Petitioner: PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

Respondent: ROGELIO BAYOTAS y CORDOVA, accused-appellant.

G.R. No. 102007, September 2, 1994
FACTS

Rogelio Bayotas y Cordova was charged with Rape and eventually convicted thereof. Pending appeal of his conviction,
Bayotas died. Consequently, the Supreme Court dismissed the criminal aspect of the appeal. However, it required the Solicitor
General to file its comment with regard to the civil liability of Bayotas arising from his commission of the offense charged.

ISSUE: Whether or not the death of the accused pending appeal of his conviction extinguish his civil liability.

HELD:

Article 89 of the Revised Penal Code provides that by death of the convict personal liabilities are extinguished, as to
pecuniary penalties liability therefore is extinguished only when the death of the offender occurs before final judgment.

Thus the court made a ruling as follows:

1… Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based
solely thereon;

2 Corollarily, the claim for civil liability survives notwithstanding the death of the accused, if the same may also be
predicated on a source of obligation other than delict. Aricle 1157 of the Civil Code enumerates these other sources of obligation
from which the civil liability may arise as a result of the same act or omission: Law, Contracts, Quasi-contracts, Acts or omissions
punished by law, Quasi-delicts;

3. Where the civil liability survives, an action for recovery therefore may be pursued but only by way of separate civil action
and may be enforced either against the executor/administrator of the estate of the accused, depending on the source of obligation
aside from delicts;

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

In the case at bar, the death of Bayotas extinguished his criminal and civil liability based solely on the act of rape. Hence, his
civil liability also extinguished together with his criminal liability upon his death.
1. In Criminal Case No. C-3217 filed before Branch 16, RTC Roxas City, Rogelio Bayotas y Cordova was charged with Rape
and eventually convicted thereof on June 19, 1991 in a decision held by Judge Manuel E. Autajay.
2. Pending appeal of his conviction, Bayotas died on February 4, 1992 at the National Bilibid Hospital (due to cardio
respiratory arrest secondary to hepatic encephalopathy secondary to hipato carcinoma gastric malingering.)
3. Consequently, the Supreme Court in its Resolution of May 20, 1992 dismissed the criminal aspect of the appeal.
4. However, it required the Solicitor General to file its comment with regard to Bayotas’ civil liability arising from his
commission of the offense charged.
5. In his comment, the Solicitor General expressed his view that the death of accused-appellant did not extinguish his civil
liability as a result of his commission of the offense charged.
6. (The Solicitor General, relying on the case of People v. Sendaydiego) insists that the appeal should still be resolved for
the purpose of reviewing his conviction by the lower court on which the civil liability is based.
7. Counsel for the accused-appellant, on the other hand, opposed the view of the Solicitor General arguing that the death of
the accused while judgment of conviction is pending appeal extinguishes both his criminal and civil penalties.
8. In support of his position, said counsel invoked the ruling of the Court of Appeals in People v. Castillo and Ocfemia 2
which held that the civil obligation in a criminal case takes root in the criminal liability and, therefore, civil liability is extinguished if
accused should die before final judgment is rendered.

ISSUE
1.Whether or not death of the accused pending appeal of his conviction extinguish his civil liability
2. How does obligation arise?

HELD
1. Yes, In the aforementioned case of People v. Castillo, this issue was settled in the affirmative.
2. Article 89 of the Revised Penal Code Provides that Criminal liability is totally extinguished By the death of the convict, as
to the personal penalties; and as to the pecuniary penalties, liability therefor is extinguished only when the death of the
offender occurs before final judgment;
3. The legal import of the term "final judgment" is similarly reflected in the Revised Penal Code. Articles 72 and 78 of that
legal body mention the term "final judgment" in the sense that it is already enforceable. This also brings to mind Section 7,
Rule 116 of the Rules of Court which states that a judgment in a criminal case becomes final "after the lapse of the period
for perfecting an appeal or when the sentence has been partially or totally satisfied or served, or the defendant has
expressly waived in writing his right to appeal."
4. Judge Kapunan observed that as "the civil action is based solely on the felony committed and of which the offender might
be found guilty, the death of the offender extinguishes the civil liability."
5. Here is the situation obtaining in the present case: Castillo's criminal liability is out. His civil liability is sought to be
enforced by reason of that criminal liability. But then, if we dismiss, as we must, the criminal action and let the civil aspect
remain, we will be faced with the anomalous situation whereby we will be called upon to clamp civil liability in a case
where the source thereof — criminal liability — does not exist. And, as was well
6. As held by then Supreme Court Justice Fernando in the Alison case: The death of accused-appellant Bonifacio Alison
having been established, and considering that there is as yet no final judgment in view of the pendency of the appeal, the
criminal and civil liability of the said accused-appellant Alison was extinguished by his death
7. On the other hand, this Court in the subsequent cases of Buenaventura Belamala v. Marcelino Polinar 7 and Lamberto
Torrijos v. The Honorable Court of Appeals 8 ruled differently. Article 33 of the Civil Code establishes a civil action for
damages on account of physical injuries, entirely separate and distinct from the criminal action.
Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from
the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal
prosecution, and shall require only a preponderance of evidence.

8. In Torrijos, the Supreme Court held that: It should be stressed that the extinction of civil liability follows the extinction of
the criminal liability under Article 89, only when the civil liability arises from the criminal act as its only basis. Stated
differently, where the civil liability does not exist independently of the criminal responsibility, the extinction of the latter by
death, ipso facto extinguishes the former, provided, of course, that death supervenes before final judgment. The said
principle does not apply in instant case wherein the civil liability springs neither solely nor originally from the crime itself
but from a civil contract of purchase and sale.
9. It is, thus, evident that as jurisprudence evolved from Castillo to Torrijos, the rule established was that the survival of the
civil liability depends on whether the same can be predicated on sources of obligations other than delict. Stated differently,
the claim for civil liability is also extinguished together with the criminal action if it were solely based thereon, i.e., civil
liability ex delicto.

10. However, the Supreme Court in People v. Sendaydiego, et al. 10 departed from this long-established principle of law. In
this case, accused Sendaydiego was charged with and convicted by the lower court of malversation thru falsification of
public documents. Sendaydiego's death supervened during the pendency of the appeal of his conviction.

This court in an unprecedented move resolved to dismiss Sendaydiego's appeal but only to the extent of his criminal liability.
His civil liability was allowed to survive although it was clear that such claim thereon was exclusively dependent on the criminal
action already extinguished. The legal import of such decision was for the court to continue exercising appellate jurisdiction
over the entire appeal, passing upon the correctness of Sendaydiego's conviction despite dismissal of the criminal action, for
the purpose of determining if he is civilly liable. In doing so, this Court issued a Resolution of July 8, 1977 stating thus:

The claim of complainant Province of Pangasinan for the civil liability survived Sendaydiego because his death occurred after
final judgment was rendered by the Court of First Instance of Pangasinan, which convicted him of three complex crimes of
malversation through falsification and ordered him to indemnify the Province in the total sum of P61,048.23 (should be
P57,048.23).

The civil action for the civil liability is deemed impliedly instituted with the criminal action in the absence of express waiver
or its reservation in a separate action (Sec. 1, Rule 111 of the Rules of Court). The civil action for the civil liability is
separate and distinct from the criminal action (People and Manuel vs. Coloma, 105 Phil. 1287; Roa vs. De la Cruz, 107
Phil. 8).

When the action is for the recovery of money and the defendant dies before final judgment in the Court of First Instance, it
shall be dismissed to be prosecuted in the manner especially provided in Rule 87 of the Rules of Court (Sec. 21, Rule 3 of
the Rules of Court).

The implication is that, if the defendant dies after a money judgment had been rendered against him by the Court of First
Instance, the action survives him. It may be continued on appeal (Torrijos vs. Court of Appeals, L-40336, October 24,
1975; 67 SCRA 394).

11. From this lengthy disquisition, we summarize our ruling herein:

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

2. Corollary, the claim for civil liability survives notwithstanding the death of accused, if the same may also be predicated
on a source of obligation other than delict. 19 Article 1157 of the Civil Code enumerates these other sources of obligation
from which the civil liability may arise as a result of the same act or omission:

a) Law

b) Contracts

c) Quasi-contracts

d) Acts or omissions punished by law

e) Quasi-delicts

3. Where the civil liability survives, as explained in Number 2 above, an action for recovery therefor may be pursued but only by
way of filing a separate civil action and subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended.
This separate civil action may be enforced either against the executor/administrator or the estate of the accused, depending on
the source of obligation upon which the same is based as explained above.

4. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in
cases where during the prosecution of the criminal action and prior to its extinction, the private-offended party instituted
together therewith the civil action. In such case, the statute of limitations on the civil liability is deemed interrupted during
the pendency of the criminal case, conformably with provisions of Article 1155 21 of the Civil Code, that should thereby
avoid any apprehension on a possible privation of right by prescription. 22

Applying this set of rules to the case at bench, we hold that the death of appellant Bayotas extinguished his criminal
liability and the civil liability based solely on the act complained of, i.e., rape. Consequently, the appeal is hereby
dismissed without qualification.

WHEREFORE, the appeal of the late Rogelio Bayotas is DISMISSED with costs de oficio.

SO ORDERED.
 1. The ruling in Sendaydiego deviated from the expressed intent of Article 89 of RPC. It allowed claims for civil liability
ex delicto to survive by ipso facto treating the civil action impliedly instituted with the criminal, as one filed under
Article 30 of Civil Code, as though no criminal proceedings had been filed but merely a separate civil action.
2. This had the effect of converting such claims from one which is dependent on the outcome of the criminal action to
an entirely new and separate one, the prosecution of which does not even necessitate the filing of criminal
proceedings. It is to be borne in mind that in recovering civil liability ex delicto, the same has perforce to be
determined in the criminal action, rooted as it is in the court’s pronouncement of the guilt or innocence of the
accused.
3. This is but to render fealty to the intendment of Article 100 of the Revised Penal Code which provides that “every
person criminally liable for a felony is also civilly liable.” In such cases, extinction of the criminal action due to death
of the accused pending appeal inevitably signifies the concomitant extinction of the civil liability. (Mors Omnia Solvi.)
Death dissolves all things.
xxx
From this lengthy disquisition, we summarize our ruling herein:
1. Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely
thereon. As opined by Justice Regalado, in this regard, “the death of the accused prior to final judgment terminates his criminal
liability and only the civil liability directly arising from and based solely on the offense committed, i.e., civil liability ex delicto in senso
strictiore.”
2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the same may also be predicated on a
source of obligation other than delict.
3. Where the civil liability survives, as explained in Number 2 above, an action for recovery therefor may be pursued but only by way
of filing a separate civil action and subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This
separate civil action may be enforced either against the executor/administrator or the estate of the accused, depending on the
source of obligation upon which the same is based as explained above.
4. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in cases
where during the prosecution of the criminal action and prior to its extinction, the private-offended party instituted together therewith
the civil action. In such case, the statute of limitations on the civil liability is deemed interrupted during the pendency of the criminal
case, conformably with provisions of Article 1155 21 of the Civil Code, that should thereby avoid any apprehension on a possible
privation of right by prescription.
Applying this set of rules to the case at bench, we hold that the death of appellant Bayotas extinguished his criminal liability and the
civil liability based solely on the act complained of, i.e., rape. Consequently, the appeal is hereby dismissed without qualification.
G.R. No. 82562 April 11, 1997 2
LYDIA VILLEGAS, MA TERESITA VILLEGAS, ANTONIO VILLEGAS, JR., and ANTONIETTE VILLEGAS vs. THE COURT OF
APPEALS, PEOPLE OF THE PHILIPPINES and ANTONIO V. RAQUIZA

G.R. No. 82592 April 11, 1997

ANTONIO V. RAQUIZA vs. COURT OF APPEALS, LYDIA A. VILLEGAS, ANTONIO VILLEGAS, JR., MA. ANTONETTE
VILLEGAS, MA. LYDIA VILLEGAS and ESTATE OF ANTONIO J. VILLEGAS

FACTS:
1. This case originated from a libel suit filed by then Assemblyman Antonio V. Raquiza against then Manila Mayor Antonio J.
Villegas, who allegedly publicly imputed to him acts constituting violations of the Anti-Graft and Corrupt Practices Act. He
did this on several occasions in August 1968
2. After losing in the 1971 elections, Villegas left for the United States where he stayed until his death.
3. Nevertheless, trial for libel case proceeded on absentia. Two months after the prosecution rested its case, the court
issued an order dismissing the criminal aspect of the case but reserving the right to resolve its civil aspect.
4. Subsequently the Court awarded Raquiza actual, moral, exemplary damages and cost of suit.
2. Ordering the estate of Antonio J. Villegas, represented herein by his legal heirs to pay plaintiff Antonio V. Raquiza Two
Hundred Million Pesos (P200,000,000.00), itemized as follows:
5. On appeal, the CA affirmed but reduced the amount of damages to 2 million. Hence, this petition.

ISSUE: WON the death of the accused before final judgment extinguish his civil liability?

HELD:

1… NO, because the source of Villegas’ civil liability in the present case is the felonious act of libel he allegedly committed.
and, this act could also be deemed a quasi-delict within the purview of Article 33 in relation to Article 1157 of the Civil Code.

2.. Article 33 of the Civil Code provides Raquiza’s right to recover demages arose from this article not from delict.
3.. Also, Article 1157 of the Civil Code enumerates these other sources of obligation from which the civil liability may arise as
a result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) Act or omissions punished by law
e) Quasi-delicts
4.. Now, If the court ruled in People v. Bayotas that the death of an accused during the pendency of his appeal extinguishes
not only his criminal as well as the civil liability unless the latter can be predicated on a source of obligation other than the act or
omission complained, with more reason should it apply to the case at bar where the accused died shortly after the prosecution
rested its case and before he was able to submit his memorandum and all this before any decision could even be reached by the
trial court.

5.. The Bayotas ruling, however, makes the enforcement of a deceased accused’s civil liability dependent on two factors,
namely, that it be pursued by filing a separate civil action and that it be made subject to the Rules on Criminal Procedure.

6.. Obviously, in the case at bar, the civil action was deemed instituted with the criminal. There was no waiver of the civil
action and no reservation of the right to institute the same, nor was it instituted prior to the criminal action.

7.. What then is the recourse of the private offended party in a criminal case such as this which must be dismissed in
accordance with the Bayotas doctrine, where the civil action was impliedly instituted with it?

8.. The answer is likewise provided in Bayotas, thus:

Assuming that for lack of express reservation, Belamala’s civil action for damages was to be considered instituted together with the
criminal action still, since both proceedings were terminated without finals adjudication, the civil action of the offended party under
Article 33 may yet be enforced separately.

9.. Hence, logically, the court should have dismissed both actions against Villegas which dismissal will not however, bar
Raquiza as the private offended party from pursuing his claim for damages against the executor or administrator of Villegas estate.
Notwithstanding the fact that he did not reserve the right to institute a civil action based on Article 33 of the Civil Code.
Arturo Pelayo vs Marcelo Lauron, et alG.r. no. L-4089 January 12, 1909
Facts:
1. On the 23rd of November, 1906, Arturo Pelayo, a physician residing in Cebu, filed a complaint against Marcelo Lauron and Juana
Abella on the ground that sometime in October 13, 1906, the plaintiff was called to the house of the defendants, situated in San
Nicolas, Pelayo was requested to render assistance to their daughter-in-law who was about to give birth to a child.
2. He then rendered medical services to the defendants. He even visited the patient several times and wanted to be paid for the
medical services he rendered but the defendants refused to pay 500 php. to do so without alleging any good reason.
3. In an answer to the complaint, the defendants denied all the allegations made by the plaintiff.
4. The defendants even told that their daughter-in-law had died in consequence of the childbirth and while she was alive she lived with
her husband independently and in a separate house.
5. The defendants were absolved from the complaint on account of lack of sufficient evidence to establish a right of action against the
defendants.

Issue: Whether or not the defendants Marcelo Lauron and Juana Abella liable to pay 500 Php for the medical services rendered by Pelayo.

Held:
1. Obligations are created by law, by contracts, by quasi-contracts, and by illicit acts and omissions or by those in which any kind of
fault or negligence occurs.
2. Obligations arising from law are not presumed. Those expressly determined in the code or in special laws are the only demandable
ones.
3. Obligations arising from contracts have legal force between the contracting parties and must be fulfilled in accordance with their
stipulations. (Arts. 1090and 1091.)
4. The rendering of medical assistance in case of illness is comprised among the mutual obligations to which the spouses are bound by
way of mutual support. (Arts. 142 and 143.)
5. If every obligation consists in giving, doing or not doing something (art. 1088), and spouses are mutually bound to support each
other, there can be no question but that, when either of them by reason of illness should be in need of medical assistance, the other
is under the unavoidable obligation to furnish the necessary services of a physician in order that health may be restored, and he or
she may be freed from the sickness by which life is jeopardized;
6. The party bound to furnish such support is therefore liable for all expenses, including the fees of the medical expert for his
professional services. This liability originates from the above-cited mutual obligation which the law has expressly established
between the married couple.
7. In case at bar, the person bound to pay the fees due to the plaintiff for the professional services that he rendered to the daughter-
in-law of the defendants during her childbirth, is the husband of the patient and not her father and mother- in-law, the defendants
herein.
8. The fact that it was not the husband who called the plaintiff and requested his assistance for his wife is no bar to the fulfilment of
the said obligation, as the defendants, in view of the imminent danger, to which the life of the patient was at that moment exposed,
considered that medical assistance was urgently needed,
9. and the obligation of the husband to furnish his wife in the indispensable services of a physician at such critical moments is specially
established by the law, as has been seen, and compliance therewith is unavoidable;
10. therefore, the plaintiff, who believes that he is entitled to recover his fees, must direct his action against the husband who is under
obligation to furnish medical assistance to his lawful wife in such an emergency.
11. Within the meaning of the law, the father and mother-in-law are strangers with respect to the obligation that devolves upon the
husband to provide support, among which is the furnishing of medical assistance to his wife at the time of her confinement;
12. And, on the other hand, it does not appear that a contract existed between the defendants and the plaintiff physician, for which
reason it is obvious that the former cannot be compelled to pay fees which they are under no liability to pay because it does not
appear that they consented to bind themselves.
 13. Therefore, in view of the consideration hereinbefore set forth, it is our opinion that the judgment appealed from should be affirmed
with the costs against the appellant. So ordered.

From Canoy

FACTS:

Petitioner Pelayo, a physician, rendered a medical assistance during the child delivery of the daughter-in-law of the defendants. The
just and equitable value of services rendered by him was P500.00 which the defendants refused to pay without alleging any good reason. With
this, the plaintiff prayed that the judgment be entered in his favor as against the defendants for the sum of P500.00 and costs.

The defendants denied all of the allegation of the plaintiff, contending that their daughter-in-law had died in consequence of the child-
birth, and that when she was alive, she lived with her husband independently and in a separate house, that on the day she gave birth she was in the
house of the defendants and her stay there was accidental and due to fortuitous circumstances.

ISSUE:

Whether or not the defendants are obliged to pay the petitioner for the medical assistance rendered to their daughter-in-law.

HELD:

According to Article 1089 of the Old Civil Code (now 1157), obligations are created by law, by contracts, by quasi-contracts, by illicit
acts and omissions or by those which any kind of fault or negligence occurs. Obligations arising from law are not presumed. Those expressly
determined in the Code or in special law, etc., are the only demandable ones.

The rendering of medical assistance in case of illness is comprised among the mutual obligations to which the spouses are bound by
way of mutual support as provided by the law or the Code. Consequently, the obligation to pay the plaintiff for the medical assistance rendered to
the defendant’s daughter-in-law must be couched on the husband.

In the case at bar, the obligation of the husband to furnish his wife in the indispensable services of a physician at such critical
moments is especially established by the law and the compliance therewith is unavoidable.

LEUNG BEN VS. P. J. O'BRIEN

G.R. No. L-13602 April 6, 1918

FACTS:

1. An action was instituted in the Court of First Instance of the city of Manila by P. J. O'Brien to recover the sum of P15,000 alleged to
have been lost by Leung Ben to P.J. O’Brien in a series of gambling, banking and percentage games conducted during the two or three months
prior to the institution of the suit.
2. In Leung Ben’s verified complaint, O’Brien asked for an attachment against the property of Leung Ben on the ground that the latter
was about to depart from the Philippine Islands with intent to defraud his creditors.
3. This attachment was issued, and acting under that authority, the sheriff attached the sum of P15,000 which had been deposited by
the O’Brien with the International Banking Corporation.

4. Leung Bien filed a motion to quash the attachment, which was dismissed by the court.
5. Hence, this application for a writ of certiorari, the purpose of which was to quash an attachment issued from the Court of First
Instance of the City of Manila.

ISSUE: Was the statutory obligation to restore money won at gaming an obligation arising from "contract, express or implied?"
RULING:

1. Yes. Upon general principles, recognized both in the civil and common law, money lost in gaming and voluntarily paid by the loser to
the winner cannot, in the absence of statute, be recovered in a civil action.
2. But Act No. 1757 of the Philippine Commission, which defines and penalizes several forms of gambling, contains numerous
provisions recognizing the right to recover money lost in gambling or in playing certain games.
3. The original complaint filed in the Court of First Instance was not clear as to the particular section of Act No. 1757 under which the
action was brought(secs. 6, 7, 8, 9, 11)., but was alleged that the money was lost at gambling, banking, and percentage game in which the
defendant was a banker.
4. It must therefore be assumed that the action was based upon the right of recovery given in section 7 of said Act, which declared that
an action may be brought against the banker by any person losing money at a banking or percentage game.

It was observed that according to the Civil Code obligations are supposed to be derived either from (1) the law, (2) contracts and quasi-
contracts, (3) illicit acts and omission, or (4) acts in which some sort fault or negligence is present.
5. This enumeration of sources of obligations and the obligation imposed by law are different types. The obligations which in the Code
are indicated as quasi-contracts, as well as those arising ex lege(as a matter of law), are in the common law system, merged into the category
of obligations imposed by law, and all are denominated implied contracts.

6. In the case under consideration, the duty of O’ Brien to refund the money which he won from the Leung Ben at gaming was a duty
imposed by statute. It therefore arose ex lege.
7. Furthermore, it was a duty to return a certain sum which had passed from O’Brien to Leung Ben. By all the criteria which the
common law supplies, this a duty in the nature of debt and is properly classified as an implied contract.
8. It was well- settled by the English authorities that money lost in gambling or by lottery, if recoverable at all, can be recovered by the
loser in an action of indebitatus assumpsit for money had and received.
9. This meant that in the common law the duty to return money won in this way was an implied contract, or quasi-contract.
10. The phase in question should be interpreted in such a way as to include all obligations, whether arising from consent or ex lege,
because that was equivalent to eliminating all distinction between the first and the fifth paragraphs by practically striking out the first two lines
of paragraph one. The Legislature had deliberately established this distinction, and while we may be unable to see any reason why it should
have been made, it was our duty to apply and interpret the law, and we were not authorized under the guise of interpretation to virtually
repeal part of the statute.

11. Nor can it be said that the relations between the parties litigant constitute a quasi-contract. In the first place, quasi- contracts are
"lawful and purely voluntary acts by which the authors thereof become obligated in favor of a third person. . . ."
12. The act which gave rise to the obligation ex lege relied upon by Leung Ben in the court below is illicit an unlawful gambling game.
13. In the second place, the first paragraph of section 412 of the Code of Civil Procedure does not authorize an attachment in actions
arising out of quasi contracts, but only in actions arising out of contract, express or implied.

From Canoy

FACTS:

Upon December 12, 1917, an action was instituted in the Court of First Instance of the city of Manila by P. J. O'Brien to recover of
Leung Ben the sum of P15,000 alleged to have been lost by the plaintiff to the defendant in a series of gambling, banking and percentage games
conducted ruing the two or three months prior to the institution of the suit. In his verified complaint the plaintiff asked for an attachment, under
section 424, and 412 (1) of the Code of Civil Procedure, against the property of the defendant, on the ground that the latter was about to depart
from the Philippine islands with intent to defraud his creditors. This attachment was issued; and acting under the authority thereof, the sheriff
attached the sum of P15,000 which had been deposited by the defendant with the International Banking Corporation.

ISSUE:

Whether or not Leung Ben has the legal basis to recover the money he lost to O’brien in a series of gambling, banking and percentage
games.

HELD:

YES. As a general rule, money lost in gaming and voluntarily paid by the loser to the winner cannot in the absence of statue, be
recovered in a civil action. But Act No. 1757 of the Philippine Commission, which defines and penalizes several forms of gambling, contains
numerous provisions recognizing the right to recover money lost in gambling or in the playing of certain games (secs. 6, 7, 8, 9, 11). The original
complaint in the action in the Court of First Instance is not clear as to the particular section of Act No. 1757 under which the action is brought,
but it is alleged that the money was lost at gambling, banking, and percentage game in which the defendant was banker. It must therefore be
assumed that the action is based upon the right of recovery given in Section 7 of said Act, which declares that an action may be brought against
the banker by any person losing money at a banking or percentage game.

Is this a cause arising upon contract, express or implied, as this term is used in section 412 of the Code of Civil Procedure?

In the case now under consideration the duty of the defendant to refund the money which he won from the plaintiff at gaming is a duty
imposed by statute. It therefore arises ex lege. Furthermore, it is a duty to return a certain sum which had passed from the plaintiff to the
defendant. By all the criteria which the common law supplies, this a duty in the nature of debt and is properly classified as an implied contract. It
is well- settled by the English authorities that money lost in gambling or by lottery, if recoverable at all, can be recovered by the loser in an action
of indebitatus assumpsit for money had and received. This means that in the common law the duty to return money won in this way is an implied
contract, or quasi-contract.

Roman Catholic Bishop of Malolos, Inc. vs. Intermediate Appellate Court, G.R. No. 72110, 191 SCRA 411 , November 16,
1990

G.R. No. 72110. November 16, 1990.*

ROMAN CATHOLIC BISHOP OF MALOLOS, INC., petitioner, vs. INTERMEDIATE APPELLATE COURT, and ROBES-
FRANCISCO REALTY AND DEVELOPMENT CORPORATION, respondents.

PETITION for certiorari to review the decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Rodrigo Law Office for petitioner.

Antonio P. Barredo and Napoleon M. Malinas for private respondent.

SARMIENTO, J.:

This is a petition for review on certiorari which seeks the reversal and setting aside of the decision of the Court of Appeals, the
dispositive portion of which reads:

WHEREFORE, the decision appealed from is hereby reversed

2 AC-G.R. CV No. 69626, Robes-Francisco Realty & Development Corporation vs. Roman Catholic Bishop of Malolos, Inc. and set
aside and another one entered for the plaintiff ordering the defendant-appellee Roman Catholic Bishop of Malolos, Inc. to accept the
balance of P124,000.00 being paid by plaintiff-appellant and thereafter to execute in favor of Robes-Francisco Realty Corporation a
registerable Deed of Absolute Sale over 20,655 square meters portion of that parcel of land situated in San Jose del Monte, Bulacan
described in OCT No. 575 (now Transfer Certificates of Title Nos. T-169493, 169494, 169495 and 169496) of the Register of Deeds
of Bulacan. In case of refusal of the defendant to execute the Deed of Final Sale, the clerk of court is directed to execute the said
document. Without pronouncement as to damages and attorney’s fees. Costs against the defendant-appellee.

The case at bar arose from a complaint filed by the private respondent, then plaintiff, against the petitioner, then defendant, in the
Court of First Instance (now Regional Trial Court) of Bulacan, at Sta. Maria, Bulacan,4 for specific performance with damages,
based on a contract5 executed on July 7, 1971.

The property subject matter of the contract consists of a 20,655 sq.m.-portion, out of the 30,655 sq.m. total area, of a parcel of land
covered by Original Certificate of Title No. 575 of the Province of Bulacan, issued and registered in the name of the petitioner which
it sold to the private respondent for and in consideration of P123,930.00.

The crux of the instant controversy lies in the compliance or non-compliance by the private respondent with the provision for
payment to the petitioner of the principal balance of P100,000.00 and the accrued interest of P24,000.00 within the grace period.
A chronological narration of the antecedent facts is as follows:

On July 7, 1971, the subject contract over the land in question was executed between the petitioner as vendor and the private
respondent through its then president, Mr. Carlos F. Robes, as vendee, stipulating for a downpayment of P23,930.00 and the
balance of P100,000.00 plus 12% interest per annum to be paid within four (4) years from execution of the contract, that is, on or
before July 7, 1975. The contract likewise provides for cancellation, forfeiture of previous payments, and reconveyance of the land in
question in case the private respondent would fail to complete payment within the said period.

On March 12, 1973, the private respondent, through its new president, Atty. Adalia Francisco, addressed a letter to Father Vasquez,
parish priest of San Jose Del Monte, Bulacan, requesting to be furnished with a copy of the subject contract and the supporting
documents.

On July 17, 1975, admittedly after the expiration of the stipulated period for payment, the same Atty. Francisco wrote the petitioner a
formal request that her company be allowed to pay the principal amount of P100,000.00 in three (3) equal installments of six (6)
months each with the first installment and the accrued interest of P24,000.00 to be paid immediately upon approval of the said
request.

On July 29, 1975, the petitioner, through its counsel, Atty. Carmelo Fernandez, formally denied the said request of the private
respondent, but granted the latter a grace period of five (5) days from the receipt of the denial to pay the total balance of
P124,000.00, otherwise, the provisions of the contract regarding cancellation, forfeiture, and reconveyance would be implemented.

On August 4, 1975, the private respondent, through its president, Atty. Francisco, wrote the counsel of the petitioner requesting an
extension of 30 days from said date to fully settle its account. The counsel for the petitioner, Atty. Fernandez, received the said letter
on the same day. Upon consultation with the petitioner in Malolos, Bulacan, Atty. Fernandez, as instructed, wrote the private
respondent a letter dated August.

Consequently, Atty. Francisco, the private respondent’s president, wrote a letter dated August 22, 1975, directly addressed to the
petitioner, protesting the alleged refusal of the latter to accept tender of payment purportedly made by the former on August 5, 1975,
the last day of the grace period. In the same letter of August 22, 1975, received on the following day by the petitioner, the private
respondent demanded the execution of a deed of absolute sale over the land in question and after which it would pay its account in
full, otherwise, judicial action would be resorted to.

On August 27, 1975, the petitioner’s counsel, Atty. Fernandez, wrote a reply to the private respondent stating the refusal of his client
to execute the deed of absolute sale due to its (private respondent’s) failure to pay its full obligation. Moreover, the petitioner denied
that the private respondent had made any tender of payment whatsoever within the grace period. In view of this alleged breach of
contract, the petitioner cancelled the contract and considered all previous payments forfeited and the land as ipso facto reconveyed.

From a perusal of the foregoing facts, we find that both the contending parties have conflicting versions on the main question of
tender of payment.

The trial court, in its ratiocination, preferred not to give credence to the evidence presented by the private respondent. According to
the trial court:

x x x What made Atty. Francisco suddenly decide to pay plaintiff’s obligation on August 5, 1975, go to defendant’s office at Malolos,
and there tender her payment, when her request of August 4, 1975 had not yet been acted upon until August 7, 1975? If Atty.
Francisco had decided to pay the obligation and had available funds for the purpose on August 5, 1975, then there would have been
no need for her to write defendant on August 4, 1975 to request an extension of time. Indeed, Atty. Francisco’s claim that she made
a tender of payment on August 5, 1975—such alleged act, considered in relation to the circumstances both antecedent and
subsequent thereto, being not in accord with the normal pattern of human conduct—is not worthy of credence.13

The trial court likewise noted the inconsistency in the testimony of Atty. Francisco, president of the private respondent, who earlier
testified that a certain Mila Policarpio accompanied her on August 5, 1975 to the office of the petitioner. Another person, however,
named Aurora Oracion, was presented to testify as the secretary-companion of Atty. Francisco on that same occasion.

Furthermore, the trial court considered as fatal the failure of Atty. Francisco to present in court the certified personal check allegedly
tendered as payment or, at least, its xerox copy, or even bank records thereof. Finally, the trial court found that the private
respondent had insufficient funds available to fulfill the entire obligation considering that the latter, through its president, Atty.
Francisco, only had a savings account deposit of P64,840.00, and although the latter had a money-market placement of
P300,000.00. the same was to mature only after the expiration of the 5-day grace period.
Based on the above considerations, the trial court rendered a decision in favor of the petitioner, the dispositive portion of which
reads:

WHEREFORE, finding plaintiff to have failed to make out its case, the court hereby declares the subject contract cancelled and
plaintiff’s down payment of P23,930.00 forfeited in favor of defendant, and hereby dismisses the complaint; and on the counterclaim,
the Court orders plaintiff to pay defendant.

(1) Attorney’s fees of P10,000.00;

(2) Litigation expenses of P2,000.00; and

(3) Judicial costs.

SO ORDERED.

Not satisfied with the said decision, the private respondent appealed to the respondent Intermediate Appellate Court (now Court of
Appeals) assigning as reversible errors, among others, the findings of the trial court that the available funds of the private
respondent were insufficient and that the latter did not effect a valid tender of payment and consignation.

The respondent court, in reversing the decision of the trial court, essentially relies on the following findings:

x x x We are convinced from the testimony of Atty. Adalia Francisco and her witnesses that in behalf of the plaintiff-appellant they
have a total available sum of P364,840.00 at her and at the plaintiff’s disposal on or before August 4, 1975 to answer for the
obligation of the plaintiff-appellant. It was not correct for the trial court to conclude that the plaintiff-appellant had only about
P64,840.00 in savings deposit on or before August 5, 1975, a sum not enough to pay the outstanding account of P124,000.00. The
plaintiff-appellant, through Atty. Francisco proved and the trial court even acknowledged that Atty. Adalia Francisco had about
P300,000.00 in money market placement. The error of the trial court lies in concluding that the money market placement of
P300,000.00 was out of reach of Atty. Francisco. But as testified to by Mr. Catalino Estrella, a representative of the Insular Bank of
Asia and America, Atty. Francisco could withdraw anytime her money market placement and place it at her disposal, thus proving
her financial capability of meeting more than the whole of P124,000.00 then due per contract. This situation, We believe, proves the
truth that Atty. Francisco apprehensive that her request for a 30-day grace period would be denied, she tendered payment on
August 4, 1975 which offer defendant through its representative and counsel refused to receive.

In other words, the respondent court, finding that the private respondent had sufficient available funds, ipso facto concluded that the
latter had tendered payment. Is such conclusion warranted by the facts proven? The petitioner submits that it is not.

Hence, this petition.16

The petitioner presents the following issues for resolution:

A. Is a finding that private respondent had sufficient available funds on or before the grace period for the payment of its obligation
proof that it (private respondent) did tender of (sic) payment for its said obligation within said period?

xxx xxx xxx

B. Is it the legal obligation of the petitioner (as vendor) to execute a deed of absolute sale in favor of the private respondent (as
vendee) before the latter has actually paid the complete consideration of the sale—where the contract between and executed by the
parties stipulates—

“That upon complete payment of the agreed consideration by the herein VENDEE, the VENDOR shall cause the execution of a
Deed of Absolute Sale in favor of the VENDEE.”

xxx xxx xxx

C. Is an offer of a check a valid tender of payment of an obligation under a contract which stipulates that the consideration of the
sale is in Philippine Currency?17

We find the petition impressed with merit.

With respect to the first issue, we agree with the petitioner that a finding that the private respondent had sufficient available funds on
or before the grace period for the payment of its obligation does not constitute proof of tender of payment by the latter for its
obligation within the said period. Tender of payment involves a positive and unconditional act by the obligor of offering legal tender
currency as payment to the obligee for the former’s obligation and demanding that the latter accept the same. Thus, tender of
payment cannot be presumed by a mere inference from surrounding circumstances. At most, sufficiency of available funds is only
affirmative of the capacity or ability of the obligor to fulfill his part of the bargain. But whether or not the obligor avails himself of such
funds to settle his outstanding account remains to be proven by independent and credible evidence. Tender of payment
presupposes not only that the obligor is able, ready, and willing, but more so, in the act of performing his obligation. Ab posse ad
actu non vale illatio. “A proof that an act could have been done is no proof that it was actually done.”

The respondent court was therefore in error to have concluded from the sheer proof of sufficient available funds on the part of the
private respondent to meet more than the total obligation within the grace period, the alleged truth of tender of payment. The same
is a classic case of non-sequitur.

On the contrary, the respondent court finds itself remiss in overlooking or taking lightly the more important findings of fact made by
the trial court which we have earlier mentioned and which as a rule, are entitled to great weight on appeal and should be accorded
full consideration and respect and should not be disturbed unless for strong and cogent reasons.

While the Court is not a trier of facts, yet, when the findings of fact of the Court of Appeals are at variance with those of the trial
court, or when the inference of the Court of Appeals from its findings of fact is manifestly mistaken, the Court has to review the
evidence in order to arrive at the correct findings based on the record.

Apropos the second issue raised, although admittedly the documents for the deed of absolute sale had not been prepared, the
subject contract clearly provides that the full payment by the private respondent is an a priori condition for the execution of the said
documents by the petitioner.

That upon complete payment of the agreed consideration by the herein VENDEE, the VENDOR shall cause the execution of a Deed
of Absolute Sale in favor of the VENDEE.

The private respondent is therefore in estoppel to claim otherwise as the latter did in the testimony in cross-examination of its
president, Atty. Francisco, which reads:

Q Now, you mentioned, Atty. Francisco, that you wanted the defendant to execute the final deed of sale before you would given the
personal certified check in payment of your balance, is that correct?

A Yes, sir.22

xxx xxx xxx

Art. 1159 of the Civil Code of the Philippines provides that “obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.” And unless the stipulations in said contract are contrary to law,
morals, good customs, public order, or public policy, the same are binding as between the parties.

What the private respondent should have done if it was indeed desirous of complying with its obligations would have been to pay the
petitioner within the grace period and obtain a receipt of such payment duly issued by the latter. Thereafter, or, allowing a
reasonable time, the private respondent could have demanded from the petitioner the execution of the necessary documents. In
case the petitioner refused, the private respondent could have had always resorted to judicial action for the legitimate enforcement
of its right. For the failure of the private respondent to undertake this more judicious course of action, it alone shall suffer the
consequences.

With regard to the third issue, granting arguendo that we would rule affirmatively on the two preceding issues, the case of the private
respondent still cannot succeed in view of the fact that the latter used a certified personal check which is not legal tender nor the
currency stipulated, and therefore, cannot constitute valid tender of payment. The first paragraph of Art. 1249 of the Civil Code
provides that “the payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such
currency, then in the currency which is legal tender in the Philippines.

The Court en banc in the recent case of Philippine Airlines v. Court of Appeals,24 G.R. No. L-49188, stated thus:

Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself,
operate as payment (citing Sec. 189, Act 2031 on Negs. Insts.; Art. 1249, Civil Code; Bryan London Co. v. American Bank, 7 Phil.
255; Tan Sunco v. Santos, 9 Phil. 44; 21 R.C.L. 60, 61). A check, whether a manager’s check or ordinary check, is not legal tender,
and an offer of a check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditor.

Hence, where the tender of payment by the private respondent was not valid for failure to comply with the requisite payment in legal
tender or currency stipulated within the grace period and as such, was validly refused receipt by the petitioner, the subsequent
consignation did not operate to discharge the former from its obligation to the latter.

In view of the foregoing, the petitioner in the legitimate exercise of its rights pursuant to the subject contract, did validly order
therefore the cancellation of the said contract, the forfeiture of the previous payment, and the reconveyance ipso facto of the land in
question.

WHEREFORE, the petition for review on certiorari is GRANTED and the DECISION of the respondent court promulgated on April
25, 1985 is hereby SET ASIDE and ANNULLED and the DECISION of the trial court dated May 25, 1981 is hereby REINSTATED.
Costs against the private respondent.

SO ORDERED.

Petitioner: THE CITY OF CEBU, petitioner

6.
Respondent: SPOUSES APOLONIO and BLASA DEDAMO, respondents.
G.R. No. 142971 May 7, 2002Facts:

1. On 17 September 1993, Petitioner City of Cebu filed a complaint for eminent domain against respondent spouses
Apolonio and Blasa Dedamo.

2. The petitioner alleged therein that it needed the land for a public purpose, i.e., for the construction of a public road which
shall serve as an access/relief road of Gorordo Avenue to extend to the General Maxilum Avenue and the back of
Magellan International Hotel Roads in Cebu City.

3. The lower court fixed the amount of just compensation at P20,826,339.50.

4. Petitioner alleged that the lower court erred in fixing the amount of just compensation at P20, 826,339.50.

5. The just compensation should be based on the prevailing market price of the property at the commencement of the
expropriation proceedings.

6. The petitioner did not convince the Court of Appeals, which affirmed the lower court’s decision in toto.

7. Hence, this petition for review on certiorari,

ISSUE: Whether or not just compensation should be determined as of the date of the filing of the complaint.

HELD:

1. No. I n t h e c a s e a t b a r , t h e a p p l i c a b l e l a w f o r t h e determination of just compensation is Section 19 of R.A.

No. 7160, which expressly provides that just compensation shall be determined as of the time of actual taking.
2. The petitioner has misread the ruling in The National Power Corp. vs. Court of Appeals that just compensation should be
determined as of the date of the filing of the complaint.

3. The Court of Appeals did not err in affirming the decision of the trial court because the trial court decided the case on the
basis of the agreement of the parties that just compensation shall be fixed by commissioners appointed by the court.

4. Also, the parties, by a solemn document freely and voluntarily agreed upon by them, agreed to be bound by the report of
the commission and approved by the trial court.

5. The agreement is a contract between the parties. It has the force of law between them and should be complied with in
good faith.

6. Article 1159 and 1315 of the Civil Code explicitly provides:

7. Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied
with in good faith.

8. and, Art. 1315. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the
fulfilment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping
with good faith, usage and law.

9. Furthermore, during the hearing petitioner did not interpose a serious objection and Records show that petitioner
consented to conform with the valuation recommended by the commissioners.

10 It is therefore too late for petitioner to question the valuation now without violating the principle of equitable estoppel.
Estoppel in pais arises when one, by his acts, representations or admissions, or by his own silence when he ought to speak out,
intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and acts
on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts.

11. Finally, while Section 4, Rule 67 of the Rules of Court provides that just compensation shall be determined at the time of
the filing of the complaint for expropriation,13 such law cannot prevail over R.A. 7160, which is a substantive law. 14

WHEREFORE, finding no reversible error in the assailed judgment on the Court of Appeals in CA-G.R. CV No. 59204, the petition in
this case is hereby DENIED.No pronouncement as to costs.

THE ROMAN CATHOLIC BISHOP OF JARO 7.

vs.
GREGORIO DE LA PEÑA
G.R. No. L-6913 November 21, 1913

FACTS :

1. The plaintiff is the trustee of a charitable bequest made for the construction of a leper hospital and that father Agustin de
la Peña was the duly authorized representative of the plaintiff to receive the legacy.

2. The defendant is the administrator of the estate of Father Agustin dela Peña.

In the year 1898 Father De la Peña, as trustee, showed that he had on hand as such trustee the sum of P6, 641, collected
by him for the charitable purposes.

3. In the same year he deposited in his personal account P19, 000 in the Hong Kong and Shanghai Bank at Iloilo.

4. Shortly thereafter and during the war of the revolution, Father De la Peña was arrested by the military authorities as a
political prisoner and money was taken from the bank by the military authorities by virtue of such order, was confiscated and turned
over to the Government.
5. The said trust funds were a part of the funds deposited and which were removed and confiscated by the military
authorities of the United States.

ISSUE : Whether or not Father de la Peña is liable for the loss of the money under his trust?

RULINGS :

1.. No, the court, finds and declares that the money which is the subject matter of this action was deposited by Father De la
Peña in the bank and that said money was forcibly taken from the bank by the armed forces of the United States during the war of
the insurrection;

2. And that said Father De la Peña was not responsible for its loss.

3. Father De la Peña's liability is determined by those portions of the Civil Code which relate to obligations. Although Article
1163 of the Civil Code states that "a person obliged to give something is also bound to preserve it with the diligence pertaining to a
good father of a family" (art.1094),

4. Now, by placing the money in the bank and mixing it with his personal funds Father De la Peña did not thereby assume an
obligation, nor make himself liable to repay the money at all hazards.

5. If he had been forcibly taken from his pocket or from his house by the military forces of one of the combatants during a
state of war, it is clear that under the provisions of the Civil Code he would have been exempt from responsibility.

6. The fact that he placed the trust fund in the bank in his personal account does not add to his responsibility.

7. The judgment is therefore reversed, and it is decreed that the plaintiff shall take nothing by his complaint.

Refer also to additional Idea papers

Petitioner: ENGRACIO OBEJERA and MERCEDES INTAK, plaintiffs-appellees, 9

Respondent: IGA SY, defendant-appellant.
C.A. No. 34 April 29, 1946

Facts:

1.. This case is an appeal filed against the decision of the Court of First Instance of Batangas annulling, on the ground of
force and intimidation, the deed of transfer, whereby the plaintiffs agreed to transfer to the defendant their property in case they
failed to return to the defendant the balance and pieces of jewelry allegedly deposited with the plaintiffs during the Japanese
invasion.

2. During the Japanese invasion plaintiffs and defendant sought refuge in the house of Leon Villena, barrio lieutenant of
Batangas and after consultation with their host Leon Villena, they decided to hide their things and valuables in a dug-out belonging
to Leon Villena.

3. After a month the defendant who desired to move to another house, they went back to the dug-out to take out the
defendant's container and discovered, that their money and things, except for a few papers, had been lost.

4. In this case the defendant (Iga Sy) contends that she deposited her money and jewelry with the plaintiffs and that the
plaintiffs, acknowledging liability for the loss of her money and jewelry, offered to transfer their property.

5. On the other hand, the plaintiffs deny the alleged deposit, deny knowledge of the loss of the defendant's money and
jewelry, and claim that their consent to the deed of transfer was obtained through violence and intimidation.

ISSUE: WON the plaintiffs (OBEJERA and INTAK) are liable for the loss of the defendant's money and jewelry?

HELD:

1.. No, under Article 1163 of the Civil Code states that "a person obliged to give something is also bound to preserve it with
the diligence pertaining to a good father of a family"
2. After a careful consideration of the evidences of this case, the contention of the defendant (Iga Sy) cannot be sustained.
The alleged deposit cannot be believed and is contrary to the ordinary course of nature and the ordinary habits of life.

3. It should also be considered, that the dug-out into which the plaintiffs and the defendant hid their money and valuables
belongs to Leon Villena;

4. that the plaintiffs and the defendant only sought refuge in his house; that neither the plaintiffs nor the defendant had,
therefore, control over, or absolute and exclusive access, to the dug-out

5. it is hard to believe that plaintiff Engracio Obejera would assume responsibility over the defendant's things hidden in a
place not belonging to him but to Leon Villena, in whose house they only sought refuge.

6. and especially at a time when the confusion and fear resulting from the Japanese invasion that nobody could be sure of
his own things and even of his life.

7. The more natural conclusion is that plaintiffs and defendant decided to hide their things in the dug-out of their host Leon
Villena, thinking it to be the safest place, and that they might recover them after the confusion and uncertainty.

8. Even Leon Villena did not offer to his guests to take care of their things by hiding them in his dug-out.

9. Even if the defendant's theory of deposit were sustained, any obligation arising was extinguished upon the loss, without
the fault of the depositee and under circumstances which at the time were inevitable.

10. The evidence of record, shows that the plaintiffs were not in any way responsible for the loss of the defendant's money
and jewelry.

11. It necessarily follows that the deed of transfer, is null and void for lack of cause or consideration. Also the two documents
are also null and void upon the other ground that the consent of the plaintiffs therein was obtained through duress and intimidation.

Wherefore, the decision of the court a quo is hereby affirmed in toto with costs against the defendant and appellant. So ordered.

Petitioner: PERLA PALMA GIL, VICENTE HIZON, JR., and ANGEL PALMA GIL, 10.
Respondent: HON. COURT OF APPEALS, HEIRS OF EMILIO MATULAC, CONSTANCIO MAGLANA, AGAPITO PACETES & The
REGISTER OF DEEDS OF DAVAO CITY,
[G.R. No. 127206. September 12, 2003]

FACTS:

1.. This case is review on appeal by certiorari.

2. This was originated from a disputed portion of property between Concepcion Palma Gil, and her sister, Nieves Palma Gil,
married to Angel Villarica, who were co-owners of a parcel of commercial land in Davao City.

3. After due proceedings, the court rendered judgment in favor of Concepcion, ordering the defendant to deliver to the
plaintiff an undivided portion of the said property.

4. Concepcion executed a deed of absolute sale in favour of Iluminada Pacetes. Pacetes paid the agreed down payment
and shall pay the full obligation upon fulfilment agreed in the contract

5. The spouses Angel and Nieves Villarica filed a suit with regard to the parcel of land sold by Concepcion until the latter
died intestate.

6. The heirs of Concepcion wanted to claim the lot sold.

ISSUE: WON the expenses incurred by the vendee to obtain the owner’s duplicate title should be charged against the amount due
to the heirs of the vendor?

HELD:
1.. Yes, According to Article 1167 of the New Civil Code provides that if a person obliged to do something fails to do it, the
same shall be executed at his cost. This same rule shall be observed if he does it in contravention of the tenor of the obligation.
Furthermore, it may be decreed that what has been poorly done be undone. (1098)

2. The vendee (Iluminada) paid the down payment of P7,500.00. By the terms of the contract, the obligation of the vendee to
pay the balance of the purchase price happened only upon the issuance of the certificate of title under the name of the vendee, and
the delivery thereof by the vendor Concepcion Gil to the vendee.

3. Concepcion failed to secure a certificate of title over the property. When she died intestate her obligation to deliver the
said title to the vendee transferred upon her heirs, including the petitioners but they failed to do so, despite the lapse of eighteen
years since Concepcion’s death.

4. The vendee was not yet obliged on August 8, 1977 to pay the balance of the purchase price of the property, but as a sign
of good faith, she nevertheless consigned the amount of P11,983.00, part of the balance of the purchase price of P14,000.00.

5. The court accepted the payment and she was issued receipts therefor. Still, the heirs of Concepcion Gil, including the
petitioners, failed to deliver the said title to the vendee.

6. Although the vendee consigned with the Court only the amount less than that of the contract agreed it cannot be claimed
that Concepcion was an unpaid seller because under the deed of sale, she was still obligated to transfer the property in the name of
the vendee, which she failed to do so.

7. The vendee (Iluminada) had to obtain the owner’s duplicate title and thereafter secure its transfer in her name. Pursuant
to Article 1167, the expenses incurred by the vendee should be charged against the amount due to the heirs of Concepcion Gil as
the vendor’s successors-in-interest.

In sum, the decision of the CA affirming the decision of the RTC dismissing the complaint of the petitioners is affirmed.

IN LIGHT OF ALL THE FOREGOING, the petition for review is DENIED for lack of merit.

Petitioner: JUAN L. PEREZ, LUIS KEH, CHARLIE LEE and ROSENDO G. TANSINSIN, JR., 11
Respondent: COURT OF APPEALS, LUIS CRISOSTOMO and VICENTE ASUNCION,
Facts

1.. the usufructuaries entered into a contract leasing the fishpond to Luis Keh for a period of five (5) years and renewable for
another five (5) years by agreement of the parties, In the lease contract states that the lessee "cannot sublease" the fishpond "nor
assign his rights to anyone." 3

2. Private respondent Luis Crisostomo, who engaged in the operation of fishponds was persuaded by the petitioners to take
over the operation of "Papaya Fishpond".

3. December 1977, Private respondent agreed to the proposal and they executed a written agreement

4. In the agreement the petitioner Keh ceded, conveyed and transferred all his "rights and interests" over the fishpond to
petitioner Lee, "up to June 1985." From private respondent's point of view, that document assured him of continuous possession of
the property for as long as he paid the agreed rentals.

5. However, sometime in June 1979, petitioners Atty. Tansinsin and Juan Perez, in the company of men bearing armalites,
went to the fishpond and presented private respondent with a letter dated June 7, 1979 showing that petitioner Luis Keh had
surrendered possession of the fishpond to the usufructuaries.

6. On September 6, 1989, the lower court rendered the aforesaid decision. It arrived at the conclusion that the defendants
therein "conspired with one another to exploit the plaintiff's naivete and educational inadequacies and, in the process, to defraud him
by inducing him into taking possession of the "Papaya Fishpond".

ISSUE: WON petitioner LUIS KEH shall be liable to private respondent for the value of the improvements made in the fishpond

HELD
1… YES, Art. 1168 of the Civil Code provides that when an obligation "consists in not doing and the obligor does what has
been forbidden him, it shall also be undone at his expense."

2. The contract between the usufructuaries and petitioner Keh has a provision barring the sublease of the fishpond.
However, it was petitioner Keh himself who violated that provision in offering the operation of the fishpond to private respondent.

3. The lease contract prohibited petitioner Luis Keh, as lessee, from subleasing the fishpond. In entering into the agreement
with private respondent, petitioner Keh did exactly what was prohibited of him under the contract — to sublease the fishpond to a
third party.

4. That the agreement for pakiao-buwis was actually a sublease is borne out by the fact that private respondent paid
petitioners Luis Keh and Juan Perez, through petitioner Tansinsin the amount of annual rental agreed upon in the lease contract
between the usufructuaries and petitioner Keh.

5. Petitioner Keh led private respondent to unwittingly incur expenses to improve the operation of the fishpond. By operation
of law,

6. Therefore, petitioner Keh shall be liable to private respondent for the value of the improvements he had made in the
fishpond.

For res judicata to apply, the following requisites must concur:

(a) the former judgment must be final;
(b) the court which rendered it had jurisdiction over the subject matter and the parties;
(c) the judgment must be on the merits, and
(d) there must be between the first and second actions identity of parties, subject matter and causes of action. 16

The Decision in having resolved only an interlocutory matter, the principle of res judicata cannot be applied in this case.
There can be no res judicata where the previous order in question was not an order or judgment determinative of an issue of fact
pending before the court but was only an interlocutory order because it required the parties to perform certain acts for final
adjudication.

Intervention pro interessse suo ("according to his interest.”)Is a mode of intervention in equity wherein a stranger desires
to intervene for the purpose of asserting a property right in the res, or thing, which is the subject matter of the litigation, without
becoming a formal plaintiff or defendant, and without acquiring control over the course of a litigation, which is conceded to the main
actors therein. 21 In this case, intervenor Vicente Asuncion aimed to protect his right as a usufructuary.

Estoppel in pais arises when one, by his acts, representations or admissions, or by his own silence when he ought to
speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully
relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts. 34
 Nevertheless, the court hesitate to grant private respondent's prayer that he should be restored to the possession of the
fishpond as a consequence of his unjustified ejectment therefrom. The court said to restore possession of the fishpond to him would
entail violation of contractual obligations that the usufructuaries have entered into over quite a long period of time now.

The Court ruled that private respondent (Crisostomo) cannot be considered a possessor in bad faith, considering that he
took possession of the fishpond when appellants (Keh and Lee) assigned to him the leasehold right.

It held that appellant (Perez) knew of the transfer of possession of the fishpond to appellee and that the receipt evidencing
payment of the 1978-1979 rental even bears an expressed admission by Lee that the payment came from private respondent
(Crisostomo).

The court said that petitioners employed fraud to the damage and prejudice of private respondent and that the former
should be held liable for damages.

The law supports the awards of moral and exemplary damages in favor of private respondent and against the petitioners.

Their conspiratorial scheme to utilize private respondent's expertise in the operation of fishponds to bail themselves out of
financial losses has been satisfactorily established to warrant a ruling that they violated Article 21 of the Civil Code and therefore
private respondent should be entitled to an award of moral damages.

Article 21 states that "any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damage."

36
Exemplary damages shall likewise be awarded pursuant to Article 2229 of the Civil Code. Because private respondent
was compelled to litigate to protect his interest, attorney's fees shall also be awarded. 37

1. Petitioner Luis Keh shall pay private respondent Luis Crisostomo in the amount of P486,562.25 with legal interest from the
rendition of the

2. Petitioners be made liable jointly and severally liable for moral damages, exemplary damages, attorney's fees.

For res judicata to apply, the following requisites must concur:

(a) the former judgment must be final;

(b) the court which rendered it had jurisdiction over the subject matter and the parties;

(c) the judgment must be on the merits, and

16
(d) there must be between the first and second actions identity of parties, subject matter and causes of action.

The Decision in having resolved only an interlocutory matter, the principle of res judicata cannot be applied in this case.
There can be no res judicata where the previous order in question was not an order or judgment determinative of an issue of fact
pending before the court but was only an interlocutory order because it required the parties to perform certain acts for final
adjudication.

Intervention pro interessse suo ("according to his interest.”)Is a mode of intervention in equity wherein a stranger desires
to intervene for the purpose of asserting a property right in the res, or thing, which is the subject matter of the litigation, without
becoming a formal plaintiff or defendant, and without acquiring control over the course of a litigation, which is conceded to the main
actors therein. 21 In this case, intervenor Vicente Asuncion aimed to protect his right as a usufructuary.
 Estoppel in pais arises when one, by his acts, representations or admissions, or by his own silence when he ought to
speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully
relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts. 34

Petitioner: CETUS DEVELOPMENT, INC., petitioner, 11.

Respondent: COURT OF APPEALS and ONG TENG, respondents.
G.R. No. 77648 August 7, 1989

FACTS:

1.. The private respondents were the lessees of the premises owned by the petitioner Cetus Development Corporation .

2. In the succeeding months after the acquisition of the property by the petitioner, the respondents failed to pay their monthly
individual rentals as no collector came.

3. The petitioner sent a letter to each of the private respondents demanding that they vacate the subject premises and to pay
the back rentals within fifteen (15) days.

4. Immediately upon the receipt of the said demand letters, the private respondents paid their respective arrearages in rent
which were accepted by the petitioner subject to the unilateral condition that the acceptance was without prejudice to the filing of an
ejectment suit.

5. the petitioner filed a complaints for ejectment against the private respondents.

6. judgment is rendered in favor to the private respondents.

7. Hence, this petition for certiorari.

ISSUE: WON the private respondents be held guilty of delay in the payment of rentals.

HELD:

1.. No, It is very clear that in the case at bar, no cause of action for ejectment has accrued. There was no failure yet on the
part of private respondents to pay rents for three consecutive months.

2. The general rule on necessity of demand applies, when there is default in the fulfilment of an obligation when the creditor
demands payment at the maturity of the obligation.

3. Article 1169 of the Civil Code which provides that "those obliged to deliver or to do something incur in delay from the time
the obligee judicially or extra judicially demands from them the fulfilment of their obligation."

4. Petitioner has not shown that its case falls on any of the following exceptions where demand is not required:

(a) when the obligation or the law so declares;

(b) when from the nature and circumstances of the obligation it can be inferred that time is of the essence of the contract;
and

(c) when demand would be useless, as when the obligor has rendered it beyond his power to perform.

5. the private respondents cannot be held guilty of delay in the payment of rentals. Thus, when petitioner first demanded the
payment the private respondents lost no time in making tender and payment, in which the petitioner accepted the said rentals.

6. Hence, its demand to vacate was premature as it was an exercise of a non-existing right to rescind.

7. Petitioner likewise claims that its failure to send a collector to collect the rentals cannot be considered a valid defense for
the reason that sending a collector is not one of the obligations of the lessor under Article 1654.
8. While it is true that a lessor is not obligated to send a collector, it has been duly established that it has been a customary
for private respondents to pay the rentals through a collector.

9. Besides Article 1257of the Civil Code provides that where no agreement has been designated for the payment of the
rentals, the place of payment is at the domicile of the defendants.

In sum, We hold that respondent Court of Appeals did not commit grave abuse of discretion amounting to lack of
jurisdiction in its conclusion affirming the trial court's decision dismissing petitioner's complaint for lack of cause of action.
ACCORDINGLY, the petition for review on certiorari is hereby DENIED for lack of merit

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 103577 October 7, 1996

ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL, ANNABELLE C. GONZALES (for herself and on
behalf of Florida C. Tupper, as attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS
MABANAG, petitioners,
vs.
THE COURT OF APPEALS, CONCEPCION D. ALCARAZ, and RAMONA PATRICIA ALCARAZ, assisted by GLORIA F. NOEL
as attorney-in-fact, respondents.

MELO, J.:p

The petition before us has its roots in a complaint for specific performance to compel herein petitioners (except the last named,
Catalina Balais Mabanag) to consummate the sale of a parcel of land with its improvements located along Roosevelt Avenue in
Quezon City entered into by the parties sometime in January 1985 for the price of P1,240,000.00.

The undisputed facts of the case were summarized by respondent court in this wise:

On January 19, 1985, defendants-appellants Romulo Coronel, et al. (hereinafter referred to as Coronels) executed a document
entitled "Receipt of Down Payment" (Exh. "A") in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to as Ramona)
which is reproduced hereunder:

RECEIPT OF DOWN PAYMENT

P1,240,000.00 — Total amount

50,000 — Down payment

———————————
P1,190,000.00 — Balance

Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos purchase price of our
inherited house and lot, covered by TCT No. 119627 of the Registry of Deeds of Quezon City, in the T55 total amount of
P1,240,000.00.

We bind ourselves to effect the transfer in our names from our deceased father, Constancio P. Coronel, the transfer certificate of
title immediately upon receipt of the down payment above-stated.

On our presentation of the TCT already in or name, We will immediately execute the deed of absolute sale of said property and Miss
Ramona Patricia Alcaraz shall immediately pay the balance of the P1,190,000.00.

Clearly, the conditions appurtenant to the sale are the following:

1. Ramona will make a down payment of Fifty Thousand (P50,000.00) Pesos upon execution of the document aforestated;
2. The Coronels will cause the transfer in their names of the title of the property registered in the name of their deceased father upon
receipt of the Fifty Thousand (P50,000.00) Pesos down payment;

3. Upon the transfer in their names of the subject property, the Coronels will execute the deed of absolute sale in favor of Ramona
and the latter will pay the former the whole balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos.

On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz (hereinafter referred to as Concepcion), mother of
Ramona, paid the down payment of Fifty Thousand (P50,000.00) Pesos (Exh. "B", Exh. "2").

On February 6, 1985, the property originally registered in the name of the Coronels' father was transferred in their names under TCT
No. 327043 (Exh. "D"; Exh. "4")

On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to intervenor-appellant Catalina B. Mabanag
(hereinafter referred to as Catalina) for One Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid
Three Hundred Thousand (P300,000.00) Pesos (Exhs. "F-3"; Exh. "6-C")

For this reason, Coronels canceled and rescinded the contract (Exh. "A") with Ramona by depositing the down payment paid by
Concepcion in the bank in trust for Ramona Patricia Alcaraz.

On February 22, 1985, Concepcion, et al., filed a complaint for specific performance against the Coronels and caused the
annotation of a notice of lis pendens at the back of TCT No. 327403 (Exh. "E"; Exh. "5").

On April 2, 1985, Catalina caused the annotation of a notice of adverse claim covering the same property with the Registry of Deeds
of Quezon City (Exh. "F"; Exh. "6").

On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject property in favor of Catalina (Exh. "G"; Exh. "7").

On June 5, 1985, a new title over the subject property was issued in the name of Catalina under TCT No. 351582 (Exh. "H"; Exh.
"8").

(Rollo, pp. 134-136)

In the course of the proceedings before the trial court (Branch 83, RTC, Quezon City) the parties agreed to submit the case for
decision solely on the basis of documentary exhibits. Thus, plaintiffs therein (now private respondents) proffered their documentary
evidence accordingly marked as Exhibits "A" throutgh "J", inclusive of their corresponding submarkings. Adopting these same
exhibits as their own, then defendants (now petitioners) accordingly offered and marked them as Exhibits "1" through "10", likewise
inclusive of their corresponding submarkings. Upon motion of the parties, the trial court gave them thirty (30) days within which to
simultaneously submit their respective memoranda, and an additional 15 days within which to submit their corresponding comment
or reply thereof, after which, the case would be deemed submitted for resolution.

On April 14, 1988, the case was submitted for resolution before Judge Reynaldo Roura, who was then temporarily detailed to
preside over Branch 82 of the RTC of Quezon City. On March 1, 1989, judgment was handed down by Judge Roura from his regular
bench at Macabebe, Pampanga for the Quezon City branch, disposing as follows:

WHEREFORE, judgment for specific performance is hereby rendered ordering defendant to execute in favor of plaintiffs a deed of
absolute sale covering that parcel of land embraced in and covered by Transfer Certificate of Title No. 327403 (now TCT No.
331582) of the Registry of Deeds for Quezon City, together with all the improvements existing thereon free from all liens and
encumbrances, and once accomplished, to immediately deliver the said document of sale to plaintiffs and upon receipt thereof, the
said document of sale to plaintiffs and upon receipt thereof, the plaintiffs are ordered to pay defendants the whole balance of the
purchase price amounting to P1,190,000.00 in cash. Transfer Certificate of Title No. 331582 of the Registry of Deeds for Quezon
City in the name of intervenor is hereby canceled and declared to be without force and effect. Defendants and intervenor and all
other persons claiming under them are hereby ordered to vacate the subject property and deliver possession thereof to plaintiffs.
Plaintiffs' claim for damages and attorney's fees, as well as the counterclaims of defendants and intervenors are hereby dismissed.

No pronouncement as to costs.

So Ordered.

Macabebe, Pampanga for Quezon City, March 1, 1989.

(Rollo, p. 106)
A motion for reconsideration was filed by petitioner before the new presiding judge of the Quezon City RTC but the same was
denied by Judge Estrella T. Estrada, thusly:

The prayer contained in the instant motion, i.e., to annul the decision and to render anew decision by the undersigned Presiding
Judge should be denied for the following reasons: (1) The instant case became submitted for decision as of April 14, 1988 when the
parties terminated the presentation of their respective documentary evidence and when the Presiding Judge at that time was Judge
Reynaldo Roura. The fact that they were allowed to file memoranda at some future date did not change the fact that the hearing of
the case was terminated before Judge Roura and therefore the same should be submitted to him for decision; (2) When the
defendants and intervenor did not object to the authority of Judge Reynaldo Roura to decide the case prior to the rendition of the
decision, when they met for the first time before the undersigned Presiding Judge at the hearing of a pending incident in Civil Case
No. Q-46145 on November 11, 1988, they were deemed to have acquiesced thereto and they are now estopped from questioning
said authority of Judge Roura after they received the decision in question which happens to be adverse to them; (3) While it is true
that Judge Reynaldo Roura was merely a Judge-on-detail at this Branch of the Court, he was in all respects the Presiding Judge
with full authority to act on any pending incident submitted before this Court during his incumbency. When he returned to his Official
Station at Macabebe, Pampanga, he did not lose his authority to decide or resolve such cases submitted to him for decision or
resolution because he continued as Judge of the Regional Trial Court and is of co-equal rank with the undersigned Presiding Judge.
The standing rule and supported by jurisprudence is that a Judge to whom a case is submitted for decision has the authority to
decide the case notwithstanding his transfer to another branch or region of the same court (Sec. 9, Rule 135, Rule of Court).

Coming now to the twin prayer for reconsideration of the Decision dated March 1, 1989 rendered in the instant case, resolution of
which now pertains to the undersigned Presiding Judge, after a meticulous examination of the documentary evidence presented by
the parties, she is convinced that the Decision of March 1, 1989 is supported by evidence and, therefore, should not be disturbed.

IN VIEW OF THE FOREGOING, the "Motion for Reconsideration and/or to Annul Decision and Render Anew Decision by the
Incumbent Presiding Judge" dated March 20, 1989 is hereby DENIED.

SO ORDERED.

Quezon City, Philippines, July 12, 1989.

(Rollo, pp. 108-109)

Petitioners thereupon interposed an appeal, but on December 16, 1991, the Court of Appeals (Buena, Gonzaga-Reyes, Abad
Santos (P), JJ.) rendered its decision fully agreeing with the trial court.

Hence, the instant petition which was filed on March 5, 1992. The last pleading, private respondents' Reply Memorandum, was filed
on September 15, 1993. The case was, however, re-raffled to undersigned ponente only on August 28, 1996, due to the voluntary
inhibition of the Justice to whom the case was last assigned.

While we deem it necessary to introduce certain refinements in the disquisition of respondent court in the affirmance of the trial
court's decision, we definitely find the instant petition bereft of merit.

The heart of the controversy which is the ultimate key in the resolution of the other issues in the case at bar is the precise
determination of the legal significance of the document entitled "Receipt of Down Payment" which was offered in evidence by both
parties. There is no dispute as to the fact that said document embodied the binding contract between Ramona Patricia Alcaraz on
the one hand, and the heirs of Constancio P. Coronel on the other, pertaining to a particular house and lot covered by TCT No.
119627, as defined in Article 1305 of the Civil Code of the Philippines which reads as follows:

Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the
other, to give something or to render some service.

While, it is the position of private respondents that the "Receipt of Down Payment" embodied a perfected contract of sale, which
perforce, they seek to enforce by means of an action for specific performance, petitioners on their part insist that what the document
signified was a mere executory contract to sell, subject to certain suspensive conditions, and because of the absence of Ramona P.
Alcaraz, who left for the United States of America, said contract could not possibly ripen into a contract absolute sale.

Plainly, such variance in the contending parties' contentions is brought about by the way each interprets the terms and/or conditions
set forth in said private instrument. Withal, based on whatever relevant and admissible evidence may be available on record, this,
Court, as were the courts below, is now called upon to adjudge what the real intent of the parties was at the time the said document
was executed.

The Civil Code defines a contract of sale, thus:

Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain in money or its equivalent.

Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of a contract of
sale are the following:

a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;

b) Determinate subject matter; and

c) Price certain in money or its equivalent.

Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking.
In a contract to sell, the prospective seller explicity reserves the transfer of title to the prospective buyer, meaning, the prospective
seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an
event, which for present purposes we shall take as the full payment of the purchase price. What the seller agrees or obliges himself
to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. In other
words the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation
to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer. In
Roque vs. Lapuz (96 SCRA 741 [1980]), this Court had occasion to rule:

Hence, We hold that the contract between the petitioner and the respondent was a contract to sell where the ownership or title is
retained by the seller and is not to pass until the full payment of the price, such payment being a positive suspensive condition and
failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from
acquiring binding force.

Stated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the prospective
seller's obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable as
provided in Article 1479 of the Civil Code which states:

Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is
supported by a consideration distinct from the price.

A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership
of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the
prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.

A contract to sell as defined hereinabove, may not even be considered as a conditional contract of sale where the seller may
likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional
contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which
may or may not occur. If the suspensive condition is not fulfilled, the perfection of the contract of sale is completely abated (cf.
Homesite and housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However, if the suspensive condition is fulfilled, the
contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale to the
buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act having to be performed by
the seller.

In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership will
not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still
has to convey title to the prospective buyer by entering into a contract of absolute sale.

It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject
property is sold by the owner not to the party the seller contracted with, but to a third person, as in the case at bench. In a contract
to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive
condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective
buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer
to the buyer after registration because there is no defect in the owner-seller's title per se, but the latter, of course, may be used for
damages by the intending buyer.

In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will
definitely affect the seller's title thereto. In fact, if there had been previous delivery of the subject property, the seller's ownership or
title to the property is automatically transferred to the buyer such that, the seller will no longer have any title to transfer to any third
person. Applying Article 1544 of the Civil Code, such second buyer of the property who may have had actual or constructive
knowledge of such defect in the seller's title, or at least was charged with the obligation to discover such defect, cannot be a
registrant in good faith. Such second buyer cannot defeat the first buyer's title. In case a title is issued to the second buyer, the first
buyer may seek reconveyance of the property subject of the sale.

With the above postulates as guidelines, we now proceed to the task of deciphering the real nature of the contract entered into by
petitioners and private respondents.

It is a canon in the interpretation of contracts that the words used therein should be given their natural and ordinary meaning unless
a technical meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586 [1992]). Thus, when petitioners declared in the said
"Receipt of Down Payment" that they —

Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos purchase price of our
inherited house and lot, covered by TCT No. 1199627 of the Registry of Deeds of Quezon City, in the total amount of
P1,240,000.00.

without any reservation of title until full payment of the entire purchase price, the natural and ordinary idea conveyed is that they sold
their property.

When the "Receipt of Down Payment" is considered in its entirety, it becomes more manifest that there was a clear intent on the
part of petitioners to transfer title to the buyer, but since the transfer certificate of title was still in the name of petitioner's father, they
could not fully effect such transfer although the buyer was then willing and able to immediately pay the purchase price. Therefore,
petitioners-sellers undertook upon receipt of the down payment from private respondent Ramona P. Alcaraz, to cause the issuance
of a new certificate of title in their names from that of their father, after which, they promised to present said title, now in their names,
to the latter and to execute the deed of absolute sale whereupon, the latter shall, in turn, pay the entire balance of the purchase
price.

The agreement could not have been a contract to sell because the sellers herein made no express reservation of ownership or title
to the subject parcel of land. Furthermore, the circumstance which prevented the parties from entering into an absolute contract of
sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the purchase
price. Under the established facts and circumstances of the case, the Court may safely presume that, had the certificate of title been
in the names of petitioners-sellers at that time, there would have been no reason why an absolute contract of sale could not have
been executed and consummated right there and then.

Moreover, unlike in a contract to sell, petitioners in the case at bar did not merely promise to sell the properly to private respondent
upon the fulfillment of the suspensive condition. On the contrary, having already agreed to sell the subject property, they undertook
to have the certificate of title changed to their names and immediately thereafter, to execute the written deed of absolute sale.

Thus, the parties did not merely enter into a contract to sell where the sellers, after compliance by the buyer with certain terms and
conditions, promised to sell the property to the latter. What may be perceived from the respective undertakings of the parties to the
contract is that petitioners had already agreed to sell the house and lot they inherited from their father, completely willing to transfer
full ownership of the subject house and lot to the buyer if the documents were then in order. It just happened, however, that the
transfer certificate of title was then still in the name of their father. It was more expedient to first effect the change in the certificate of
title so as to bear their names. That is why they undertook to cause the issuance of a new transfer of the certificate of title in their
names upon receipt of the down payment in the amount of P50,000.00. As soon as the new certificate of title is issued in their
names, petitioners were committed to immediately execute the deed of absolute sale. Only then will the obligation of the buyer to
pay the remainder of the purchase price arise.

There is no doubt that unlike in a contract to sell which is most commonly entered into so as to protect the seller against a buyer
who intends to buy the property in installment by withholding ownership over the property until the buyer effects full payment
therefor, in the contract entered into in the case at bar, the sellers were the one who were unable to enter into a contract of absolute
sale by reason of the fact that the certificate of title to the property was still in the name of their father. It was the sellers in this case
who, as it were, had the impediment which prevented, so to speak, the execution of an contract of absolute sale.

What is clearly established by the plain language of the subject document is that when the said "Receipt of Down Payment" was
prepared and signed by petitioners Romeo A. Coronel, et al., the parties had agreed to a conditional contract of sale, consummation
of which is subject only to the successful transfer of the certificate of title from the name of petitioners' father, Constancio P. Coronel,
to their names.

The Court significantly notes this suspensive condition was, in fact, fulfilled on February 6, 1985 (Exh. "D"; Exh. "4"). Thus, on said
date, the conditional contract of sale between petitioners and private respondent Ramona P. Alcaraz became obligatory, the only act
required for the consummation thereof being the delivery of the property by means of the execution of the deed of absolute sale in a
public instrument, which petitioners unequivocally committed themselves to do as evidenced by the "Receipt of Down Payment."
Article 1475, in correlation with Article 1181, both of the Civil Code, plainly applies to the case at bench. Thus,

Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the
contract and upon the price.

From the moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of
contracts.

Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall
depend upon the happening of the event which constitutes the condition.

Since the condition contemplated by the parties which is the issuance of a certificate of title in petitioners' names was fulfilled on
February 6, 1985, the respective obligations of the parties under the contract of sale became mutually demandable, that is,
petitioners, as sellers, were obliged to present the transfer certificate of title already in their names to private respondent Ramona P.
Alcaraz, the buyer, and to immediately execute the deed of absolute sale, while the buyer on her part, was obliged to forthwith pay
the balance of the purchase price amounting to P1,190,000.00.

It is also significant to note that in the first paragraph in page 9 of their petition, petitioners conclusively admitted that:

3. The petitioners-sellers Coronel bound themselves "to effect the transfer in our names from our deceased father Constancio P.
Coronel, the transfer certificate of title immediately upon receipt of the downpayment above-stated". The sale was still subject to this
suspensive condition. (Emphasis supplied.)

(Rollo, p. 16)

Petitioners themselves recognized that they entered into a contract of sale subject to a suspensive condition. Only, they contend,
continuing in the same paragraph, that:

. . . Had petitioners-sellers not complied with this condition of first transferring the title to the property under their names, there could
be no perfected contract of sale. (Emphasis supplied.)

(Ibid.)

not aware that they set their own trap for themselves, for Article 1186 of the Civil Code expressly provides that:

Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.

Besides, it should be stressed and emphasized that what is more controlling than these mere hypothetical arguments is the fact that
the condition herein referred to was actually and indisputably fulfilled on February 6, 1985, when a new title was issued in the names
of petitioners as evidenced by TCT No. 327403 (Exh. "D"; Exh. "4").

The inevitable conclusion is that on January 19, 1985, as evidenced by the document denominated as "Receipt of Down Payment"
(Exh. "A"; Exh. "1"), the parties entered into a contract of sale subject only to the suspensive condition that the sellers shall effect
the issuance of new certificate title from that of their father's name to their names and that, on February 6, 1985, this condition was
fulfilled (Exh. "D"; Exh. "4").

We, therefore, hold that, in accordance with Article 1187 which pertinently provides —

Art. 1187. The effects of conditional obligation to give, once the condition has been fulfilled, shall retroact to the
day of the constitution of the obligation . . .

In obligation to do or not to do, the courts shall determine, in each case, the retroactive effect of the condition
that has been complied with.

the rights and obligations of the parties with respect to the perfected contract of sale became mutually due and
demandable as of the time of fulfillment or occurrence of the suspensive condition on February 6, 1985. As of that point in
time, reciprocal obligations of both seller and buyer arose.

Petitioners also argue there could been no perfected contract on January 19, 1985 because they were then not yet the absolute
owners of the inherited property.
We cannot sustain this argument.

Article 774 of the Civil Code defines Succession as a mode of transferring ownership as follows:

Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to be extent and value of the
inheritance of a person are transmitted through his death to another or others by his will or by operation of law.

Petitioners-sellers in the case at bar being the sons and daughters of the decedent Constancio P. Coronel are compulsory heirs who
were called to succession by operation of law. Thus, at the point their father drew his last breath, petitioners stepped into his shoes
insofar as the subject property is concerned, such that any rights or obligations pertaining thereto became binding and enforceable
upon them. It is expressly provided that rights to the succession are transmitted from the moment of death of the decedent (Article
777, Civil Code; Cuison vs. Villanueva, 90 Phil. 850 [1952]).

Be it also noted that petitioners' claim that succession may not be declared unless the creditors have been paid is rendered moot by
the fact that they were able to effect the transfer of the title to the property from the decedent's name to their names on February 6,
1985.

Aside from this, petitioners are precluded from raising their supposed lack of capacity to enter into an agreement at that time and
they cannot be allowed to now take a posture contrary to that which they took when they entered into the agreement with private
respondent Ramona P. Alcaraz. The Civil Code expressly states that:

Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying thereon.

Having represented themselves as the true owners of the subject property at the time of sale, petitioners cannot claim now that they
were not yet the absolute owners thereof at that time.

Petitioners also contend that although there was in fact a perfected contract of sale between them and Ramona P. Alcaraz, the latter
breached her reciprocal obligation when she rendered impossible the consummation thereof by going to the United States of
America, without leaving her address, telephone number, and Special Power of Attorney (Paragraphs 14 and 15, Answer with
Compulsory Counterclaim to the Amended Complaint, p. 2; Rollo, p. 43), for which reason, so petitioners conclude, they were
correct in unilaterally rescinding rescinding the contract of sale.

We do not agree with petitioners that there was a valid rescission of the contract of sale in the instant case. We note that these
supposed grounds for petitioners' rescission, are mere allegations found only in their responsive pleadings, which by express
provision of the rules, are deemed controverted even if no reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of Court).
The records are absolutely bereft of any supporting evidence to substantiate petitioners' allegations. We have stressed time and
again that allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong, 110 Phil. 882 [1961]; Recaro vs. Embisan, 2
SCRA 598 [1961]. Mere allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]).

Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on February 6, 1985, we cannot justify
petitioner-sellers' act of unilaterally and extra judicially rescinding the contract of sale, there being no express stipulation authorizing
the sellers to extrajudicial rescind the contract of sale. (cf. Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs. Vda. de Leon, 132
SCRA 722 [1984])

Moreover, petitioners are estopped from raising the alleged absence of Ramona P. Alcaraz because although the evidence on
record shows that the sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had been dealing with Concepcion D.
Alcaraz, Ramona's mother, who had acted for and in behalf of her daughter, if not also in her own behalf. Indeed, the down payment
was made by Concepcion D. Alcaraz with her own personal check (Exh. "B"; Exh. "2") for and in behalf of Ramona P. Alcaraz.
There is no evidence showing that petitioners ever questioned Concepcion's authority to represent Ramona P. Alcaraz when they
accepted her personal check. Neither did they raise any objection as regards payment being effected by a third person. Accordingly,
as far as petitioners are concerned, the physical absence of Ramona P. Alcaraz is not a ground to rescind the contract of sale.

Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default, insofar as her obligation to pay the full purchase price is
concerned. Petitioners who are precluded from setting up the defense of the physical absence of Ramona P. Alcaraz as above-
explained offered no proof whatsoever to show that they actually presented the new transfer certificate of title in their names and
signified their willingness and readiness to execute the deed of absolute sale in accordance with their agreement. Ramona's
corresponding obligation to pay the balance of the purchase price in the amount of P1,190,000.00 (as buyer) never became due and
demandable and, therefore, she cannot be deemed to have been in default.

Article 1169 of the Civil Code defines when a party in a contract involving reciprocal obligations may be considered in default, to wit:
Art. 1169. Those obliged to deliver or to do something, incur in delay from the time the obligee judicially or extrajudicially demands
from them the fulfillment of their obligation.

xxx xxx xxx

In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with
what is incumbent upon him. From the moment one of the parties fulfill his obligation, delay by the other begins. (Emphasis
supplied.)

There is thus neither factual nor legal basis to rescind the contract of sale between petitioners and respondents.

With the foregoing conclusions, the sale to the other petitioner, Catalina B. Mabanag, gave rise to a case of double sale where
Article 1544 of the Civil Code will apply, to wit:

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may
have first taken possession thereof in good faith, if it should be movable property.

Should if be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in Registry
of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the
absence thereof to the person who presents the oldest title, provided there is good faith.

The record of the case shows that the Deed of Absolute Sale dated April 25, 1985 as proof of the second contract of sale was
registered with the Registry of Deeds of Quezon City giving rise to the issuance of a new certificate of title in the name of Catalina B.
Mabanag on June 5, 1985. Thus, the second paragraph of Article 1544 shall apply.

The above-cited provision on double sale presumes title or ownership to pass to the first buyer, the exceptions being: (a) when the
second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should there be no inscription by either of the two
buyers, when the second buyer, in good faith, acquires possession of the property ahead of the first buyer. Unless, the second
buyer satisfies these requirements, title or ownership will not transfer to him to the prejudice of the first buyer.

In his commentaries on the Civil Code, an accepted authority on the subject, now a distinguished member of the Court, Justice Jose
C. Vitug, explains:

The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of the second sale
cannot defeat the first buyer's rights except when the second buyer first registers in good faith the second sale (Olivares vs.
Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to
register, since knowledge taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No. 58530, 26 December
1984). In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984, 129 SCRA 656), it has held that it is essential, to merit the protection of
Art. 1544, second paragraph, that the second realty buyer must act in good faith in registering his deed of sale (citing Carbonell vs.
Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R. No. 95843, 02 September 1992).
(J. Vitug Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604).

Petitioner point out that the notice of lis pendens in the case at bar was annotated on the title of the subject property only on
February 22, 1985, whereas, the second sale between petitioners Coronels and petitioner Mabanag was supposedly perfected prior
thereto or on February 18, 1985. The idea conveyed is that at the time petitioner Mabanag, the second buyer, bought the property
under a clean title, she was unaware of any adverse claim or previous sale, for which reason she is buyer in good faith.

We are not persuaded by such argument.

In a case of double sale, what finds relevance and materiality is not whether or not the second buyer was a buyer in good faith but
whether or not said second buyer registers such second sale in good faith, that is, without knowledge of any defect in the title of the
property sold.

As clearly borne out by the evidence in this case, petitioner Mabanag could not have in good faith, registered the sale entered into
on February 18, 1985 because as early as February 22, 1985, a notice of lis pendens had been annotated on the transfer certificate
of title in the names of petitioners, whereas petitioner Mabanag registered the said sale sometime in April, 1985. At the time of
registration, therefore, petitioner Mabanag knew that the same property had already been previously sold to private respondents, or,
at least, she was charged with knowledge that a previous buyer is claiming title to the same property. Petitioner Mabanag cannot
close her eyes to the defect in petitioners' title to the property at the time of the registration of the property.
This Court had occasions to rule that:

If a vendee in a double sale registers that sale after he has acquired knowledge that there was a previous sale of the same property
to a third party or that another person claims said property in a pervious sale, the registration will constitute a registration in bad faith
and will not confer upon him any right. (Salvoro vs. Tanega, 87 SCRA 349 [1978]; citing Palarca vs. Director of Land, 43 Phil. 146;
Cagaoan vs. Cagaoan, 43 Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.)

Thus, the sale of the subject parcel of land between petitioners and Ramona P. Alcaraz, perfected on February 6, 1985, prior to that
between petitioners and Catalina B. Mabanag on February 18, 1985, was correctly upheld by both the courts below.

Although there may be ample indications that there was in fact an agency between Ramona as principal and Concepcion, her
mother, as agent insofar as the subject contract of sale is concerned, the issue of whether or not Concepcion was also acting in her
own behalf as a co-buyer is not squarely raised in the instant petition, nor in such assumption disputed between mother and
daughter. Thus, We will not touch this issue and no longer disturb the lower courts' ruling on this point.

WHEREFORE, premises considered, the instant petition is hereby DISMISSED and the appealed judgment AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 108129 September 23, 1999

AEROSPACE CHEMICAL INDUSTRIES, INC., petitioner,

vs.
COURT OF APPEALS, PHILIPPINE PHOSPHATE FERTILIZER, CORP., respondents.

QUISUMBING, J.:

This petition for review assails the Decision 1 dated August 19, 1992, of the Court of Appeals, which set aside the judgment of the
Regional Trial Court of Pasig, Branch 151. The case stemmed from a complaint filed by the buyer (herein petitioner) against the
seller (private respondent) for alleged breach of contract. Although petitioner prevailed in the trial court, the appellate court reversed
and instead found petitioner guilty of delay and therefore liable for damages, as follows:

WHEREFORE, the Decision of the court a quo is SET ASIDE and a new one rendered, dismissing the complaint with costs against
the plaintiff (herein petitioner) and, on the counterclaim, ordering the plaintiff Aerospace Chemical Industries, Inc. to pay the
defendant, Philippine Phosphate Fertilizer Corporation the sum of P324,516.63 representing the balance of the maintenance cost
and tank rental charges incurred by the defendant for the failure of the plaintiff to haul the rest of the rest of the sulfuric acid on the
designated date.

Costs against plaintiff-appellee. 2

As gleaned from the records, the following are the antecedents:

On June 27, 1986, petitioner Aerospace Industries, Inc. (Aerospace) purchased five hundred (500) metric tons of sulfuric acid from
private respondent Philippine Phosphate Fertilizer Corporation (Philphos). The contract 3 was in letter-form as follows:

27 June 1986

AEROSPACE INDUSTRIES INC.

203 E. Fernandez St.

San Juan, Metro Manila

Attention: Mr. Melecio Hernandez

Manager

Subject : Sulfuric Acid Shipment

Gentlemen:

This is to confirm our agreement to supply your Sulfuric Acid requirement under the following terms and conditions:

A. Commodity : Sulfuric Acid in Bulk

B. Concentration : 98-99% H2SO4
C. Quantity : 500 MT-100 MT Ex-Basay
400 MT Ex-Sangi
D. Price : US$ 50.00/MT-FOB Cotcot,

Basay, Negros Or.

US$ 54.00/MT-FOB Sangi, Cebu

E. Payment : Cash in Philippine currency

payable to Philippine Phosphate

Fertilizer Corp. (MAKATI) at

PCIB selling rate at the time of

payment at least five (5) days prior

to shipment date.

F. Shipping Conditions

1. Laycan : July

2. Load port : Cotcot, Basay, Negros Or. and

Atlas Pier, Sangi, Cebu

xxx xxx xxx

11. Other terms and Conditions: To be mutually agreed upon.

Very truly yours,

Philippine Phosphate Fertilizer Corp.

Signed: Herman J. Rustia

Sr. Manager, Materials & Logistics

CONFORME:

AEROSPACE INDUSTRIES, INC.

Signed: Mr. Melecio Hernandez

 Manager

Initially set beginning July 1986, the agreement provided that the buyer shall pay its purchases in equivalent Philippine currency
value, five days prior to the shipment date. Petitioner as buyer committed to secure the means of transport to pick-up the purchases
from private respondent's loadports. Per agreement, one hundred metric tons (100 MT) of sulfuric acid should be taken from Basay,
Negros Oriental storage tank, while the remaining four hundred metric tons (400 MT) should be retrieved from Sangi, Cebu.

On August 6, 1986, private respondent sent an advisory letter 4 to petitioner to withdraw the sulfuric acid purchased at Basay
because private respondent had been incurring incremental expense of two thousand (P2,000.00) pesos for each day of delay in
shipment.

On October 3, 1986, petitioner paid five hundred fifty-three thousand, two hundred eighty (P553,280.00) pesos for 500 MT of sulfuric
acid.

On November 19, 1986, petitioner chartered (hired) M/T Sultan Kayumanggi, owned by Ace Bulk Head Services. The vessel was
assigned to carry the agreed volumes of freight from designated loading areas. M/T Kayumanggi withdrew only 70.009 MT of
sulfuric acid from Basay because said vessel heavily tilted on its port side. Consequently, the master of the ship stopped further
loading. Thereafter, the vessel underwent repairs.

In a demand letter 5 dated December 12, 1986, private respondent asked petitioner to retrieve the remaining sulfuric acid in Basay
tanks so that said tanks could be emptied on or before December 15, 1986. Private respondent said that it would charge petitioner
the storage and consequential costs for the Basay tanks, including all other incremental expenses due to loading delay, if petitioner
failed to comply.

On December 18, 1986, M/T Sultan Kayumanggi docked at Sangi, Cebu, but withdrew only 157.51 MT of sulfuric acid. Again, the
vessel tilted. Further loading was aborted. Two survey reports conducted by the Societe Generale de Surveillance (SGS) Far East
Limited, dated December 17, 1986 and January 2, 1987, attested to these occurrences.

Later, on a date not specified in the record, M/T Sultan Kayumanggi sank with a total of 227.51 MT of sulfuric acid on
board.1âwphi1.nêt

Petitioner chartered another vessel, M/T Don Victor, with a capacity of approximately 500 MT. 6 On January 26 and March 20, 1987,
Melecio Hernandez, acting for the petitioner, addressed letters to private respondent, concerning additional orders of sulfuric acid to
replace its sunken purchases, which letters are hereunder excerpted:

January 26, 1987

xxx xxx xxx

We recently charter another vessel M/T DON VICTOR who will be authorized by us to lift the balance approximately 272.49 MT.

We request your good selves to grant us for another Purchase Order with quantity of 227.51 MT and we are willing to pay the
additional order at the prevailing market price, provided the lifting of the total 500 MT be centered/confined to only one safe berth
which is Atlas Pier, Sangi, Cebu. 7

March 20, 1987

This refers to the remaining balance of the above product quantity which were not loaded to the authorized cargo vessel, M/T Sultan
Kayumanggi at your load port — Sangi, Toledo City.

Please be advised that we will be getting the above product quantity within the month of April 1987 and we are arranging for a 500
MT Sulfuric Acid inclusive of which the remaining balance: 272.49 MT an additional product quantity thereof of 227.51 MT. 8

Petitioner's letter 9 dated May 15, 1987, reiterated the same request to private respondent.

On January 25, 1988, petitioner's counsel, Atty. Pedro T. Santos, Jr., sent a demand letter 10 to private respondent for the delivery of
the 272.49 MT of sulfuric acid paid by his client, or the return of the purchase price of three hundred seven thousand five hundred
thirty (P307,530.00) pesos. Private respondent in reply, 11 on March 8, 1988, instructed petitioner to lift the remaining 30 MT of
sulfuric acid from Basay, or pay maintenance and storage expenses commencing August 1, 1986.
On July 6, 1988, petitioner wrote another letter, insisting on picking up its purchases consisting of 272.49 MT and an additional of
227.51 MT of sulfuric acid. According to petitioner it had paid the chartered vessel for the full capacity of 500 MT, stating that:

With regard to our balance of sulfuric acid — product at your shore tank/plant for 272.49 metric ton that was left by M/T Sultana
Kayumanggi due to her sinking, we request for an additional quantity of 227.51 metric ton of sulfuric acid, 98% concentration.

The additional quantity is requested in order to complete the shipment, as the chartered vessel schedule to lift the high grade
sulfuric acid product is contracted for her full capacity/load which is 500 metric tons more or less.

We are willing to pay the additional quantity — 227.51 metric tons high grade sulfuric acid in the prevailing price of the said product.
12

xxx xxx xxx

By telephone, petitioner requested private respondent's Shipping Manager, Gil Belen, to get its additional order of 227.51 MT of
sulfuric acid at Isabel, Leyte. 13 Belen relayed the information to his associate, Herman Rustia, the Senior Manager for Imports and
International Sales of private respondent. In a letter dated July 22, 1988, Rustia replied:

Subject: Sulfuric Acid Ex-Isabel

Gentlemen:

Confirming earlier telcon with our Mr. G.B. Belen, we regret to inform you that we cannot accommodate your request to lift Sulfuric
Acid ex-Isabel due to Pyrite limitation and delayed arrival of imported Sulfuric Acid from Japan. 14

On July 25, 1988, petitioner's counsel wrote to private respondent another demand letter for the delivery of the purchases
remaining, or suffer tedious legal action his client would commence.

On May 4, 1989, petitioner filed a complaint for specific performance and/or damages before the Regional Trial Court of Pasig,
Branch 151. Private respondent filed its answer with counterclaim, stating that it was the petitioner who was remiss in the
performance of its obligation in arranging the shipping requirements of its purchases and, as a consequence, should pay damages
as computed below:

Advanced Payment by Aerospace (Oct. 3, 1986) P553,280.00

Less Shipments

70.009 MT sulfuric acid P72,830.36

151.51 MT sulfuric acid 176,966.27 (249,796.63)

—————— ——————

Balance P303,483.37

Less Charges

Basay Maintenance Expense

from Aug. 15 to Dec. 15, 1986

(P2,000.00/day x 122 days) P244,000.00

Sangi — Tank Rental

from Aug. 15, 1986 to Aug. 15, 1987

(P32,000.00/mo. x 12 mos.) 384,000.00 (628,000.00)

—————— ——————

Receivable/Counterclaim (P324,516.63)

===========

Trial ensued and after due proceedings, judgment was rendered by the trial court in petitioner's favor, disposing as follows:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant, directing the latter to pay the former the
following sums:

1. P306,060.77 — representing the value of the undelivered 272.49 metric tons of sulfuric acid plaintiff paid to defendant;

2. P91,818.23 — representing unrealized profits, both items with 12% interest per annum from May 4, 1989, when the complaint
was filed until fully paid;

3. P30,000.00 — as exemplary damages; and

4. P30,000.00 — as attorney's fees and litigation expenses, both last items also with 12% interest per annum from date hereof until
fully paid.

Defendant's counterclaims are hereby dismissed for lack of merit.

Costs against defendant. 15

In finding for the petitioner, the trial court held that the petitioner was absolved in its obligation to pick-up the remaining sulfuric acid
because its failure was due to force majeure. According to the trial court, it was private respondent who committed a breach of
contract when it failed to accommodate the additional order of the petitioner, to replace those that sank in the sea, thus:

To begin with, even if we assume that it is incumbent (necessary) upon the plaintiff to "lift" the sulfuric acid it ordered from
defendant, the fact that force majeure intervened when the vessel which was previously (sic) listing, but which the parties, including
a representative of the defendant, did not mind, sunk, has the effect of absolving plaintiff from "lifting" the sulfuric acid at the
designated load port. But even assuming the plaintiff cannot be held entirely blameless, the allegation that plaintiff agreed to a
payment of a 2,000-peso incremental expenses per day to defendant for delayed "lifting has not been proven." . . .

Also, if it were true that plaintiff is indebted to defendant, why did defendant accept a second additional order after the transaction in
litigation? Why also, did defendant not send plaintiff statements of account until after 3 years?

All these convince the Court that indeed, defendant must return what plaintiff has paid it for the goods which the latter did not
actually receive. 16

On appeal by private respondent, the Court of Appeals reversed the decision of the trial court, as follows:

Based on the facts of this case as hereinabove set forth, it is clear that the plaintiff had the obligation to withdraw the full amount of
500 MT of sulfuric acid from the defendant's loadport at Basay and Sangi on or before August 15, 1986. As early as August 6, 1986
it had been accordingly warned by the defendant that any delay in the hauling of the commodity would mean expenses on the part
of the defendant amounting to P2,000.00 a day. The plaintiff sent its vessel, the "M/T Sultan Kayumanggi", only on November 19,
1987. The vessel, however; was not capable of loading the entire 500 MT and in fact, with its load of only 227.519 MT, it sank.

Contrary to the position of the trial court, the sinking of the "M/T Sultan Kayumanggi" did not absolve the plaintiff from its obligation
to lift the rest of the 272.481 MT of sulfuric acid at the agreed time. It was the plaintiff's duty to charter another vessel for the
purpose. It did contract for the services of a new vessel, the "M/T Don Victor", but did not want to lift the balance of 272.481 MT only
but insisted that its additional order of 227.51 MT be also given by the defendant to complete 500 MT. apparently so that the vessel
may be availed of in its full capacity.

xxx xxx xxx

We find no basis for the decision of the trial court to make the defendant liable to the plaintiff not only for the cost of the sulfuric acid,
which the plaintiff itself failed to haul, but also for unrealized profits as well as exemplary damages and attorney's fees. 17
Respondent Court of Appeals found the petitioner guilty of delay and negligence in the performance of its obligation. It dismissed the
complaint of petitioner and ordered it to pay damages representing the counterclaim of private respondent.

The motion for reconsideration filed by petitioner was denied by respondent court in its Resolution dated December 21, 1992, for
lack of merit.

Petitioner now comes before us, assigning the following errors:

I.

RESPONDENT COURT OF APPEALS ERRED IN NOT HOLDING PRIVATE RESPONDENT TO HAVE COMMITTED A BREACH
OF CONTRACT WHEN IT IS NOT DISPUTED THAT PETITIONER PAID IN FULL THE VALUE OF 500 MT OF SULFURIC ACID
TO PRIVATE RESPONDENT BUT THE LATTER WAS ABLE TO DELIVER TO PETITIONER ONLY 227.51 M.T.

II.

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING PETITIONER LIABLE FOR DAMAGES TO PRIVATE
RESPONDENT ON THE BASIS OF A XEROX COPY OF AN ALLEGED AGREEMENT TO HOLD PETITIONER LIABLE FOR
DAMAGES FOR THE DELAY WHEN PRIVATE RESPONDENT FAILED TO PRODUCE THE ORIGINAL IN CONTRAVENTION OF
THE RULES ON EVIDENCE.

III.

RESPONDENT COURT OF APPEALS ERRED IN FAILING TO CONSIDER THE UNDISPUTED FACTS THAT PETITIONER'S
PAYMENT FOR THE GOODS WAS RECEIVED BY PRIVATE RESPONDENT WITHOUT ANY QUALIFICATION AND THAT
PRIVATE RESPONDENT ENTERED INTO ANOTHER CONTRACT TO SUPPLY PETITIONER 227.519 MT OF SULFURIC ACID
IN ADDITION TO THE UNDELIVERED BALANCE AS PROOF THAT ANY DELAY OF PETITIONER WAS DEEMED WAIVED BY
SAID ACTS OF RESPONDENT.

IV.

RESPONDENT COURT OF APPEALS ERRED IN NOT CONSIDERING THE LAW THAT WHEN THE SALE INVOLVES
FUNGIBLE GOODS AS IN THIS CASE THE EXPENSES FOR STORAGE AND MAINTENANCE ARE FOR THE ACCOUNT OF
THE SELLER (ARTICLE 1504 CIVIL CODE).

V.

RESPONDENT COURT OF APPEALS ERRED IN FAILING TO RENDER JUDGMENT FOR PETITIONER AFFIRMING THE
DECISION OF THE TRIAL COURT.

From the assigned errors, we synthesize the pertinent issues raised by the petitioner as follows:

1. Did the respondent court err in holding that the petitioner committed breach of contract, considering that:

a) the petitioner allegedly paid the full value of its purchases, yet received only a portion of said purchases?

b) petitioner and private respondent allegedly had also agreed for the purchase and supply of an additional 227.519 MT of sulfuric
acid, hence prior delay, if any, had been waived?

2. Did the respondent court err in awarding damages to private respondent?

3. Should expenses for the storage and preservation of the purchased fungible goods, namely sulfuric acid, be on seller's account
pursuant to Article 1504 of the Civil Code?

To resolve these issues, petitioner urges us to review factual findings of respondent court and its conclusion that the petitioner was
guilty of delay in the performance of its obligation. According to petitioner, that conclusion is contrary to the factual evidence. It adds
that respondent court disregarded the rule that findings of the trial court are given weight, with the highest degree of respect.
Claiming that respondent court's findings conflict with those of the trial court, petitioner prays that the trial court's findings be upheld
over those of the appellate court.
Petitioner argues that it paid the purchase price of sulfuric acid, five (5) days prior to the withdrawal thereof, or on October 3, 1986,
hence, it had complied with the primary condition set in the sales contract. Petitioner claims its failure to pick-up the remaining
purchases on time was due to a storm, a force majeure, which sank the vessel. It thus claims exemption from liability to pay
damages. Petitioner also contends that it was actually the private respondent's shipping officer, who advised petitioner to buy the
additional 227.51 MT of sulfuric acid, so as to fully utilize the capacity of the vessel it chartered. Petitioner insists that when its ship
was ready to pick-up the remaining balance of 272.49 MT of sulfuric acid, private respondent could not comply with the contract
commitment due to "pyrite limitation."

While we agree with petitioner that when the findings of the Court of Appeals are contrary to those of the trial court, 18 this Court may
review those findings, we find the appellate court's conclusion that petitioner violated the subject contract amply supported by
preponderant evidence. Petitioner's claim was predicated merely on the allegations of its employee, Melecio Hernandez, that the
storm or force majeure caused the petitioner's delay and failure to lift the cargo of sulfuric acid at the designated loadports. In
contrast, the appellate court discounted Hernandez' assertions. For on record, the storm was not the proximate cause of petitioner's
failure to transport its purchases on time. The survey report submitted by a third party surveyor, SGS Far East Limited, revealed that
the vessel, which was unstable, was incapable of carrying the full load of sulfuric acid. Note that there was a premature termination
of loading in Basay, Negros Oriental. The vessel had to undergo several repairs before continuing its voyage to pick-up the balance
of cargo at Sangi, Cebu. Despite repairs, the vessel still failed to carry the whole lot of 500 MT of sulfuric acid due to ship defects
like listing to one side. Its unfortunate sinking was not due to force majeure. It sunk because it was, based on SGS survey report,
unstable and unseaworthy.

Witness surveyor Eugenio Rabe's incident report, dated December 13, 1986 in Basay, Negros Oriental, elucidated(explain) this
point:

Loading was started at 1500hrs. November 19. At 1600Hrs. November 20, loading operation was temporarily stopped by the
vessel's master due to ships stability was heavily tilted to port side, ship's had tried to transfer the loaded acid to stbdside but failed
to do so, due to their auxiliary pump on board does not work out for acid.

xxx xxx xxx

Note. Attending surveyor arrived BMC Basay on November 22, due to delayed advice of said vessel Declared quantity loaded
onboard based on data's provided by PHILPHOS representative.

On November 26, two representative of shipping company arrived Basay to assist the situation, at 1300Hrs repairing and/or welding
of tank number 5 started at 1000Hrs November 27, repairing and/or welding was suspended due to the explosion of tank no. 5.
Explosion ripped about two feet of the double bottom tank.

November 27 up to date no progress of said vessel. 19

While at Sangi, Cebu, the vessel's condition (listing) did not improve as the survey report therein noted:

Declared quantity loaded on board was based on shore tank withdrawal due to ship's incomplete tank calibration table. Barge
displacement cannot be applied due to ship was listing to Stboard side which has been loaded with rocks to control her stability. 20

These two vital pieces of information were totally ignored by trial court. The appellate court correctly took these into account,
significantly. As to the weather condition in Basay, the appellate court accepted surveyor Rabe's testimony, thus:

Q. Now, Mr. Witness, what was the weather condition then at Basay, Negros Oriental during the loading operation of sulfuric acid on
board the Sultana Kayumanggi?

A. Fair, sir. 21

Since the third party surveyor was neither petitioner's nor private respondent's employee, his professional report should carry more
weight than that of Melecio Hernandez, an employee of petitioner. Petitioner, as the buyer, was obligated under the contract to
undertake the shipping requirements of the cargo from the private respondent's loadports to the petitioner's designated warehouse.
It was petitioner which chartered M/T Sultan Kayumanggi. The vessel was petitioner's agent. When it failed to comply with the
necessary loading conditions of sulfuric acid, it was incumbent upon petitioner to immediately replace M/T Sultan Kayumanggi with
another seaworthy vessel. However, despite repeated demands, petitioner did not comply seasonably.

Additionally, petitioner claims that private respondent's employee, Gil Belen, had recommended to petitioner to fully utilize the
vessel, hence petitioner's request for additional order to complete the vessel's 500 MT capacity. This claim has no probative
pertinence nor solid basis. A party who asserts that a contract of sale has been changed or modified has the burden of proving the
change or modification by clear and convincing evidence. 22 Repeated requests and additional orders were contained in petitioner's
letters to private respondent. In contrast, Belen's alleged action was only verbal; it was not substantiated at all during the trial. Note
that, using the vessel to full capacity could redound to petitioner's advantage, not the other party's. If additional orders were at the
instance of private respondent, the same must be properly proved together with its relevance to the question of delay. Settled is the
principle in law that proof of verbal agreements offered to vary the terms of written agreements is inadmissible, under the parol
evidence rule. 23 Belen's purported recommendation could not be taken at face value and, obviously, cannot excuse petitioner's
default.

Respondent court found petitioner's default unjustified, and on this conclusion we agree:

It is not true that the defendant was not in a position to deliver the 272.481 MT which was the balance of the original 500 MT
purchased by the plaintiff. The whole lot of 500 MT was ready for lifting as early as August 15, 1986. What the defendant could not
sell to the plaintiff was the additional 227.51 MT which said plaintiff was ordering, for the reason that the defendant was short of the
supply needed. The defendant, however, had no obligation to agree to this additional order and may not be faulted for its inability to
meet the said additional requirements of the plaintiff. And the defendant's incapacity to agree to the delivery of another 227.51 MT is
not a legal justification for the plaintiffs refusal to lift the remaining 272.481.

It is clear from the plaintiff's letters to the defendant that it wanted to send the "M/T Don Victor" only if the defendant would confirm
that it was ready to deliver 500 MT. Because the defendant could not sell another 227.51 MT to the plaintiff, the latter did not send a
new vessel to pick up the balance of the 500 MT originally contracted for by the parties. This, inspite the representations made by
the defendant for the hauling thereof as scheduled and its reminders that any expenses for the delay would be for the account of the
plaintiff. 24

We are therefore constrained to declare that the respondent court did not err when it absolved private respondent from any breach
of contract.

Our next inquiry is whether damages have been properly awarded against petitioner for its unjustified delay in the performance of its
obligation under the contract. Where there has been breach of contract by the buyer, the seller has a right of action for damages.
Following this rule, a cause of action of the seller for damages may arise where the buyer refuses to remove the goods, such that
buyer has to remove them. 25 Article 1170 of the Civil Code provides:

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.

26
Delay begins from the time the obligee judicially or extrajudicially demands from the obligor the performance of the obligation. Art.
1169 states:

Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands
from them the fulfillment of their obligation.

In order that the debtor may be in default, it is necessary that the following requisites be present: (1) that the obligation be
demandable and already liquidated; (2) that the debtor delays performance; and (3) that the creditor requires the performance
judicially or extrajudicially. 27

In the present case, private respondent required petitioner to ship out or lift the sulfuric acid as agreed, otherwise petitioner would be
charged for the consequential damages owing to any delay. As stated in private respondent's letter to petitioner, dated December
12, 1986:

Subject: M/T "KAYUMANGGI"

Gentlemen:

This is to reiterate our telephone advice and our letter HJR-8612-031 dated 2 December 1986 regarding your sulfuric acid vessel,
M/T "KAYUMANGGI".

As we have, in various instances, advised you, our Basay wharf will have to be vacated 15th December 1986 as we are expecting
the arrival of our chartered vessel purportedly to haul our equipments and all other remaining assets in Basay. This includes our
sulfuric acid tanks. We regret, therefore, that if these tanks are not emptied on or before the 15th of December, we either have to
charge you for the tanks waiting time at Basay and its consequential costs (i.e. chartering of another vessel for its second pick-up at
Basay, handling, etc.) as well as all other incremental costs on account of the protracted loading delay. 28 (Emphasis supplied)

Indeed the above demand, which was unheeded, justifies the finding of delay. But when did such delay begin? The above letter
constitutes private respondent's extrajudicial demand for the petitioner to fulfill its obligation, and its dateline is significant. Given its
date, however, we cannot sustain the finding of the respondent court that petitioner's delay started on August 6, 1986. The Court of
Appeals had relied on private respondent's earlier letter to petitioner of that date for computing the commencement of delay. But as
averred by petitioner, said letter of August 6th is not a categorical demand. What it showed was a mere statement of fact, that "[F]for
your information any delay in Sulfuric Acid withdrawal shall cost us incremental expenses of P2,000.00 per day." Noteworthy, private
respondent accepted the full payment by petitioner for purchases on October 3, 1986, without qualification, long after the August 6th
letter. In contrast to the August 6th letter, that of December 12th was a categorical demand.

Records reveal that a tanker ship had to pick-up sulfuric acid in Basay, then proceed to get the remaining stocks in Sangi, Cebu. A
period of three days appears to us reasonable for a vessel to travel between Basay and Sangi. Logically, the computation of
damages arising from the shipping delay would then have to be from December 15, 1986, given said reasonable period after the
December 12th letter. More important, private respondent was forced to vacate Basay wharf only on December 15th. Its Basay
expenses incurred before December 15, 1986, were necessary and regular business expenses for which the petitioner should not
be obliged to pay.

Note that private respondent extended its lease agreement for Sangi, Cebu storage tank until August 31, 1987, solely for petitioner's
sulfuric acid. It stands to reason that petitioner should reimburse private respondent's rental expenses of P32,000 monthly,
commencing December 15, 1986, up to August 31, 1987, the period of the extended lease. Note further that there is nothing on
record refuting the amount of expenses abovecited. Private respondent presented in court two supporting documents: first, the lease
agreement pertaining to the equipment, and second a letter dated June 15, 1987, sent by Atlas Fertilizer Corporation to private
respondent representing the rental charges incurred. Private respondent is entitled to recover the payment for these charges. It
should be reimbursed the amount of two hundred seventy two thousand
(P272,000.00) 29 pesos, corresponding to the total amount of rentals from December 15, 1986 to August 31, 1987 of the Sangi,
Cebu storage tank.

Finally, we note also that petitioner tries to exempt itself from paying rental expenses and other damages by arguing that expenses
for the preservation of fungible goods must be assumed by the seller. Rental expenses of storing sulfuric acid should be at private
respondent's account until ownership is transferred, according to petitioner. However, the general rule that before delivery, the risk
of loss is borne by the seller who is still the owner, is not applicable in this case because petitioner had incurred delay in the
performance of its obligation. Article 1504 of the Civil Code clearly states:

Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is transferred to the buyer, but when the
ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery has been made or not, except
that:

xxx xxx xxx

(2) Where actual delivery has been delayed through the fault of either the buyer or seller the goods are at the risk of the party at
fault. (emphasis supplied)

On this score, we quote with approval the findings of the appellate court, thus:

. . . The defendant [herein private respondent] was not remiss in reminding the plaintiff that it would have to bear the said expenses
for failure to lift the commodity for an unreasonable length of time.

But even assuming that the plaintiff did not consent to be so bound, the provisions of Civil Code come in to make it liable for the
damages sought by the defendant.

Art. 1170 of the Civil Code provides:

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.

Certainly, the plaintiff [herein petitioner] was guilty of negligence and delay in the performance of its obligation to lift the sulfuric acid
on August 15, 1986 and had contravened the tenor of its letter-contract with the defendant. 30

As pointed out earlier, petitioner is guilty of delay, after private respondent made the necessary extrajudicial demand by requiring
petitioner to lift the cargo at its designated loadports. When petitioner failed to comply with its obligations under the contract it
became liable for its shortcomings. Petitioner is indubitably liable for proven damages.

Considering, however, that petitioner made an advance payment for the unlifted sulfuric acid in the amount of three hundred three
thousand, four hundred eighty three pesos and thirty seven centavos (P303,483.37), it is proper to set-off this amount against the
rental expenses initially paid by private respondent. It is worth noting that the adjustment and allowance of private respondent's
counterclaim or set-off in the present action, rather than by another independent action, is encouraged by the law. Such practice
serves to avoid circuitry of action, multiplicity of suits, inconvenience, expense, and unwarranted consumption of the court's time. 31
The trend of judicial decisions is toward a liberal extension of the right to avail of counterclaims or set-offs. 32 The rules on
counterclaims are designed to achieve the disposition of a whole controversy involving the conflicting claims of interested parties at
one time and in one action, provided all parties can be brought before the court and the matter decided without prejudicing the right
of any party. 33 Set-off in this case is proper and reasonable. It involves deducting P272,000.00 (rentals) from P303,483.37 (advance
payment), which will leave the amount of P31,483.37 refundable to petitioner.

WHEREFORE, the petition is hereby DENIED. The assailed decision of the Court of Appeals in CA G.R. CV No. 33802 is
AFFIRMED, with MODIFICATION that the amount of damages awarded in favor of private respondent is REDUCED to Two
hundred seventy two thousand pesos (P272,000.00). It is also ORDERED that said amount of damages be OFFSET against
petitioner's advance payment of Three hundred three thousand four hundred eighty three pesos and thirty-seven centavos
(P303,483.37) representing the price of the 272.481 MT of sulfuric acid not lifted. Lastly, it is ORDERED that the excess amount of
thirty one thousand, four hundred eighty three pesos and thirty seven centavos (P31,483.37) be RETURNED soonest by private
respondent to herein petitioner.1âwphi1.nêt

Costs against the petitioner.

SO ORDERED.

Petitioner: DESAMPARADOS M. SOLIVA

15
Respondent: The INTESTATE ESTATE of MARCELO M. VILLALBA and VALENTA BALICUA VILLALBA
G.R. No. 154017 December 8, 2003

FACTS:

1…. On May 5, 1982, Petitioner Soliva filed a complaint for recovery of ownership, possession and damages against
Respondent Valenta Villalba alleging that she is the owner of a parcel of agricultural land occupied by the respondent.

2. On January 4, 1966, the late Capt. Marcelo Villalba asked her permission to occupy her house on said land, promised to
buy the house and lot upon receipt of his money from Manila and gave her P600.00 for the occupation of the house;

3. that Capt. Villalba died in 1978 without having paid the consideration for the house and lot; and that after the death of
Capt. Villalba, his widow, Respondent Valenta refused to vacate the house and lot despite demands, destroyed the house thereon
and constructed a new one.

4. The court rendered judgment restoring to petitioner her right of ownership and possession of the property

5. The CA rendered judgment dismissing the complaint had barred her action to recover the disputed property from the
Villalbas.

6. Hence this petition.

ISSUE: WON the plaintiff by reason of long inaction or inexcusable neglect should be barred entirely from asserting the claim?

HELD:

1… Yes, because to allow such action would be inequitable and unjust to the defendant.

2. One of the essential elements of laches is that the Delay by the complainant in asserting his right after he has had
knowledge of the defendant’s conduct and after he has had an opportunity to sue;

3. The Petitioner complied with her obligation to deliver the property in 1966. However, respondent’s husband failed to
comply with his reciprocal obligation to pay, when the money he had been expecting from Manila never materialized. 25 He also
failed to make further instalments after May 13, 1966.26

4. As early as 1966, therefore, petitioner already had the right to compel payment or to ask for rescission, pursuant to Article
1169 of the Civil Code, which reads:

5. That those obliged to deliver or to do something incur in delay from the time the obligee judicially or extra judicially
demands from them the fulfilment of their obligation.
6. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the moment one of the parties fulfils his obligation, delay by the other begins."

7. Nonetheless, petitioner failed to sue for collection or rescission. Due to insufficiency of evidence, the lower courts brushed
aside her assertions that she had availed herself of extrajudicial remedies to collect the balance or to serve an extrajudicial demand
on Villalba, prior to her legal action in 1982.

8. Meanwhile, respondent had spent a considerable sum in renovating the house and introducing improvements on the
premises.27

9. In view thereof, the appellate court aptly ruled that petitioner’s claim was already barred by laches.

10. it must be stressed that unlike prescription, laches is not concerned merely with the fact of delay, but even more with the
effect of unreasonable delay

11. WHEREFORE, the Petition is partly GRANTED. The Decision of the Court of Appeals is AFFIRMED, with the
MODIFICATION that respondent is ordered to pay the balance of the purchase price of P1,250 plus 6 percent interest per annum,
from May 5, 1982 until the finality of this judgment. Thereafter, interest of 12 percent per year shall then be imposed on that amount
upon the finality of this Decision until the payment thereof. No costs.

Petitioner: POLO S. PANTALEON

Respondent: AMERICAN EXPRESS INTERNATIONAL, INC.,
G.R. No. 174269, May 8 2009 [Credit Transaction]

FACTS:

1… This case originated after the Amsterdam incident that happened involving the delay of American Express Card of his
credit card purchases a diamond worth US$13,826.00 at the Coster store during their European tour and also the delay happened in
US.

2. Pantaleon commenced a complaint for moral and exemplary damages before the RTC against American Express. He
said that he and his family experienced inconvenience and humiliation due to the delays in credit authorization. RTC rendered a
decision in favor of Pantaleon.

3. The CA reversed the award of damages in favor of Pantaleon, recognized that delay in the nature of mora accipiendi or
creditor’s default attended AMEX’s approval of Pantaleon’s purchases but holding that AmEx had not breached its obligations to
Pantaleon.

ISSUE: WON AMEX IS guilty of culpable delay?

RULING:

NO, AMEX has no obligation to approve the purchase requests of its credit cardholders, Pantaleon cannot claim that
AMEX defaulted in its obligation. Article 1169 of the Civil Code, which provides the requisites to hold a debtor guilty of culpable
delay, states:

Article 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially
demands from them the fulfillment of their obligation. x x x.

The three requisites for a finding of default are: (a) that the obligation is demandable and liquidated; (b) the debtor delays
performance; and (c) the creditor judicially or extrajudicially requires the debtor’s performance.
 Based on the above, the first requisite is no longer met because AMEX, by the express terms of the credit card
agreement, is not obligated to approve Pantaleon’s purchase request. Without a demandable obligation, there can be no finding of
default.

Apart from the lack of any demandable obligation, we also find that Pantaleon failed to make the demand required by
Article 1169 of the Civil Code.

As previously established, the use of a credit card to pay for a purchase is only an offer to the credit card company to
enter a loan agreement with the credit card holder. Before the credit card issuer accepts this offer, no obligation relating to the
loan agreement exists between them. On the other hand, a demand is defined as the "assertion of a legal right; xxx an asking
with authority, claiming or challenging as due."27 A demand presupposes the existence of an obligation between the parties.

Thus, every time that Pantaleon used his AMEX credit card to pay for his purchases, what the stores transmitted to AMEX
were his offers to execute loan contracts. These obviously could not be classified as the demand required by law to make the debtor
in default, given that no obligation could arise on the part of AMEX until after AMEX transmitted its acceptance of Pantaleon’s offers.
Pantaleon’s act of "insisting on and waiting for the charge purchases to be approved by AMEX" 28 is not the demand contemplated
by Article 1169 of the Civil Code.

For failing to comply with the requisites of Article 1169, Pantaleon’s charge that AMEX is guilty of culpable delay in
approving his purchase requests must fail.

On AMEX’s obligation to act on the offer within a specific period of time

Even assuming that AMEX had the right to review his credit card history before it approved his purchase requests,
Pantaleon insists that AMEX had an obligation to act on his purchase requests, either to approve or deny, in "a matter of seconds"
or "in timely dispatch." Pantaleon impresses upon us the existence of this obligation by emphasizing two points: (a) his card has no
pre-set spending limit; and (b) in his twelve years of using his AMEX card, AMEX had always approved his charges in a matter of
seconds.

Pantaleon’s assertions fail to convince us.

We originally held that AMEX was in culpable delay when it acted on the Coster transaction, as well as the two other
transactions in the United States which took AMEX approximately 15 to 20 minutes to approve. This conclusion appears valid and
reasonable at first glance, comparing the time it took to finally get the Coster purchase approved (a total of 78 minutes), to AMEX’s
"normal" approval time of three to four seconds (based on the testimony of Edgardo Jaurigue, as well as Pantaleon’s previous
experience). We come to a different result, however, after a closer look at the factual and legal circumstances of the case.

AMEX’s credit authorizer, Edgardo Jaurigue, explained that having no pre-set spending limit in a credit card simply means
that the charges made by the cardholder are approved based on his ability to pay, as demonstrated by his past spending, payment
patterns, and personal resources.29 Nevertheless, every time Pantaleon charges a purchase on his credit card, the credit card
company still has to determine whether it will allow this charge, based on his past credit history. This right to review a card
holder’s credit history, although not specifically set out in the card membership agreement, is a necessary implication of AMEX’s
right to deny authorization for any requested charge.

We next examine the credit card membership agreement, the contract that primarily governs the relationship between AMEX and
Pantaleon. Significantly, there is no provision in this agreement that obligates AMEX to act on all cardholder purchase
requests within a specifically defined period of time.

In light of the foregoing, we find and so hold that AMEX is neither contractually bound nor legally obligated to act on its cardholders’
purchase requests within any specific period of time, much less a period of a "matter of seconds" that Pantaleon uses as his
standard. T

AMEX acted with good faith

[Article 19], known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be
observed not only in the exercise of one's rights but also in the performance of one's duties. These standards are the following: to
act with justice; to give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial
limitation on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though
by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality.
When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in
damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article
19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a
remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be proper.

Q 21: With reference to the transaction at the Coster Diamond House covered by Exhibit H, also Exhibit 4 for the defendant, the
approval came at 2:19 a.m. after the request was relayed at 1:33 a.m., can you explain why the approval came after about 46
minutes, more or less?

A21: Because we have to make certain considerations and evaluations of [Pantaleon’s] past spending pattern with [AMEX] at that
time before approving plaintiff’s request because [Pantaleon] was at that time making his very first single charge purchase of
US$13,826 [this is below the US$16,112.58 actually billed and paid for by the plaintiff because the difference was already
automatically approved by [AMEX] office in Netherland[s] and the record of [Pantaleon’s] past spending with [AMEX] at that
time does not favorably support his ability to pay for such purchase. In fact, if the foregoing internal policy of [AMEX] had been
strictly followed, the transaction would not have been approved at all considering that the past spending pattern of the plaintiff with
[AMEX] at that time does not support his ability to pay for such purchase. 41

Q: Why did it take so long?

A: It took time to review the account on credit, so, if there is any delinquencies [sic] of the cardmember. There are factors on
deciding the charge itself which are standard measures in approving the authorization. Now in the case of Mr. Pantaleon although
his account is single charge purchase of US$13,826. [sic] this is below the US$16,000. plus actually billed x x x we would have
already declined the charge outright and asked him his bank account to support his charge. But due to the length of his membership
as cardholder we had to make a decision on hand.42

As Edgardo Jaurigue clarified, the reason why Pantaleon had to wait for AMEX’s approval was because he had to go over
Pantaleon’s credit card history for the past twelve months. 43 It would certainly be unjust for us to penalize AMEX for merely
exercising its right to review Pantaleon’s credit history meticulously.

Finally, we said in Garciano v. Court of Appeals that "the right to recover [moral damages] under Article 21 is based on equity, and
he who comes to court to demand equity, must come with clean hands. Article 21 should be construed as granting the right to
recover damages to injured persons who are not themselves at fault." 44 As will be discussed below, Pantaleon is not a blameless
party in all this.

Pantaleon’s action was the proximate cause for his injury

In Nikko Hotel Manila Garden v. Reyes,45 we ruled that a person who knowingly and voluntarily exposes himself to danger cannot
claim damages for the resulting injury:

Pantaleon knew even before entering Coster that the tour group would have to leave the store by 9:30 a.m. to have enough time to
take the city tour of Amsterdam before they left the country. After 9:30 a.m., Pantaleon’s son, who had boarded the bus ahead of his
family, returned to the store to inform his family that they were the only ones not on the bus and that the entire tour group was
waiting for them. Significantly, Pantaleon tried to cancel the sale at 9:40 a.m. because he did not want to cause any inconvenience
to the tour group. However, when Coster’s sale manager asked him to wait a few more minutes for the credit card approval, he
agreed, despite the knowledge that he had already caused a 10-minute delay and that the city tour could not start without him.

Pantaleon is not entitled to damages

Because AMEX neither breached its contract with Pantaleon, nor acted with culpable delay or the willful intent to cause harm, we
find the award of moral damages to Pantaleon unwarranted.

Similarly, we find no basis to award exemplary damages. In contracts, exemplary damages can only be awarded if a defendant
acted "in a wanton, fraudulent, reckless, oppressive or malevolent manner." 49 The plaintiff must also show that he is entitled to
moral, temperate, or compensatory damages before the court may consider the question of whether or not exemplary damages
should be awarded.50

Neither do we find any basis for the award of attorney’s fees and costs of litigation. No premium should be placed on the right to
litigate and not every winning party is entitled to an automatic grant of attorney's fees. 51 To be entitled to attorney’s fees and
litigation costs, a party must show that he falls under one of the instances enumerated in Article 2208 of the Civil Code. 52 This,
Pantaleon failed to do. Since we eliminated the award of moral and exemplary damages, so must we delete the award for attorney's
fees and litigation expenses.

Petitioner: TWIN TOWERS CONDOMINIUM CORPORATION, petitioner 17

Respondent: THE COURT OF APPEALS, ALS MANAGEMENT & DEVELOPMENT CORPORATION, ANTONIO LITONJUA and
SECURITIES AND EXCHANGE COMMISSION, respondents.
G.R. No. 123552 February 27, 2003

FACTS:

The petitioner, a non-stock corporation, is organized for the sole purpose of holding title to and managing the common areas of Twin
Towers Condominium. Membership in Petitioner Corporation is compulsory and limited to all registered owners of units in the
Condominium. ALS, as registered owner of a Unit of the Condominium, is a member of petitioner. Litonjua, who is the corporate
president of ALS, occupies the Unit.

Petitioner collects from all its members’ quarterly assessments and dues as authorized by its Master Deed and Declaration of
Restrictions and its By-Laws.

Petitioner’s records of account show that ALS failed to pay assessments and dues starting 1986 up to the first quarter of 1988.

Here, the petitioner repeatedly preventing ALS, its agents and guests from using the parking space, swimming pool, gym, and other
facilities of the Condominium.

In the SEC en banc it remanded the case to the Hearing Officer to determine the value of the services petitioner failed to render to
ALS because of the latter’s non-use of the Condominium facilities. The SEC en banc ruled that the value of these services could be
deducted from the unpaid assessments and dues that ALS owes petitioner.

ISSUE:

RULING

ALS asserts that the denial by petitioner to ALS and Litonjua of the use of the Condominium facilities deprived petitioner
of any right to demand from ALS payment of any condominium assessments and dues. ALS contends that the right to demand
payment of assessments and dues carries with it the correlative obligation to allow the use of the Condominium facilities. ALS is
correct if it had not defaulted on its assessment and dues before the denial of the use of the facilities. However, the records clearly
show that petitioner denied ALS and Litonjua the use of the facilities only after ALS had defaulted on its obligation to pay the
assessments and dues. The denial of the use of the facilities was the sanction for the prior default incurred by ALS.

In essence, what ALS wants is to use its own prior non-payment as a justification for its future non-payment of its
assessments and dues. Stated another way, ALS advances the argument that a contracting party who is guilty of first breaching his
obligation is excused from such breach if the other party retaliates by refusing to comply with his own obligation.

This obviously is not the law. In reciprocal obligations, when one party’ fulfills his obligation, and the other does not, delay
by the other begins. Moreover, when one party does not comply with his obligation, the other party does not incur delay if he does
not perform his own reciprocal obligation because of the first party’s non-compliance. This is embodied in Article 1169 of the Civil
Code, the relevant provision of which reads:

"In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins."

Thus, before ALS incurred its arrearages, petitioner allowed ALS to use the facilities. However, ALS subsequently
defaulted and thus incurred delay. It was only then that petitioner disallowed ALS and Litonjua from using the facilities. Clearly,
petitioner’s denial to ALS of the Condominium facilities, after ALS had defaulted, does not constitute a valid ground on the part of
ALS to refuse paying its assessments and dues.

Also here, The Master Deed binds ALS since the Master Deed is annotated on the condominium certificate of title of ALS’
Unit. The Master Deed is ALS’ contract with all Condominium members who are all co-owners of the common areas and facilities of
the Condominium. Contracts have the force of law between the parties and are to be complied with in good faith. 45 From the
moment the contract is perfected, the parties are bound to comply with what is expressly stipulated as well as with what is required
by the nature of the obligation in keeping with good faith, usage and the law. 46 Thus, when ALS purchased its Unit from petitioner,
ALS was bound by the terms and conditions set forth in the contract, including the stipulations in the House Rules of petitioner, such
as House Rule 26.2.
 In sum, as a member of petitioner, ALS is indisputably bound by the Condominium’s House Rules which are authorized by
the By-Laws, the Master Deed and the Condominium Act.

There is also no question that ALS is a member of petitioner considering that ALS is the registered owner of the Unit. Under the
automatic exclusive membership clause in the Master Deed, ALS became a regular member of petitioner upon its acquisition of a
unit in the Condominium.

As a member of petitioner, ALS assumed the compulsory obligation to share in the common expenses of the Condominium. This
compulsory obligation is further emphasized in Section 8, paragraph c, Part I of the Master Deed, to wit:

"Each member of the Condominium Corporation shall share in the common expenses of the condominium project in the same
sharing or percentage stated

Undoubtedly, as a member of petitioner, ALS is legally bound to pay petitioner assessments and dues LO maintain the common
areas and facilities of the Condominium. ALS’ obligation arises from both the law and its contract with the Condominium developer
and other unit owners.

Petitioner’s Master Deed provides that a member of the Condominium corporation shall share in the common expenses of the
condominium project.31 This obligation does not depend on the use or non-use by the member of the common areas and facilities of
the Condominium. Whether or not a member uses the common areas or facilities, these areas and facilities will have to be
maintained. Expenditures must be made to maintain the common areas and facilities whether a member uses them frequently,
infrequently or never at all.