attorney’s fees ~ CA Affirmed, finding that Corpus accepted David’s services with the understanding of both that the latter was to be compensated in money > Contention of Corpus: that David is not entitled to attorney's fees because there was no contract to that effect > Contention of David: that the absence of a formal contract for the payment of the attorney's fees will not negate the payment because the contract may be express or implied, and there was an implied understanding between them that Corpus will pay David’s attorney's fees when a final decision shall have been rendered in favor of Corpus reinstating him to his former position and paying his back salaries
> Attorney’s fees to David is JUSTIFIED: (1) Implied Agreement; (2) Innominate Contract
> Implied Agreement between Corpus and David for payment of attorney’s fees > Admitted and recognized by Corpus in: (1) payment of P2k in check with the “wish I could give more but as you know we were banking on a SC decision reinstating me and reimbursing my back salaries” and with the anticipation of the case’s continuation, constituting a promise to pay more upon his
reinstatement and payment of his back salaries; (2) request for help by Corpus’ father and acceptance of David as collaborate lawyer where it would have been unethical for him to even offer his services when Corpus had a competent counsel in the person of Atty. Alvarez; (3) reply of Corpus to David’s demand of payment (May 7, 1965) which disagreed as to the amount of attorney's fees demanded but without a categorical denial of David’s right to attorney's fees; (4) payment of P2500 (½ of the awarded P5k as attorney’s fees); (5) admission in Corpus motion for recon in CA that David was entitled to compensation for legal services > Absence of express contract explained by their close relationship which signifies mutual trust and confidence between them > Innominate Contract where David rendered service and hence becomes entitled to compensation by Corpus who had benefited from such rendered service > Right to Reasonable Amount, determined by the extent of his services, given that there is not contract for contingent fee (which depends on an express contract and hence, an attorney is not entitled to a percentage of the amount recovered by his client in the absence of an express contract to that effect) > David was collaborating counsel of principal counsel Alvarez, for 4y, entered at the crucial stage (after dismissal of the case by RTC), advanced legal
propositions (while Alvarez laid down the basic theory and foundation of the case), joint efforts of Atty. Alvarez and Atty. David: in filing the motion for reconsideration (both signed), arguing the case before the SC, Baguio (David),
arguing the remanded case before the lower court (both) > Alvarez was paid P20k, David demands P75k but since Corpus received only P150,158.50 as back salaries and emoluments after deducting taxes, the reasonable amount for David’s fees is P20k
>> Innominate Contract of facio ut des > I do and you give > based on the principle that “no one shall unjustly enrich himself at the expense of another” > Art. 1307 that such contracts shall be regulated by (1) the stipulations of the parties, by (2) the general provisions or principles of obligations and contracts, by (3) the rules governing the most analogous nominate contracts, and by (4) the customs of the people > Perez vs. Pomar: consideration of a tacit and mutual consent as to the rendition of the services, giving rise to the obligation upon the person benefited by the services to make compensation since the bilateral obligation to render service, on the one hand, and on the other to pay for the service rendered, is thereby incurred
G.R. No. L-27696 September 30, 1977
MIGUEL FLORENTINO, ROSARIO ENCARNACION de
FLORENTINO, MANUEL ARCE, JOSE FLORENTINO, VICTORINO FLORENTINO, ANTONIO FLORENTINO, REMEDION
ENCARNACION and SEVERINA ENCARNACION [or A] v.
SALVADOR ENCARNACION, SR., SALVADOR ENCARNACION, JR., and ANGEL ENCARNACION [or B]
Facts: Stipulation in Deed of Extrajudicial Partition, favoring the Church, cannot be revoked by the appellees because as a stipulation pour autrui which confers benefit to a third person, the acceptance of the beneficiary, the Church, need not follow any form or be done in a fixed period as long as it had been done before revocation. The Church had already impliedly accepted it by its unquestioned enjoyment long before the revocation of appelees. Hence, given that the stipulation has not been revoked on time, the contract is binding on all parties.
> Application for Registration of a parcel of agricultural land (May 22, 1964) A and B as the common and pro-indiviso owners in fee simple of the land, acquired by virtue of the Deed of Extrajudicial Partition of the estate of their predecessor-in-interest, aunt Dona Encarnacion Florentino ~ that they knew of no mortgage, lien, or encumbrance or third persons interested > Hearing set by and published, No opposition (Director of Lands withdrew opposition), Order of default against the world, Evidence presented > Registration of property to A and B ~ CFI Denied the request of Miguel Florentino (A) to consider as an encumbrance the arrangement (stipulated in the Deed of Extrajudicial Partition),
that the fruits of the land is for payment of the expenses for religious functions specified, due to its non-registration in the Register of Deeds, the absence of acceptance by the donee Church (considering the arrangement as a donation, pure and simple), the non-grant of Angel and Salvador Encarnacion, Jr. (B) when they did not sign the Deed ~ such payment was ordered deducted from the undivided shares of A only, excluding B who denied it > CFI Modified its answer: that as a donation, usufruct or ellemosynary gift, the arrangement can be revoked as what B have done given that there had been no proof of acceptance by the Church; also, A is not a real party in interest and the Church should have been the right party to demand the arrangement
> Arrangement cannot be revoked unilaterally at the option of co-owners B > Why: stipulation is a stipulation pour autrui ~ Intention of A and B: to confer a direct and material benefit upon the Church > Hence, Requirement of
acceptance has no required form or specified time limit! ~ as long as done before revocation > Implied Acceptance by Church before revocation: enjoyment without question of the arrangement since time immemorial (17y from the time of Dona Encarnacion’s ownership of the land) > HENCE, stipulation is binding on all parties of the Deed, which is a contract, the law among the parties > Art. 1309 (1257): force of law of contracts and mutuality among parties > B, even if non-signatories, are bound for having purchased the shares of the original heirs and for not objecting to the stipulation
> Church need not be the plaintiff > Stipulation is already binding among all parties given that the Church has already accepted it ~ thus, the stipulation is valid
>> Stipulation pour autrui > stipulation in favor of a third person conferring a clear and deliberate favor upon him ~ merely part of a contract entered into by the parties, neither of whom acted as agent of the third person, and such third person may demand its fulfillment provided that he communicates his acceptance to the obligor before it is revoked > Requisites: (1) that the stipulation in favor of a third person should be a part, not the whole, of the contract; (2) that the favorable stipulation should not be conditioned or compensated by any kind of obligation whatever; (3) neither of the contracting parties bears the legal representation or authorization of the third party; (4 - JJ) Acceptance by the third party > Validity: purpose and intent of the stipulating parties is to benefit the third person (not mere incidental benefit), regardless of the nature of the obligation in which it is stipulated (ie donation, contract) >> Cristobal v. Gomez: A trust constituted between two contracting parties for the benefit of a third person is not subject to the rules governing donation of real
property > Beneficiary may demand performance of the obligation without having formally accepted the benefit in a public document, upon mere acquiescence in the formation of the trust and acceptance under Art. 1257 G.R. No. L-23276 November 29, 1968
MELECIO COQUIA, MARIA ESPANUEVA and MANILA YELLOW TAXICAB CO., INC. v. FIELDMEN’S INSURANCE CO., INC.
Facts: As sole heirs of their son, the parents of Carlito Coquia can demand the fulfillment of the insurance policy even if they are not parties to it because the contract is a contract pour autrui. The beneficiary is a third person for whose favor the contract was made and can demand its fulfillment.
> Common Carrier Insurance Policy (December 1, 1961) of Manila Yellow Taxicab, Inc., issued by Fieldmen’s Insurance Company, Inc. covering a 1y period and indemnifying the latter for any sum held against it in case of death or bodily injury of a passenger, driver, conductor or inspector > Vehicular
Accident (February 10, 1962) by a taxicab wherein the driver, Carlito Coquia, died > Claim for P5k by Yellow but Fieldmen offered only P2k which the former refused > SUIT by the parents of Carlito (Melecio and Maria) against Yellow, which was ordered to pay P4k > Contention of Yellow: Parents have no cause of action because they are not parties to insurance contract, hence they cannot demand its enforcement, and Fieldmen has not complied with the insurance policy
> Parents are parties by virtue of Art. 1311 or the principle of contracts pour autrui > third parties for whose benefit the contract was made may demand its enforcement ~ need not be parties > Benefit to Driver: Section II, 3 where the Insurance Company “will indemnify any authorized Driver who is driving the Motor Vehicle” and 8 where “indemnity payable directly to the heirs of claimants” and 7 “In the event of death of any person entitled to indemnity” > Driver Carlito also paid 50% of the premiums, which were deducted from his commissions
> Right of Yellow and Fieldmen to arbitration, pursuant to Section 17 of the policy where there is dispute in the amount of liability, cannot be invoked at present for failure to invoke it previously ~ constitutes a waiver of its right
G.R. No. L-22404 May 31, 1971
PASTOR B. CONSTANTINO v. HERMINIA ESPIRITU
Facts: The benefit in favor of the son of Pastor and Herminia, as the purpose of the Deed of Absolute Sale between the parents, is a cause of action for the father’s case against the mother, seeking to restraint the latter from alienating the subject properties. Even if their son was not a party to the Deed of Absolute Sale, the latter was constituted for his benefit and as a third person, he may demand its fulfillment as co-plaintiff. (*Even if he was not co-plaintiff, the father could have demanded the fulfillment with the acceptance of the son of the benefit by being co-plaintiff and absent revocation by mother.)
> Deed of Absolute Sale (October 30, 1953) between Pastor Constantino and Herminia Espiritu where former sold his house and lots to the latter for P8k ~ understanding the Herminia would hold it in trust for their unborn, illegit son, Pastor Jr. > Mortgage and Sale of the house and lots by Herminia to Republic Savings Bank to secure the payment of her loans (amounting P5k) > SUIT for Preliminary Injunction by Pastor against Herminia ~ to restraint Herminia from alienating the properties and to compel her to execute a Deed of Absolute Sale in favor of Pastor Jr. (5y/o already) > Contention of Herminia: No cause of action where Pastor Jr. was not included as party-plaintiff > Contention of Pastor: the properties were held in trust > Complaint Dismissed but a new Amended Complaint was submitted by Pastor which includes Pastor Jr.
> Deed of Absolute Sale is a Contract pour autrui between Pastor and Herminia > (Action is for specific performance) > Third person for whose benefit the contract was entered into, their son, may also demand its fulfillment > Inclusion of Pastor Jr. in amended complaint as co-plaintiff served as acceptance of the benefit, before revocation > Thus, the contract has become binding on all of the three
> Third party need not be identified
> What applies to Third Party is merely the benefit but not the other stipulations
G.R. No. 79518 January 13, 1989
REBECCA YOUNG, assisted by her husband ANTONIO GO v. CA, PH CREDIT CORP., PHIL. HOLDING, INC., FRANCISCO VILLAROMAN, FONG YOOK LU, ELLEN YEE FONG, and THE REGISTER OF DEEDS OF MANILA
Facts: The Compromise Agreement between Rebecca’s dad and Ph Holding conferring to Antonio the right of first refusal to purchase is not pour autrui in favor of Rebecca. The intention of the parties was not to include her where her involvement was subject to her being impleaded in the civil action and to her affixing her signature in the agreement, both of which were unsatisfied. Hence,
Rebecca does not have such right since she is not a third party beneficiary nor a party to the agreement.
> Order of Demolition obtained by Ph. Holding, Inc. over its building ~ occupied by Antonio Young, his daughter Rebecca Young, and Sps. Foong Yook Lu and Ellen Yee Fong, among others > Action for Annulment of the Demolition Order by Antonio Young ~ Compromise Agreement (submitted September 24, 1981) where Antonio and Rebecca would voluntarily vacate their tenanted units in 60d but would have the right of first refusal should Ph Holding decide to sell the property > Sale of the property (September 17, 1981) by way of dacion by Ph Holding to Ph Credit Corporation ~ Latter subdivided the property (November 9, 1982) into two parcels and sold it to Blessed Land Development Corporation (Antonio Young, President; December 8, 1982) and to Sps. Fong Yook Lu and Ellen Yee Fong (September 16, 1983) > SUIT for Annulment of Sale (to Sps. Fong) and Specific Performance by Rebecca Young, among others > Contention of Rebecca: Right of first refusal to purchase the property sold to Sps. Fong > RTC Dismissed: (1) Rebecca not a party to the Compromise Agreement; (2) Even if agreement pour autrui, lack of notice to the obligor of her acceptance of her right of first refusal; (3) Lack of evidence of exercise of right of first refusal
> Rebecca has no right of first refusal > (1) Compromise agreement not pour autrui > WHY: Intention of Antonio and Holding: not to include Rebecca in the beneficient provisions of the agreement > though impleaded in the compromise agreement (“Antonio Young and Holding agree to implead in this action as necessary party-plaintiff, Rebecca Young…whose written conformity appears hereunder”), it was subject to her being impleaded in the civil case and to her written conformity which was unsatisfied ~ not impleaded by either Antonio or Holding and no signature; (2) Rebecca not a party to the compromise agreement and hence, not entitled to enforce it which is granted and binding only to the parties
G.R. No. L-79734 December 8, 1988
MARMONT RESORT HOTEL ENTERPRISES v. FEDERICO GUIANG, AURORA GUIANG, and CA
Facts: Marmont Hotel is a third person beneficiary of the Sale between Maris and Sps. Guiang because the sole purpose of the sale is to provide a water supply system for Marmont. Hence, Marmont has possessory rights and thus cannot have been prevented from accessing the water supply facility.
> MOA (May 2, 1975) between Marmont (hotel and resort business) and Maris Trading where latter is to install the water system of the Marmont Resort Hotel for P40k > Maris installed a water supply facility (well and water pump) on the property owned by Sps. Guiang > MOA between Maris and Aurora, witness by Federico Guiang where latter would be paid P1500 for the portion of the property wherein the well and pump were installed and would transfer all rights to Maris > Inadequacy of water supply to meet demand of Marmont Hotel, Advise of another contractor to install a submersible pump in the well (to increase pressure and improve water flow), Permission to inspect and modify water pump from Marmont not granted by Sps. Guiang (*Maris apparently not informed) > SUIT (May 13, 1980) by Marmont against Sps. Guiang for damages resulting from latter’s refusal to allow inspection of the water facility site > Contention of Sps. Guiang: No knowledge of MOA 1 and Invalidity of MOA 2 because the property sold was conjugal and sold by Aurora Guiang without the consent of her husband, and was still part of the public domain pending Federico’s Miscellaneous Sales Application > RTC Dismissed where sale of land by Aurora was valid but no evidence that Maris transferred its rights to Marmont
> Marmont has possessory right over the water supply facility > MOA 2 which conferred possessory rights of the property from Sps. Guiang to Maris has a stipulation pour autrui where Marmont was to benefit by way of having a water system facility, which was installed by Maris in the property of Sps. Guiang with the latter’s knowledge and consent > Purpose of Maris in acquiring the property: to supply the water requirements of Marmont ~ water facility intended solely for Marmont ~ interest not incidental
> BUT alleged stipulation is merely a recital/statement but not terms of agreement > No deliberate conferment of right to a beneficiary
> Even if MOA 2 is read as having no stipulation pour autrui, Sps. Guaing are still liable for damages > Refusal of access to Marmont forced the latter to locate alternative sources of water
> MOA 2, or sale by Aurora, is valid because Federico was then present and even gave consent by signing as a witness
> Sale valid even if covering public land because Sps. had possessory and other rights which they could have validly appropriated
> Two MOAs admissible in evidence due to the Sps. and Marmont’s stipulation of facts that judicially admitted the existing of the MOAs
>> Stipulation pour autrui > a stipulation in favor of a third person conferring a clear and deliberate favor upon him > found in a contract entered into by parties neither of whom acted a agent of the beneficiary
G.R. No. 119850 June 20, 1996
MANDARIN VILLA, INC. v. CA and CLODUALDO DE JESUS
Facts: Atty. Clodualdo has a right to demand the fulfillment of the Agreement between Mandarin and Bankard where the former is to accept the credit cards issued by the latter because said agreement has a stipulation pour autrui that confers the right to card holders.
> SUIT for Damages by Atty. Clodualdo de Jesus against Mandarin Villa, Inc. because the latter’s Seafoods Village refused his unexpired credit card ~ when Atty. Clodualdo hosted dinner for his friends (October 19, 1989), he offered to pay his bill with his Ph Commercial Credit Card, was told that said card was expired (Card expiration said September 1990 but restaurant’s verification computer said ‘Card Expired’), was humiliated and embarrassed in front of his guests (aggravated when one guest commented that “baka kailanganga maghugas na kami ng pinggan”), and was made to pay by his BPI Express Credit Card which was accepted and honored > Damages Granted against Mandarin and BANKARD (PCCCI) > Contention of Mandarin: that it was not obligated to accept the credit card because it is not a legal tender and payment by means of credit card is a novation of the existing obligation to pay for which Mandarin, as creditor, must first give consent
> Atty. Clodualdo can pay by means of his PCCI credit card arising from the right to fulfill the Agreement between Mandarin and PCCI (dated June 23, 1989) where the former is to honor validly issued PCCI credit cards in payment of purchased goods given that the card has not expired or among those cancelled or suspended > Stipulation is pour autrui, conferring a favor upon Atty.
Clodualdo as holder of PCCI card ~ Right is valid and binding because his offer to pay by means of his PCCI card is an acceptance of the stipulation, made prior to revocation
> Benefit conferred to Clodualdo is the ability to pay thru his Bankard card
> Logo that “Bankard is accepted here” is binding upon Mandarin for having it posted inside its restaurant > STIPULATION POUR AUTRUI, in addition to the Agreement (JJ)
> Mandarin is Negligent > Point of Sales Guidelines (of the verification
machine) that if “CARD EXPIRED” flashes, Mandarin should have checked the expiry date on the card and should have honored it if it was not expired > Date of dinner was October 19, 1989 while Expiration embossed on Card was September 1990
> But is it an enforceable obligation? Just a guideline, not part of contract with Bankard
> Can Mandarin sue Clodualdo if latter had no money in the bank that resulted to the dishonor of his card? NO, Mandarin not a beneficiary/third person in contract between Clodualdo and Bankard
> Atty. Clodualdo not negligent in not bringing sufficient cash > Common Practice in restaurants to honor credit cards as means of payment
> Humiliation not due to comment of one guest but because Mandarin dishonored his credit card
G.R. No. 13505 February 4, 1919
GEO W. DAYWALT v. LA CORPORACION DE LOS PADRES AGUSTINOS RECOLETOS, ET AL
Facts: Church not liable for damages as a stranger when Teodorica for a long time refused to surrender the title of her property to Daywalt, as agreed by the Deed of Sale, resulting to losses he had incurred in failing to pursue a mining enterprise. Strangers cannot be liable for than the person they had benefitted. Church has no liability because Teodorica herself is not liable where: (1) the right of Daywalt to recover such damages from Teodorica had been exhausted by his previous action against her and thus, cannot be recovered in an
independent action; (2) damage, as a special damage, had not been contemplated by the parties; (3) damage was too remote to breach of contract.
> Three Documents Teodorica Endencia and Geo W. Daywalt: (A) Contract of Conveyance (1902) between Teodorica Endencia and Geo W. Daywalt covering the former’s land which was to be conveyed upon the perfection of Torrens title to Teodorica by the Court of Land Registration > Grant of Right to Property as Owner (August 1906) to Teodorica but without issuance of Torrens title > (B) Deed of Conveyance (August 16, 1906) where Teodorica would convey her property for P4k ~ Did not take effect due to non-issuance of Torrens title > (C) Contract (October 3, 1908) where Teodorica was to deliver the Torrens title to the Hongkong and Shanghai Bank in Manila upon its receipt ~ superseded the old contract > Issuance of the Torrens title (1909) but property was larger than expected (1,248 hectares where contract contemplated 452 hectares) ~ Reluctance of Teodorica to convey the entire land > Contract of Sale (1911) between Daywalt and S.B. Wakefield > Surrender by Teodorica of the Title to Fr. Isidoro Sanz (and then to procurador Fr. Juan Labarga in Manila) of the La Corporacion de los Padres Recoletos whom she trusts and who knew about her contracts ~ that she was misinformed about the area of her property and did not intend to sell so large an amount and that the latter proposed to pay Teodorica
P424/y for use and occupation of her property, which was adjacent to theirs, for the pasturing of their cattle > Church surrendered the Title by virtue of the SC Decision pursuant to Suit by Daywalt for enforcement of contract (C) ~ Granted, contract in full force and effect while decree attained finality in 1914 > SUIT by Daywalt against the Church for having unlawfully interfered and induced Teodorica to refrain from the performance of her contract and to withhold the delivery of the Title ~ Damage in failure of the sugar growing and milling enterprise with Wakefield due to dispossession of title
> Liability of Teodorica from Damages consequent to breach of contract > Present BUT cannot be claimed due to res judicata of the action for specific performance (1909) which was granted in favor of Daywalt > HENCE, if damages are not sought in the action to enforce performance, they cannot be recovered in an independent action ~ WHY: Indemnification from breach of contract is a right inseparably annexed to every action for the fulfillment of the obligation > Right of Daywalt had already been exhausted thus ~ res judicata > Liability of Teodorica from Wrongful detention of real property as vendor > Value dependent on the interest: the value of the use and occupation of the land from the time it was withheld > YET, such damage, as a special damage, was not within contemplation of the parties when the contract was made and was too remote to be the subject of recovery
> Liability of the Church > Liability of Strangers > No more than what could be recovered from the party in whose behalf he intermeddles > (1) Teodorica has no liability, Church has no liability > MOREOVER, (2) Church NOT liable to damages to vendee > Mere advise is not an actionable interference with such contract of sale > They merely sympathized and believed in good faith that the contract could not be enforced and that Teodorica would be wronged if it should be carried into effect > No improper motive, no desire to secure to themselves the property
> Reconciliation of Liability of Strangers and Exclusivity of Parties to a Contract
> A stranger to a contract may, by an unjustifiable interference in the performance thereof, render himself liable for the damages consequent upon non-performance > Principle that any person who entices a servant from his employment is liable in damages to the master ~ Basis: Master’s juridical right in the service rendered by his employee > Presumption of Malice in interference ~ that the wrongful-doer, having knowledge of the existence of the contract relation, in bad faith sets about to break it up or to prevent its performance by
force, intimidation, coercion, or threats, or by false or defamatory statements, or by nuisance or riot
>> Damages recoverable in case of breach of contract: (1) Ordinary Damages > found in all breaches of contract where there are no special circumstances to distinguish the case specially from other contracts > Damages recoverable are those that naturally and generally would result from such a breach ~ immediate and inevitable damages; > (2) Special Damages > found in case where some external condition, apart from the actual terms to the contract exists or intervenes, as it were, to give a turn to affairs and to increase damage in a way that the promisor, without actual notice of that external condition, could not reasonably be expected to foresee > Necessity that the particular condition which made the damage a possible and likely consequence of the breach was known to the defendant at the time the contract was made ~ condition should be made the subject of contract
> Pursuing business interest will harm others but no contract interference because constructive destruction is inherent in a market
> Malice is required in contract interference
> When does it become contract interference: Malice ~ What constitutes Malice:
G.R. No. 120554 September 21, 1999
SO PING BUN v. CA, TEK HUA ENTERPRISING CORP. and MANUEL C. TIONG
Facts: Trendsetter interfered with the fulfillment of Tek Hua of its lease contract with DCCSI when it obtained a lease for its own, covering the warehouse of the property, because it deprived Tek Hua of its property right. But since such act was justified by Trendsetter’s motive to benefit itself, damages cannot be granted to Tek Hua but the lease contract of Trendsetter had been nullified. > Lease Agreements (1963) between Tek Hua Trading Co. (thru managing partner, So Pek Giok) and Dee C. Chuan & Sons, Inc. where the latter leased its property for 1y, renewable for a monthly basis ~ Expired, Non-renewal but Continued Possession of Tek Hua > Dissolution of Tek Hua Trading (1976), Formation of Tek Hua Enterprising > Death of So Pek Giok (1986) and Occupation of his grandson, So Ping Bun (Trendsetter Marketing), of the warehouse in the property which Tek Hua was leasing from DCCSI > Notice of Rent Increase (August 1, 1989) by DCCSI, (first effective September 1, 1989 then January 1, 1990, then December 1, 1990, from 25% to 20% then to 30%) ~ New Lease Contracts for signing, the failure of which would be deemed as
termination of the lease > Failure of Tek Hua to respond ~ Lease contract rescinded > Letter (March 1, 1991) by Manuel Tiong, President of Tek Hua, to So Ping Bun, demanding the possession of the warehouse in 14d because he would need it for his textile business ~ So Pin Bum refused, requested a contract of lease with DCCSI (March 4, 1992), and claimed that he had been paying rents ~ Lease Contract granted > SUIT for Nullification of Lease Contract by Tek Hua and Tiong against So Ping Bun
> Liability of So Pin Bum (Trendsetter Marketing) > In asking DCCSI for a contract of lease, it deprived Tek Hua of its property right by virtue of its lease > BUT his act was not motivated by malice but only the intention to benefit himself > YET detrimenting Tek Hua is not without consequences ~ Injunction and Nullification of Lease granted but without Damages
>> Damage > the loss, hurt, or harm which results from injury; the recompense or compensation awarded for the damage suffered > Liability for an action for damage for a nontrespassory invasion of another’s interest in the private use and enjoyment of asset if OR an unlawful interference by one person of the
enjoyment by the other of his private property: (a) the other has property rights and privileges with respect to the use or enjoyment interfered with, (b) the invasion is substantial, (c) the defendant’s conduct is a legal cause of the invasion, and (d) the invasion is either intentional and unreasonable or unintentional and actionable under general negligence rules > Elements of Tortuous Interference: (1) existence of a valid contract; (2) knowledge on the part of the third person of the existence of contract; and (3) interference of the third person is without legal justification or excuse >> Legal Justification: sole purpose of the defendant is to benefit himself, ie the furtherance of his own financial or economic interest or any substantial interest > financial or profit motivation will not necessarily make a person an officious interferer liable for damages as long as there is no malice or bad faith involved > HENCE, where the alleged interferer is financially interested, and such interest motivates his conduct, it cannot be said that he is a malicious intermeddler
G.R. No. 119107 March 18, 2005
JOSE V. LAGON v. CA and MENANDRO V. LAPUZ
Facts: In purchasing the property of Bai from her heirs, Lagon did not interfere the contract of lease of Lapuz with the late Bai because Lagaon did not know of the existence of the valid contract and had no malice in purchasing said
property.