NARCISO DEGAOS

v
PEOPLE BERSAMIN,
J.:

FACTS:
In an amended information, the Office of the Provincial Prosecutor charged Aida Luz, and
Narciso Degaos inthe RTC with estafa under Article 315 of the RPC allegedly committed as
follows:That they received from Sps Atty. Bordador gold and pieces of jewelry worth almost
500k under express obligation tosell the same on commission and remit the proceeds thereof or
return the unsold gold and pieces of jewelry, but thesaid accused, once in possession of the
said merchandise and far from complying with their obligation, inspite ofrepeated demands for
compliance therewith, willfully, unlawfully and feloniously, with intent of gain and grave abuseof
confidence misapply, misappropriate and convert to their own use and benefit the said
merchandise and/or theproceeds thereof, to the damage and prejudice of said Sps. Atty.
Bordador in the said amount of almost 500k.Prior to the institution of the instant case, a
separate civil action for the recovery of sum of money was filed by theSps. Bordador against
accused Aida and Narciso.

Issues:
1.) Whether or not Hence the sale was on credit
2.) Whether or not novation transpired

Held: 1.) Transaction was an agency, not a sale on credit

Narciso contends that his agreement with the complainants relative to the items of jewelry and
gold was a sale on credit, not a consignment to sell on commission basis. The contention of
Degaos is devoid of factual and legal bases. Based on the express terms and tenor of the
Kasunduan at Katibayan,
Narciso received and accepted the items under the obligation to sell them in behalf of the
complainants
and he would be compensated with the overprice as his commission. Plainly, the transaction
was a consignment under the obligation to account for the proceeds of sale, or to return the

unsold items.
As such, he was the agent of the complainants in the sale to others of the items.
In contrast, according the first paragraph of
Article 1458 of the Civil Code
, one of the contracting parties in a contract of sale obligates himself to transfer the ownership of
and to deliver a determinate thing, while the other party obligates himself to pay therefor a price
certain in money or its equivalent.
Contrary to the contention of Narciso, there was no sale on credit to him because the ownership
of the items did not pass to him.

2.) Novation did not transpire as to prevent the incipient criminal liability from arising Degaos
claims that his partial payments to the complainants novated his contract with them from agency
to loan, thereby converting his liability from criminal to civil. He insists that his failure to complete
his payments prior to the filing of the complaint-affidavit by the complainants notwithstanding,
the fact that the complainants later required him to make a formal proposal before the barangay
authorities on the payment of the balance of his outstanding obligations confirmed that novation
had occurred. The CA rejected the claim of Degaos, opining that his argument that novation
took place when the private complainants accepted his partial payments before the criminal
information was filed in court and therefore, his criminal liability was extinguished is untenable

Fil-Estate properties vs. Spouses Conrado and Ronquillo

FACTS:
Petitioner Fil-Estate Properties, Inc. is the owner and developer of the Central Park Place
Tower while co-petitioner Fil-Estate Network, Inc. is its authorized marketing agent.
Respondent Spouses Conrado and Maria Victoria Ronquillo purchased from petitioners an
82-square meter condominium unit at Central Park Place Tower in Mandaluyong City for a
pre-selling contract price of P 5,174,000.00. On 29 August 1997, respondents executed and
signed a Reservation Application Agreement wherein they deposited P200,000.00as
reservation fee. As agreed upon, respondents paid the full downpayment of P1,552,200.00
and had been paying the P63,363.33 monthly amortizations until September 1998.
Upon learning that construction works had stopped, respondents likewise stopped paying
their monthly amortization. Claiming to have paid a total of P2,198,949.96 to petitioners,
respondents through two successive letters, demanded a full refund of their payment with

interest. When their demands went unheeded, respondents were constrained to file a
Complaint for Refund and Damages before the Housing and Land Use Regulatory Board
(HLURB). Respondents prayed for reimbursement/refund of P2,198,949.96representing the
total amortization payments, P200,000.00 as and by way of moral damages, attorneys fees
and other litigation expenses.

ISSUES:
Whether or not the Asian financial crisis constitute a fortuitous event which would
justify delay by petitioners in the performance of their contractual obligation
Whether the award of moral damages, attorneys fees and administrative fine was
proper.
HELD: In Civil Law a fortuitous event can be a ground for rescission of contracts.
It is apparent that these issues were repeatedly raised by petitioners in all the legal fora.
The rulings were consistent that first, the Asian financial crisis is not a fortuitous event that
would excuse petitioners from performing their contractual obligation; second, as a result of
the breach committed by petitioners, respondents are entitled to rescind the contract and to
be refunded the amount of amortizations paid including interest and damages; and third,
petitioners are likewise obligated to pay attorneys fees and the administrative fine.
This petition did not present any justification for us to deviate from the rulings of the HLURB,
the Office of the President and the Court of Appeals.
Indeed, the non- performance of petitioners obligation entitles respondents to rescission
under Article 1191 of the New Civil Code which states: Article 1191. The power to rescind
obligations is implied in reciprocal ones, in case one of the obligors should not comply with
what is incumbent upon him. The injured party may choose between the fulfillment and the
rescission of the obligation, with payment of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the latter should become impossible.
More in point is Section 23 of Presidential Decree No. 957, the rule governing the sale of
condominiums, which provides: Section 23. Non-Forfeiture of Payments. No installment
payment made by a buyer in a subdivision or condominium project for the lot or unit he
contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after
due notice to the owner or developer, desists from further payment due to the failure of the
owner or developer to develop the subdivision or condominium project according to the
approved plans and within the time limit for complying with the same. Such buyer may, at
his option, be reimbursed the total amount paid including amortization interests but
excluding delinquency interests, with interest thereon at the legal rate.
Conformably with these provisions of law, respondents are entitled to rescind the contract
and demand reimbursement for the payments they had made to petitioners.

Ansay vs. Board of Directors

FACTS:
On July 25, 1956, Primitivo Ansay et al filed against the Board of Directors of the National
Development Company in the Court of First Instance of Manila a complaint praying for a 20%
Christmas bonus for the years 1954 and 1955.
Appellants contend that there exists a cause of action in their complaint because their claim rests
on moral grounds or what in brief is defined by law as a natural obligation.
ISSUE: Whether or not the Christmas bonus is demandable.
HELD: No, it is not demandable. Appellants admit that appellees are not under legal obligation
to give such claimed bonus and such grant only arises from a moral obligation or natural
obligation. However, natural obligation is only enforceable with the presence of the element of
voluntary fulfillment by the obligor. In the case at bar, there has been no voluntary performance
on the part of the appellees. Hence, the bonus is not demandable.
Salen vs. Balce
Facts: Plaintiffs are the legitimate parents of Carlos Salen who died from wounds caused by
Gumersindo Balce, a legitimate son of defendant who was then single, 18 yrs old and was living
with defendant. As a result of C. Salen's death, G. Balce was accused and convicted of
homicide and was sentenced to imprisonment and to pay the amount of P2,000.00. Plaintiffs
brought this action against defendant before CFI to recover the sum of P2,000.00, with legal
interest. Defendant, in his answer, set up the defense that the law upon which plaintiffs
predicate their right to recover does not here apply for the reason that law refers to quasi-delicts
and not to criminal cases. CFI sustained the theory of defendant.
Issue: Whether or not appellee can be held subsidiary liable to pay the indemnity in accordance
with Art. 2180 of the Civil Code.
Held: Judgment reversed.
Art 2180 Civil Code applies in the case at bar. To hold otherwise would result in the absurdity
that while for an act where mere negligence intervenes the father or mother may stand
subsidiarily liable for the damage caused by his or her son, no liability would attach if the
damage is caused with criminal intent. Verily, the void that apparently exists in the RPC (art.101)
is subserved by this particular provision of our Civil Code, as may be gleaned from some recent
decisions of the SC which cover equal or identical cases.

Saludaga vs. Feu

Facts:
It is the obligation of any college institution to provide a safe and secure
environment for every student. As for the students, they have the obligation to
give back the respect for their respective colleges and to excel and do well with
the institutions goals. Far Eastern University failed to comply with their
obligation when a student of theirs, whose name is Joseph Saludaga was shot
inside the campus by their security guard named Alejandro Rosete. The victim
petitioned a case against FEU and Edilberto C. De Jesus, president of FEU. The
University also failed to check the qualifications of the security guards hired
through Galaxy, the third party which hires security guards for the university.
From there, there are also complaints for Galaxy being the first employers of
Rosete. It is also said that the safety of the university should not only be within
the hands of the security guards. Damages are taken by Saludaga by surprised
including physical and moral damages obtained from the said accidental shooting
by Rosete who claimed that it was an accident.
Issue:
Whether Far Eastern University failed to comply with their obligation in
implementing a safe and secure learning environment.
Held:
The court dismissed the the petitioners complaints for Edilberto C. De Jesus as
well as the counterclaims of the respondents. The Regional Trial Court of Manila
found FEU to be liable for the damages and a breach of their obligation to the
petitioner. FEU was ordered to pay actual damage of 35,298.25, plus 6%interest
per annum from the filing of the case until the finality of decision. After the
execution, the rate shall be 12& per annum until its satisfaction. FEU was
ordered to pay temperate damages in the amount of P20,000.00. Moral damage
for P100,000.00, attorneys fees and litigation expense for 50,000.00
Galaxy was and its presidents were ordered to jointly and severely pay the
respondent FEU damages equivalent to the amount awarded to Saludaga.

Napocor vs. CA
Facts: On 15 November 1973, the Office of the President of the Philippines issued
Memorandum Order No. 398 instructing the NPC to build the Agus Regulation Dam at the
mouth of Agus River in Lanao del Sur, at a normal maximum water level of Lake Lanao at 702
meters elevation. Pursuant thereto, petitioner built and operated the said dam in 1978. Private
respondents Hadji Abdul Carim Abdullah, Caris Abdullah, Hadji Ali Langco and Diamael
Pangcatan own fishponds along the Lake Lanao shore. In October and November of 1986, all
the improvements were washed away when the water level of the lake escalated and the
subject lakeshore area was flooded. Private respondents blamed the inundation on the Agus
Regulation Dam built and operated by the NPC in 1978. They theorized that NPC failed to
increase the outflow of water even as the water level of the lake rose due to the heavy rains.

Issue: Whether or not the Court of Appeals erred in affirming the trial courts verdict that
petitioner was legally answerable for the damages endured by the private respondents.

Held: Memorandum Order No. 398 clothes the NPC with the power to build the Agus Regulation
Dam and to operate it for the purpose of generating energy. Twin to such power are the duties:
(1) to maintain the normal maximum lake elevation at 702 meters, and (2) to build benchmarks
to warn the inhabitants in the area that cultivation of land below said elevation is forbidden.
With respect to its job to maintain the normal maximum level of the lake at 702 meters, the
Court of Appeals, echoing the trial court, observed with alacrity that when the water level rises
due to the rainy season, the NPC ought to release more water to the Agus River to avoid
flooding and prevent the water from going over the maximum level. And yet, petitioner failed to
do so, resulting in the inundation of the nearby estates. Consequently, even assuming that the
fishponds were erected below the 702-meter level, NPC must, nonetheless, bear the brunt for
such damages inasmuch as it has the duty to erect and maintain the benchmarks precisely to
warn the owners of the neighboring properties not to build fishponds below these marks.
Without such points of reference, the inhabitants in said areas are clueless whether or not their
improvements are within the prohibited area. Conversely, without such benchmarks, NPC has
no way of telling if the fishponds, subject matter of the present controversy, are indeed below
the prescribed maximum level of elevation. Due to NPCs negligence in the performance of its
duties, it shall be held liable for the resulting damages suffered by private respondents.

Gaisano Cagayan Inc. vs. Insurance Company of North America

Facts:
IMC and Levi Strauss (Phils.) Inc. (LSPI) separately obtained from respondent fire insurance policies
with book debt endorsements. The insurance policies provide for coverage on "book debts in
connection with ready-made clothing materials which have been sold or delivered to various
customers and dealers of the Insured anywhere in the Philippines."
The policies defined book debts as the "unpaid account still appearing in the Book of Account of the
Insured 45 days after the time of the loss covered under this Policy." The policies also provide for the
following conditions:
1. Warranted that the Company shall not be liable for any unpaid account in respect of the
merchandise sold and delivered by the Insured which are outstanding at the date of loss for a period
in excess of six (6) months from the date of the covering invoice or actual delivery of the
merchandise whichever shall first occur.

2. Warranted that the Insured shall submit to the Company within twelve (12) days after the close of
every calendar monthall amount shown in their books of accounts as unpaid and thus become
receivable item from their customers and dealers.
Gaisano is a customer and dealer of the products of IMC and LSPI. On February 25, 1991, the
Gaisano Superstore Complex in Cagayan de Oro City, owned by petitioner, was consumed by fire.
Included in the items lost or destroyed in the fire were stocks of ready-made clothing materials sold
and delivered by IMC and LSPI.
Insurance of America filed a complaint for damages against Gaisano. It alleges that IMC and LSPI
were paid for their claims and that the unpaid accounts of petitioner on the sale and delivery of
ready-made clothing materials with IMC was P2,119,205.00 while with LSPI it was P535,613.00.

Issue: Whether or not the petitioner is liable for the fortuitous event.

Held: Petitioner's argument that it is not liable because the fire is a fortuitous event under Article
117432 of the Civil Code is misplaced. As held earlier, petitioner bears the loss under Article 1504 (1)
of the Civil Code.
Moreover, it must be stressed that the insurance in this case is not for loss of goods by fire but for
petitioner's accounts with IMC and LSPI that remained unpaid 45 days after the fire. Accordingly,
petitioner's obligation is for the payment of money. As correctly stated by the CA, where the
obligation consists in the payment of money, the failure of the debtor to make the payment even by
reason of a fortuitous event shall not relieve him of his liability. The rationale for this is that the rule
that an obligor should be held exempt from liability when the loss occurs thru a fortuitous event only
holds true when the obligation consists in the delivery of a determinate thing and there is no
stipulation holding him liable even in case of fortuitous event. It does not apply when the obligation is
pecuniary in nature.
Under Article 1263 of the Civil Code, "[i]n an obligation to deliver a generic thing, the loss or
destruction of anything of the same kind does not extinguish the obligation." This rule is based on
the principle that the genus of a thing can never perish. An obligation to pay money is generic;
therefore, it is not excused by fortuitous loss of any specific property of the debtor.

Telefast vs. Castro

Facts:
The petitioner is a company engaged in transmitting telegrams. The plaintiffs are the children and
spouse of Consolacion Castro who died in the Philippines. One of the plaintiffs, Sofia sent a telegram
thru Telefast to her father and other siblings in the USA to inform about the death of their mother.
Unfortunately, the deceased had already been interred but not one from the relatives abroad was able
to pay their last respects. Sofia found out upon her return in the US that the telegram was never
received. Hence the suit for damages on the ground of breach of contract. The defendant-petitioner
argues that it should only pay the actual amount paid to it.
Issue: Whether or not the award of the moral, compensatory and exemplary damages is proper.

Held: Yes, there was a contract between the petitioner and private respondent Sofia C. Crouch
whereby, for a fee, petitioner undertook to send said private respondent's message overseas by
telegram. Petitioner failed to do this despite performance by said private respondent of her obligation
by paying the required charges. Petitioner was therefore guilty of contravening its and is thus liable
for damages. This liability is not limited to actual or quantified damages. To sustain petitioner's
contrary position in this regard would result in an inequitous situation where petitioner will only be
held liable for the actual cost of a telegram fixed thirty (30) years ago.
Art. 1170 of the Civil Code provides that "those who in the performance of their obligations are
guilty of fraud, negligence or delay, and those who in any manner contravene the tenor thereof, are
liable for damages." Art. 2176 also provides that "whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the damage done."

Hong Kong & Shanghai Banking Corp v. Spouses

Bienvenido & Broqueza
FACTS:
Broqueza (Respondents) are employees of HSBC and are also part of the retirement trust
fund (Petitioner). Respondents obtained loans from HSBC to be automatically deducted
from their salaries. However, there was a labor dispute between the employees and HSBC
which led to their dismissal. The employees filed a case of illegal dismissal, but HSBC
already issued demands upon Respondents which led to their delinquency.
There was a collection case filed in the MeTC by Petitioner, which it won. Termination from
employment resulted in the loss of continued benefits under their retirement plans.Thus, the
loans secured by their future retirement benefits to which they are no longer entitled are
reduced to unsecured and pure civil obligations.As unsecured and pure obligations, the
loans
are
immediately
demandable.
Respondents appealed to the RTC, but it upheld the decision of the lower court. On appeal
to the CA, it held in favour of Respondents, stating that complaints for recovery of sum of
money against Respondents are premature as the loan obligations have not yet
matured.Thus,
no
cause
of
action
accrued
in
favor
of
Petitioner.
Petitioner

thus

appeals

to

the

Supreme

Court.

ISSUES:
A.

Whether

HELD:

or

not

the

CA erred

Petition

in

ruling

that
is

the

claim

was

premature.
meritorious.

LABOR
First

LAW:

Retirement

Benefits
Issue:

In their Answer, the spouses Broqueza admitted that prior to Editha Broquezas dismissal
from HSBC in December 1993, she "religiously paid the loan amortizations, which HSBC
collected through payroll check-off."A definite amount is paid to HSBCL-SRP on a specific
date. Editha Broqueza authorized HSBCL-SRP to make deductions from her payroll until
her loans are fully paid.Editha Broqueza, however, defaulted in her monthly loan payment
due to her dismissal.Despite the spouses Broquezas protestations, the payroll deduction is
merely a convenient mode of payment and not the sole source of payment for the
loans.HSBCL-SRP never agreed that the loans will be paid only through salary
deductions.Neither did HSBCL-SRP agree that if Editha Broqueza ceases to be an
employee of HSBC, her obligation to pay the loans will be suspended.HSBCL-SRP can
immediately demand payment of the loans at anytime because the obligation to pay has no
period.Moreover, the spouses Broqueza have already incurred in default in paying the
monthly
installments.
The enforcement of a loan agreement involves "debtor-creditor relations founded on
contract and does not in any way concern employee relations.As such it should be
enforcedthrough a separate civil action in the regular courts and not before the Labor
Arbiter."