Lambert v FoxFACTS:Early in 1911: John R. Edgar & Co., engaged in the retail book and stationery business was taken over by its creditors including Lambert and FoxLambert and Fox became the 2 largest stockholders in the new corporation called John R. Edgar & Co., IncorporatedLambert and Fox entered into an agreement wherein they mutually and reciprocally agree not to sell, transfer, or otherwise dispose of an part of the stock until after 1 year from the agreement date unless consented in writingviolation: P1,000 pesos as liquidated damagesOctober 19, 1911: Fox sold his stock E. C. McCullough & Co. of Manila, a strong competitor sale was made by the defendant against the protest Foz offered to sell his shares of stock to the Lambert for the same sum that McCullough was paying them less P1,000, the penalty specified in the contractTrial Court: dismissedISSUE: W/N Fox should be penalizedHELD: YES. The judgment is reversed, the case remanded with instructions to enter a judgment in favor of the plaintiff and against the defendant for P1,000, with interest; without costs in this instance.parties expressly stipulated that the contract should last one year regardless of the objective it should be appliedparties who are competent to contract may make such agreements within the limitations of the law and public policy as they desire, and that the courts will enforce them according to their termsThe suspension of the power to sell has a beneficial purpose, results in the protection of the corporation as well as of the individual parties to the contract, and is reasonable as to the length of time of the suspension.Other source:Early in 1911 the firm known as John R. Edgar & Co., engaged in the retail book and stationery business, found itself in such condition financially that its creditors, including the plaintiff and the defendant, together with many others, agreed to take over the business, incorporate it and accept stock therein in payment of their respective credits. A few days after the incorporation was completed plaintiff and defendant entered into the following agreement: xxx the undersigned mutually and reciprocally agree not to sell, transfer, or otherwise dispose of any part of their present holdings of stock in said John R. Edgar & Co. Inc., till after one year from the date hereof. Either party violating this agreement shall pay to the other the sum of one thousand (P1,000) pesos as liquidated damages, unless previous consent in writing to such sale, transfer, or other disposition be obtained.Notwithstanding this contract the defendant Fox sold his stock in the said corporation to E. C. McCullough of the firm of E. C. McCullough & Co. of Manila, a strong competitor of the said John R. Edgar & Co., Inc. The learned trial court decided the case in favor of the defendant upon the ground that the intention of the parties as it appeared from the contract in question was to the effect that the agreement should be good and continue only until the corporation reached a sound financial basis, and that that event having occurred some time before the expiration of the year mentioned in the contract, the purpose for which the contract was made and had been fulfilled and the defendant accordingly discharged of his obligation thereunder. The complaint was dismissed upon the merits. ISSUE: Did the court erred in the construction of the contract?HELD: "As for us, we do not construe or interpret this law. It does not need it. We apply it. By applying the law, we conserve both provisions for the benefit of litigants. The first and fundamental duty of courts, in our judgment, is to apply the law. Construction and interpretation come only after it has been demonstrated that application is impossible or inadequate without them. They are the very last functions which a court should exercise. The majority of the law need no interpretation or construction. They require only application, and if there were more application and less construction, there would be more stability in the law, and more people would know what the law is." In the case at bar the parties expressly stipulated that the contract should last one year. No reason is shown for saying that it shall last only nine months. Whatever the object was in specifying the year, it was their agreement that the contract should last a year and it was their judgment and conviction that their purposes would not be subversed in any less time. What reason can give for refusing to follow the plain words of the men who made the contract? We see none. In this jurisdiction penalties provided in contracts of this character are enforced . It is the rule that parties who are competent to contract may make such agreements within the limitations of the law and public policy as they desire, and that the courts will enforce them according to their terms. (Civil Code, articles 1152, 1153, 1154, and 1155; Fornow vs. Hoffmeister, 6 Phil. Rep., 33; Palacios vs. Municipality of Cavite, 12 Phil. Rep., 140; Gsell vs. Koch, 16 Phil. Rep., 1.) The only case recognized by the Civil Code in which the court is authorized to intervene for the purpose of reducing a penalty stipulated in the contract is when the principal obligation has been partly or irregularly fulfilled and the court can see that the person demanding the penalty has received the benefit of such or irregular performance. In such case the court is authorized to reduce the penalty to the extent of the benefits received by the party enforcing the penalty. In this jurisdiction, there is no difference between a penalty and liquidated damages, so far as legal results are concerned. In either case the party to whom payment is to be made is entitled to recover the sum stipulated without the necessity of proving damages. Indeed one of the primary purposes in fixing a penalty or in liquidating damages, is to avoid such necessity. The suspension of the power to sell has a beneficial purpose, results in the protection of the corporation as well as of the individual parties to the contract, and is reasonable as to the length of time of the suspension. We do not here undertake to discuss the limitations to the power to suspend the right of alienation of stock, limiting ourselves to the statement that the suspension in this particular case is legal and valid. The judgment is reversed, the case remanded with instructions to enter a judgment in favor of the plaintiff and against the defendant for P1,000, with interest; without costs in this instance.

Jison v CAFACTS:Private respondent, Monina Jison, instituted a complaint against petitioner, Francisco Jison, for recognition as illegitimate child of the latter. The case was filed 20 years after her mothers death and when she was already 39 years of age. Petitioner was married to Lilia Lopez Jison since 1940 and sometime in 1945, he impregnated Esperanza Amolar, Moninas mother. Monina alleged that since childhood, she had enjoyed the continuous, implied recognition as the illegitimate child of petitioner by his acts and that of his family. It was likewise alleged that petitioner supported her and spent for her education such that she became a CPA and eventually a Central Bank Examiner. Monina was able to present total of 11 witnesses. ISSUE: WON Monina should be declared as illegitimate child of Francisco Jison.HELD:Under Article 175 of the Family Code, illegitimate filiation may be established in the same way and on the same evidence as that of legitimate children. Article 172 thereof provides the various forms of evidence by which legitimate filiation is established.To prove open and continuous possession of the status of an illegitimate child, there must be evidence of the manifestation of the permanent intention of the supposed father to consider the child as his, by continuous and clear manifestations of parental affection and care, which cannot be attributed to pure charity. Such acts must be of such a nature that they reveal not only the conviction of paternity, but also the apparent desire to have and treat the child as such in all relations in society and in life, not accidentally, but continuously.The following facts was established based on the testimonial evidences offered by Monina:1. That Francisco was her father and she was conceived at the time when her mother was employed by the former;2. That Francisco recognized Monina as his child through his overt acts and conduct.SC ruled that a certificate of live birth purportedly identifying the putative father is not competence evidence as to the issue of paternity. Franciscos lack of participation in the preparation of baptismal certificates and school records render the documents showed as incompetent to prove paternity. With regard to the affidavit signed by Monina when she was 25 years of age attesting that Francisco was not her father, SC was in the position that if Monina were truly not Franciscos illegitimate child, it would be unnecessary for him to have gone to such great lengths in order that Monina denounce her filiation. Moninas evidence hurdles the high standard of proof required for the success of an action to establish ones illegitimate filiation in relying upon the provision on open and continuous possession. Hence, Monina proved her filiation by more than mere preponderance of evidence.Since the instant case involves paternity and filiation, even if illegitimate, Monina filed her action well within the period granted her by a positive provision of law. A denial then of her action on ground of laches would clearly be inequitable and unjust. Petition was denied.Other source:FACTS: This is a case filed by one Monina Jison for recognition as an illegitimate child of Francisco Jison who is married to Lilia Lopez Jison. MONINA alleged that she is the daughter of FRANCISCO who impregnated her mother Esperanza F. Amolar, who was then employed as the nanny of FRANCISCO's daughter. She claims that she has openly and continuously possessed the status of an illegitimate child of Francisco and that Francisco had also openly and continuously recognized her as such.The trial court categorized Moninas many evidences as hearsay evidence, incredulous evidence, or self-serving evidence and ruled against Monina while the Court of Appeals decided in favour of Monina and declared her to be the illegitimate daughter of Francisco. The Court of Appeals ruled that the testimonies of Moninas witnesses were sufficient to establish MONINA's filiation.ISSUE: Did Monina successfully establish her filiation under Article 172 par. 2 of the Family Code (open and continuous possession of the status)?HELD: Yes. Under Article 175 of the Family Code, illegitimate filiation, such as MONINA's, may be established in the same way and on the same evidence as that of legitimate children. The Supreme Court sustained the findings of the CA that Monina was able to prove her illegitimate filiation.For the success of an action to establish illegitimate filiation under Article 172 par. 2, a "high standard of proof" is required. To prove open and continuous possession of the status of an illegitimate child, there must be evidence of the manifestation of the permanent intention of the supposed father to consider the child as his, by continuous and clear manifestations of parental affection and care, which cannot be attributed to pure charity. Such acts must be of such a nature that they reveal not only the conviction of paternity, but also the apparent desire to have and treat the child as such in all relations in society and in life, not accidentally, but continuously. By "continuous" is meant uninterrupted and consistent, but does not require any particular length of time. In deciding paternity suits, the issue of whether sexual intercourse actually occurred inevitably redounds to the victim's or mother's word, as against the accused's or putative father's protestations. In the instant case, MONINA's mother could no longer testify as to the fact of intercourse, as she had already passed away. But the fact of Moninas birth and her parentage may be established by evidence other than the testimony of her mother. The testimonial evidence offered by MONINA, woven by her narration of circumstances and events that occurred through the years, concerning her relationship with FRANCISCO, coupled with the testimonies of her witnesses, overwhelmingly established that the following:1) FRANCISCO is MONINA's father and she was conceived at the time when her mother was in the employ of the former;2) FRANCISCO recognized MONINA as his child through his overt acts and conduct like sending her to school, paying for her tuition fees, school uniforms, books, board and lodging at the Colegio del Sagrado de Jesus, defraying for her hospitalization expenses, providing her with monthly allowance, paying for the funeral expenses of her mother, acknowledging her paternal greetings and calling appellant his "Hija" or child, instructing his office personnel to give appellant's monthly allowance, recommending her to use his house in Bacolod and paying for her long distance telephone calls, having her spend her long distance telephone calls, having her spend her vacation in his apartment in Manila and also at his Forbes residence, allowing her to use his surname in her scholastic and other records. 3) Such recognition has been consistently shown and manifested throughout the years publicly, spontaneously, continuously and in an uninterrupted manner. The totality of the evidence on record established Moninas filiation.Appeal filed by Francisco Jison was dismissed.

Culaba v CAFacts: Culaba sells SMB. One day, an agent from SMB driving an SMB van drops by to collect Culaba's balance, issuing SMB receipts for the payment. Susbequently, Culaba receives demand letters from SMB for not paying his balance. The agent turns out to be a spurious agent, and the receipts lost receipts which had been published in the papers as lost after the payment. Culaba invokes articles 1240 and 1242 in his defense. SMB's counsel invokes 1233, that the burden of proof of payment is on the debtor and that Culaba failed to exercise due diligencewhen he failed to question the irregular nature of the invoices as well as the authority of the purported agent. Was Culaba excused by his mistaken payment?Held: Culaba failed to observe the due diligence required in parting with such a valuable consideration. He should have verified the identity of the agent and his authority to receive. He did not, thus he was guilty of negligence, the effects of which not even his claims of good faith can shield him from. Culaba is liable to pay SMB.Other source:FACTS:SMC sold beer products on credit to the Culaba spouses in the amount of P28,650.00, as evidenced by Temporary Credit InvoiceNo. 42943.Thereafter, the Culaba spouses made a partial payment of P3,740.00, leaving an unpaid balance of P24,910.00. As they failed topay despite repeated demands, SMC filed an action for collection of a sum of money against them before the RTCThe defendant-spouses denied any liability, claiming that they had already paid the plaintiff in full on four separate occasions. To substantiate this claim, the defendants presented four (4) Temporary Charge Sales (TCS) Liquidation Receipts.Defendant Francisco Culaba testified that he made the foregoing payments to an SMC supervisor who came in an SMC van. He wasthen showed a list of customers accountabilities which included his account. The defendant, in good faith, then paid to the saidsupervisor, and he was, in turn, issued genuine SMC liquidation receipts.SMC submitted a publishers affidavit9 to prove that the entire booklet of TCSL Receipts bearing Nos. 27301-27350 were reportedlost by it, and that it caused the publication of the notice of loss in the July 9, 1983 issue of the Daily ExpressISSUE: WON the payment of the petitioners obligation to the private respondent was properly made, thus, extinguishing thesame. NO!RULING:Payment is a mode of extinguishing an obligation. Article 1240 of the Civil Code provides that payment shall be made tothe person in whose favor the obligation has been constituted, or his successor-in-interest, or any person authorized toreceive it. In this case, the payments were purportedly made to a "supervisor" of the private respondent, who was clad in an SMCuniform and drove an SMC van. He appeared to be authorized to accept payments as he showed a list of customers accountabilitiesand even issued SMC liquidation receipts which looked genuine.The basis of agency is representation. A person dealing with an agent is put upon inquiry and must discover upon his peril theauthority of the agent. In the instant case, the petitioners loss could have been avoided if they had simply exercised duediligence in ascertaining the identity of the person to whom they allegedly made the payments.The petitioners in this case failed to discharge this burden, considering that the private respondent vehemently denied that thepayments were accepted by it and were made to its authorized representative.In the case at bar, the most prudent thing the petitioners should have done was to ascertain the identity and authority of theperson who collected their payments. Failing this, the petitioners cannot claim that they acted in good faith when they made suchpayments. Their claim therefor is negated by their negligence, and they are bound by its consequences. Being negligent in this regard,the petitioners cannot seek relief on the basis of a supposed agency

Uraca v CAFacts: The Velezes were the owners of the lot and commercial building in question located at Progreso and M.C. Briones Streets in Cebu City. The petitioners were its lessees.On July 8, 1985, the Velezes through Carmen Velez Ting wrote a letter to petitioners offering to sell the subject property for P1,050,000.00 and to reply within three days. Petitioners, through counsel, accepted the offer.When Uraca went to Ting, Ting told her that there was a mistake in the price. It should have been P1.4M, Uraca agreed to the new price to be payable in installments with a down payment of P1M and the balance of P400,000 to be paid in 30 days. Carmen Velez Ting did not accept the said counter-offer of Emilia Uraca although this fact is disputed by Uraca.No payment was made by to the Velezes on July 12 and 13, 1985. On July 13, 1985, the Velezes sold property to Avenue Merchandising Inc. for P1,050,000.00. The certificate of title of the said property was clean and free of any annotation of adverse claims or lis pendens.On July 31, 1985, petitioners filed the instant complaint against the Velezes. On August 1, 1985, they also registered a notice of lis pendens over the property in question with the Office of the Register of Deeds.On October 30, 1985, the Avenue Group filed an ejectment case against petitioners ordering the latter to vacate the commercial building standing on the lot in question.Petitoners filed an amended complaint impleading the Avenue Group as new defendants after about 4 years after the filing of the original complaint.RTC found two perfected contracts of sale between the Velezes and the petitioners involving the real property in question. The first sale was for P1,050,000.00 and the second was for P1,400,000.00. In respect to the first sale, the trial court held that "[d]ue to the unqualified acceptance by the plaintiffs within the period set by the Velezes, there consequently came about a meeting of the minds of the parties not only as to the object certain but also as to the definite consideration or cause of the contract. The second sale merely constituted a mere modificatory novation which did not extinguish the first sale. It also held that the Avenue Group were buyers in bad faith.The Court of Appeals held that there was a perfected contract of sale of the property for P1,050,000.00 between the Velezes and herein petitioners. It added, however, that such perfected contract of sale was subsequently novated. However, it was mutually withdrawn, cancelled and rescinded by novation, and was therefore abandoned by the parties when Carmen Velez Ting raised the consideration of the contract by P350,000.00, thus making the price P1.4M instead of the original price of P1,050,000.00. Since there was no agreement as to the 'second' price offered, there was no meeting of minds between the parties, hence, no contract of sale was perfected.CA added that, even if there was agreement as to the price and a second contract was perfected, the later contract would be unenforceable under the Statute of Frauds. It further held that such second agreement, if there was one, constituted a mere promise to sell which was not binding for lack of acceptance or a separate consideration.Issues: 1.)Was there novation of the first contract?2.)Was there a double sale of the real property involved?Held: On NovationNovation is never presumed; it must be sufficiently established that a valid new agreement or obligation has extinguished or changed an existing one. The registration of a later sale must be done in good faith to entitle the registrant to priority in ownership over the vendee in an earlier sale.Article 1600 of the Civil Code provides that "(s)ales are extinguished by the same causes as all other obligations, . . . ." Article 1231 of the same Code states that novation is one of the ways to wipe out an obligation. Extinctive novation requires: (1) the existence of a previous valid obligation; (2) the agreement of all the parties to the new contract; (3) the extinguishment of the old obligation or contract; and (4) the validity of the new one.Novation is effected only when a new contract has extinguished an earlier contract between the same parties. It must be proven as a fact either by express stipulation of the parties or by implication derived from an irreconcilable incompatibility between old and new obligations or contracts.The petitioners and the Velezes clearly did not perfect a new contract because the essential requisite of consent was absent, the parties having failed to agree on the terms of the payment. Since the parties failed to enter into a new contract that could have extinguished their previously perfected contract of sale, there can be no novation of the latter. Consequently, the first sale of the property in controversy, by the Velezes to petitioners for P1,050,000.00, remained valid and existing.On Double SalePrior registration of the disputed property by the second buyer does not by itself confer ownership or a better right over the property. Article 1544 requires that such registration must be coupled with good faith. Knowledge gained by the first buyer of the second sale cannot defeat the first buyer's rights except where the second buyer registers in good faith the second sale ahead of the first, as provided by the Civil Code. Knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register the second sale, since such knowledge taints his prior registration with bad faith (Art. 1544).The Avenue Group was a buyer and registrants in bad faith. They had actual knowledge of the Velezes' prior sale of the same property to the petitioners.Hence, the third and not the second paragraph of Article 1544 should be applied to this case. Under this provision, petitioners are entitled to the ownership of the property because they were first in actual possession, having been the property's lessees and possessors for decades prior to the sale.(The petition is GRANTED. The assailed Decision of the Court of Appeals is hereby SET ASIDE and the dispositive portion of the trial court's decision dated October 19, 1990 is REVIVED with the following MODIFICATION the consideration to be paid under par. 2 of the disposition is P1,050,000.00 and not P1,400,000.00.)

Ace Agro v CAPrivate respondent Cosmos Bottling Corp. is engaged in the manufacture of soft drinks. Since 1979 petitioner Ace-Agro Development Corp. (Ace-Agro) had been cleaning soft drink bottles and repairing wooden shells for Cosmos, rendering its services within the company premises in San Fernando, Pampanga. The parties entered into service contracts which they renewed every year. In January 1990, they signed a contract covering the period January 1, 1990 to December 31, 1990. Private respondent had earlier contracted the services of Aren Enterprises in view of the fact that petitioner could handle only from 2,000 to 2,500 cases a day and could not cope with private respondent's daily production of 8,000 cases. Unlike petitioner, Aren Enterprises rendered service outside private respondent's plant.On April 25, 1990, fire broke out in private respondent's plant, destroying, among other places, the area where petitioner did its work. As a result, petitioner's work was stopped. Petitioner asked private respondent to allow it to resume its service, but petitioner was advised that on account of the fire, which had "practically burned all old soft drink bottles and wooden shells," private respondent was terminating their contract.Petitioner expressed surprise at the termination of the contract and requested private respondent to reconsider its decision and allow petitioner to resume its work in order to "cushion the sudden impact of the unemployment of many of its workers." As it received no reply from private respondent, petitioner informed its employees of the termination of their employment. This led the employees to file a complaint for illegal dismissal before the Labor Arbiter against petitioner and private respondent.Private respondent then advised petitioner that the latter could resume the repair of wooden shells under terms similar to those contained in its contract but work had to be done outside the company premises. Petitioner refused the offer, claiming that to do its work outside the company's premises would make it incur additional costs for transportation. In subsequent meetings with Cosmos representatives, Ace-Agro asked for an extension of the term of the contract in view of the suspension of work. But its request was apparently turned down.Later, private respondent advised petitioner that the latter could then resume its work inside the plant in accordance with its original contract with Cosmos. Petitioner rejected private respondent's offer, this time, citing the fact that there was a pending labor case.Subsequently, Ace-Agro brought a case against private respondent for breach of contract and damages. It complained that the termination of its service contract was illegal and arbitrary and that, as a result, it stood to lose profits and to be held liable to its employees for backwages, damages and/or separation pay.A decision was rendered in the labor case, finding petitioner liable for the claims of its employees. Petitioner was ordered to reinstate the employees and pay them backwages. However, private respondent Cosmos was absolved from the employees' claims on the ground that there was no privity of contract between them and private respondent.On the other hand, RTC found respondent guilty of breach of contract and ordered it to pay damages to petitioner. Petitioner's claim for reimbursement for what it had paid to its employees in the labor case was denied.ISSUE: WON COSMOS BOTTLING IS LIABLE FOR BREACH?HELD: NO. Petitioner claims that the appellate court erred "in ruling that respondent was justified in unilaterally terminating the contract on account of a force majeure." Quite possibly it did not understand the appellate court's decision, or it would not be contending that there was no valid cause for the termination of the contract but only for its suspension. The following is what the appellate court said: Article 1231 of the New Civil Code on extinguishment of obligations does not specifically mention unilateral termination as a mode of extinguishment of obligation but, according to Tolentino, "there are other causes of extinguishment of obligations which are not expressly provided for in this chapter." He further said: But in some contracts, either because of its indeterminate duration or because of the nature of the prestation which is its object, one of the parties may free himself from the contractual tie by his own will (unilateral extinguishment).And that was just what defendant-appellant did when it unilaterally terminated the agreement it had with plaintiff-appellee. As per its letter, the reason given by defendant-appellant for unilaterally terminating the agreement was because the fire practically burned all of the softdrink bottles and wooden shells which plaintiff-appellee was working on under the agreement. What defendant-appellant was trying to say was that the prestation or the object of their agreement had been lost and destroyed in the above-described fire. Apparently, the defendant-appellant would like this situation to fall within what according to Tolentino would be: Obligations may be extinguished by the happening of unforeseen events, under whose influence the obligation would never have been contracted, because in such cases, the very basis upon which the existence of the obligation is founded would be wanting.Both parties admitted that the fire was a force majeure or unforeseen event and that the same even burned practically all the softdrink bottles and wooden shells which are the objects of the agreement. But the story did not end there. It is true that defendant-appellant still had other bottles that needed cleaning and wooden shells that needed repairing; therefore, the suspension of the work of the plaintiff- appellee brought about by the fire is, at best, temporary as found by the trial court.Appellant sent its November 7, 1990 letter to appellee, this time specifically stating that plaintiff-appellee can now resume work in accordance with their existing agreement. This time, it could not be denied that by the tenor of the letter, appellant was willing to honor its agreement with appellee, that it had finally made a reconsideration of appellee's plea to resume work under the contract. But again, plaintiff-appellee refused this offer to resume work.Why did the appellee refuse to resume work? Its November 17, 1990 letter stated that it had something to do with the settlement of the NLRC case filed against it by its employees. But that was not the real reason. In his cross-examination, the witness for appellee stated that its real reason for refusing to resume work with the appellant was, as in its previous refusal, because it wanted an extension of the period or duration of the contract beyond December 31, 1991, to cover the period within which it was unable to work.The agreement between the appellee and the appellant is with a resolutory period, beginning from January 1, 1990 and ending on December 31, 1990. When the fire broke out, there resulted a suspension of the appellee's work as per agreement. But this suspension of work due to force majeure did not merit an automatic extension of the period of the agreement between them.According to Tolentino: The stipulation that in the event of a fortuitous event or force majeure the contract shall be deemed suspended during the said period does not mean that the happening of any of those events stops the running of the period the contract has been agreed upon to run. It only relieves the parties from the fulfillment of their respective obligations during that time. If during six of the thirty years fixed as the duration of a contract, one of the parties is prevented by force majeure to perform his obligation during those years, he cannot after the expiration of the thirty-year period, be compelled to perform his obligation for six more years to make up for what he failed to perform during the said six years, because it would in effect be an extension of the term of the contract. The contract is stipulated to run for thirty years, and the period expires on the thirtieth year; the period of six years during which performance by one of the parties is prevented by force majeure cannot be deducted from the period stipulated.In fine, the appellant withdrew its unilateral termination of its agreement with appellee in its letter dated November 7, 1990.But the appellee's refusal to resume work was, in effect, a unilateral termination of the parties' agreement, an act that was without basis. When the appellee asked for an extension of the period of the contract beyond December 31, 1990 it was, in effect, asking for a new contract which needed the consent of defendant- appellant. The appellee might be forgiven for its first refusal, but the second refusal must be construed as a breach of contract by plaintiff- appellee.

Fabrigas v San FranciscoSpouses Fabrigas(petitioner) and respondent San francisco Del Monte, Inc.(Del Monte) entered into an agreement, denominated as Contract to Sell No. 2482-V, whereby the latter agreed to sell to Spouses Fabrigas a parcel of residential land. The said lot was worth P109,200.00 and it was registered in the name of respondent Del Monte. The agreement stipulated that Spouses Fabrigas shall pay P30,000.00 as downpayment and the balance within ten years in monthly successive installments of P1,285.69.After paying P30,000.00, Spouses Fabrigas took possession of the property but failed to make any installment payments on the balance of the purchase price. Despite the demand letter made by Del Monte and the grace period given still the said Spouses did not comply with their obligations.On January 21, 1985, petitioner Marcelina and Del Monte entered into another agreement denominated as Contract to Sell No. 2941-V, covering the same property but under restructed terms of payment. Under the second contract, the parties agreed on a new purchase price of P131,642.58, the amount of P26,328.52 as downpayment and the balance to be paid in monthly installments of P2,984.60 each.After the said deal, the petitioner made some delinquent installments paying less than the stated amount, to which Del Monte made a demand letter to the petitioners. And this time they ordered the cancellation of the Contract to Sell No. 2941-VISSUE:Whether or not the Contract to Sell No. 2941-V was valid.HELD:The Court quotes with approval the following factual observations of the trial court, which cannot be disturbed in this case, to wit:The Court notes that defendant, Marcelina Fabrigas, although she had to sign contract No. 2491-V, to avoid forfeiture of her downpayment, and her other monthly amortizations, was entirely free to refuse to accept the new contract. There was no clear case of intimidation or threat on the part of plaintiff in offering the new contract to her. At most, since she was of sufficient intelligence to discern the agreement she is entering into, her signing of Contract No. 2491-V is taken to be valid and binding. The fact that she has paid monthly amortizations subsequent to the execution of Contract to Sell No. 2491-V, is an indication that she had recognized the validity of such contract. . . .In sum, Contract to Sell No. 2491-V is valid and binding. There is nothing to prevent respondent Del Monte from enforcing its contractual stipulations and pursuing the proper court action to hold petitioners liable for their breach thereof.

Manila International v ALAFacts: The contract for the structural repair and waterproofing of the IPT and ICT building of the NAIA airport was awarded, after a public bidding, to respondent ALA. Respondent made the necessary repair and waterproofing.After submission of its progress billings to the petitioner, respondent received partial payments. Progress billing remained unpaid despite repeated demands by the respondent. Meanwhile petitioner unilaterally rescinded the contract on the ground that respondent failed to complete the project within the agreed completion date.Respondent objected to the rescission made by the petitioner and reiterated its claims. The trial court directed the parties to proceed to arbitration. Both parties executed a compromise agreement and jointly filed in court a motion for judgment based on the compromise agreement. The Court a quo rendered judgment approving the compromise agreement.For petitioners failure to pay within the period stipulated, respondent filed a motion for execution to enforce its claim. Petitioner filed a comment and attributed the delays to its being a government agency. The trial court denied the respondents motion. Reversing the trial court, the CA ordered it to issue a writ of execution to enforce respondents claim. The appellate court ratiocinated that a judgment rendered in accordance with a compromise agreement was immediately executory, and that a delay was not substantial compliance therewith.Issues: 1) Whether or not decision based on compromise agreement is final and executory.2) Whether or not delay by one party on a compromise justifies execution.Held: 1) A compromise once approved by final orders of the court has the force of res judicata between the parties and should not be disturbed except for vices of consent or forgery. Hence, a decision on a compromise agreement is final and executory. Such agreement has the force of law and is conclusive between the parties. It transcends its identity as a mere contract binding only upon the parties thereto, as it becomes a judgment that is subject to execution in accordance with the Rules. Judges therefore have the ministerial and mandatory duty to implement and enforce it.2. The failure to pay on the date stipulated was clearly a violation of the Agreement. Thus, non-fulfillment of the terms of the compromise justified execution. It is the height of absurdity for petitioner to attribute to a fortuitous event its delayed payment. Petitioners explanation is clearly a gratuitous assertion that borders callousness.

NFA v MasadaFACTS:Respondent MASADA Security Agency, Inc., entered into a contract[3]to provide security services to the various offices, warehouses and installations of NFA within the scope of the NFA Region IThe Regional Tripartite Wages and Productivity Board issued several wage orders mandating increases in the daily wage rate.Respondent requested NFA for a corresponding upward adjustment in the monthly contract rate consisting of the increases in thedaily minimum wage of the security guards as well as the corresponding raise in their overtime pay, holiday pay, 13th month pay, holidayand rest day pay. It also claimed increases in Social Security System (SSS) and Pag-ibig premiums as well as in the administrativecosts and margin. NFA, however, granted the request only with respect to the increase in the daily wage by multiplying the amount ofthe mandated increase by 30 days and denied the same with respect to the adjustments in the other benefits and remunerationscomputed on the basis of the daily wage.The trial court rendered a decision[13] in favor of respondent holding that NFA is liable to pay the security guards wage relatedbenefits pursuant to RA 6727, because the basis of the computation of said benefits, like overtime pay, holiday pay, SSS and Pag-ibigpremium, is the increased minimum wage. It also found NFA liable for the consequential adjustments in administrative costs andmargin.NFA claims that its additional liability under the aforecited provision is limited only to the payment of the increment in the statutoryminimum wage rate, i.e., the rate for a regular eight (8) hour work day.ISSUE: WON the satisfaction of NFAs Obligation is limited to the payment of the increased statutory minimum wage rates. YES!RULING: Based on the foregoing interpretation of Section 6 of RA 6727, the parties may enter into stipulations increasing the liability of theprincipal. So long as the minimum obligation of the principal, i.e., payment of the increased statutory minimum wage is complied with,the Wage Rationalization Act is not violated.In the instant case, Article IV.4 of the service contract provides:IV.4. In the event of a legislated increase in the minimum wage of security guards and/or in the PADPAO rate, the AGENCY may negotiate for an adjustment in the contract price. Any adjustment shall be applicable only to the increment, based on published and circulated rates and not on mere certification.Par 3 of NFA Memorandum AO-98-03- states:3. For purposes of wage adjustments, consider only the rate based on the wage Order issued by the Regional TripartiteWage Productivity Board (RTWPB). Unless otherwise provided in the Wage Order issued by the RTWPB, the wageadjustment shall be limited to the increment in the legislated minimum wage;[32]The parties therefore acknowledged the application to their contract of the wage orders issued by the RTWPB pursuant to RA6727. There being no assumption by NFA of a greater liability than that mandated by Section 6 of the Act, its obligation is limited to thepayment of the increased statutory minimum wage rates which, as admitted by respondent, had already been satisfied by NFA.Under Article 1231 of the Civil Code, one of the modes of extinguishing an obligation is by payment. Having dischargedits obligation to respondent, NFA no longer have a duty that will give rise to a correlative legal right of respondent. Thelatters complaint for collection of remuneration and benefits other than the increased minimum wage rate, should thereforebe dismissed for lack of cause of action.

Korea Exchange v Gonzales

BPI v Casa MontessoriFACTS: On November 8, 1982, CASA Montessori International opened Current AccouNT with BPI with CASAs President Lebron as one of its authorized signatories. In 1991, after conducting an investigation, plaintiff discovered that nine of its checks had been encashed by a certain Sonny D. Santos since 1990 in the total amount of P782,000.00. It turned out that Santos with account at BPI Greenbelt Branch was a fictitious name used by third party defendant Leonardo T. Yabut who worked as external auditor of CASA. Third party defendant voluntarily admitted that he forged the signature of Lebron and encashed the checks. In 1991, plaintiff filed Complaint for Collection with Damages against defendant bank praying that the latter be ordered to reinstate the amount of P782,500.00 with interest. RTC rendered decision in favor of the plaintiff. CA modified decision holding CASA as contributory negligent hence ordered Yabut to reimburse BPI half the total amount claimed and CASA, the other half. It also disallowed attorneys fees and moral and exemplary damages.ISSUE: W/N moral and exemplary damages and attorneys fees should be awarded.RULING: Moral and exemplary damages denied but atty.s fees granted.In the absence of a wrongful act or omission, or of fraud or bad faith, moral damages cannot be awarded. The adverse result of an action does not per se make the action wrongful, or the party liable for it.CASA was unable to identify the particular instance upon which its claim for moral damages is predicated. Neither bad faith nor negligence so gross that it amounts to malice can be imputed to BPI.Imposed by way of correction for the public good, exemplary damages cannot be recovered as a matter of right. There is no bad faith on the part of BPI for paying the checks of CASA upon forged signatures. Therefore, the former cannot be said to have acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. The latter, having no right to moral damages, cannot demand exemplary damages.When the act or omission of the defendant has compelled the plaintiff to incur expenses to protect the latters interest, or where the court deems it just and equitable, attorneys fees may be recovered. In the present case, BPI persistently denied the claim of CASA under the NIL to recredit the latters account for the value of the forged checks. This denial constrained CASA to incur expenses and exert effort for more than ten years in order to protect its corporate interest in its bank account.Other source:Facts: CASA Montessori International opened an account with BPI, with CASAs President as one of its authorized signatories. It discovered that 9 of its checks had been encashed by a certain Sonny D. Santos whose name turned out to be fictitious, and was used by a certain Yabut, CASAs external auditor. He voluntarily admitted that he forged the signature and encashed the checks.RTC granted the Complaint for Collection with Damages against BPI ordering to reinstate the amount in the account, with interest. CA took account of CASAs contributory negligence and apportioned the loss between CASA and BPI, and ordred Yabut to reimburse both. BPI contends that the monthly statements it issues to its clients contain a notice worded as follows: If no error is reported in 10 days, account will be correct and as such, it should be considered a waiver.Issue:Whether or not waiver or estoppel results from failure to report the error in the bank statementHeld: Such notice cannot be considered a waiver, even if CASA failed to report the error. Neither is it estopped from questioning the mistake after the lapse of the ten-day period.This notice is a simple confirmation or "circularization" -- in accounting parlance -- that requests client-depositors to affirm the accuracy of items recorded by the banks. Its purpose is to obtain from the depositors a direct corroboration of the correctness of their account balances with their respective banks. Every right has subjects -- active and passive. While the active subject is entitled to demand its enforcement, the passive one is duty-bound to suffer such enforcement. On the one hand, BPI could not have been an active subject, because it could not have demanded from CASA a response to its notice. CASA, on the other hand, could not have been a passive subject, either, because it had no obligation to respond. It could -- as it did -- choose not to respond.Estoppel precludes individuals from denying or asserting, by their own deed or representation, anything contrary to that established as the truth, in legal contemplation. Our rules on evidence even make a juris et de jure presumption that whenever one has, by ones own act or omission, intentionally and deliberately led another to believe a particular thing to be true and to act upon that belief, one cannot -- in any litigation arising from such act or omission -- be permitted to falsify that supposed truth. In the instant case, CASA never made any deed or representation that misled BPI. The formers omission, if any, may only be deemed an innocent mistake oblivious to the procedures and consequences of periodic audits. Since its conduct was due to such ignorance founded upon an innocent mistake, estoppel will not arise. A person who has no knowledge of or consent to a transaction may not be estopped by it. "Estoppel cannot be sustained by mere argument or doubtful inference x x x." CASA is not barred from questioning BPIs error even after the lapse of the period given in the notice.