Scra [G.R. No. 105567. November 25, 1993.]
GOVERNMENT SERVIE INS!R"NE S#STEM $GSIS%, Petitioner , v. &ONOR"'(E O!RT O) "**E"(S a+ S*O!SES R"!( a+ ES*ER"N-" (E!TERIO, Respondents.
Te (e/a Servce Gro4 or Petitioner .
ame M. *oaa or Private Respondents.
E I S I O N
*!NO, J.8
This is a petition for review on certiorari  to set aside the Decision of the 10th Division of the Court of Appeals ordering the petitioner GSIS to execute a Final Deed of Sale in favor of the spouses Raul and speran!a "euterio involving a house and lot in the GSIS #illage$ %ro&ect '(C$ )ue!on Cit*+ 1
The facts show that on Dece,-er 1'$ 1./$ the petitioner GSIS conducted a lotter* draw for the allocation of lots and housing units in %ro&ect '(C of GSIS #illage+ %rivate respondent speran!a "euterio won and was issued a Certificate of Acnowledg,ent to purchase the su-&ect house and lot 2 on Dece,-er 23$ 1./+ In 1./4$ the parties entered into a Deed of Conditional Sale evidencing the conve*ance of the su-&ect propert* and all i,prove,ents thereon to the "euterio spouses for the purchase price of %1.$350+00$ pa*a-le over a fifteen(*ear period$ in 1'0 e6ual ,onthl* install,ents of %1/'+4 each+ %aragraph 11 of the Deed of Conditional Sale provides7chanro-les law li-rar*
89pon the full pa*,ent -* the #endee of the purchase price of the lot and dwelling:i,prove,ent a-ove referred to together with all the interest due thereon$ taxes and other charges and upon his faithful co,pliance with all the conditions of the Contract$ the #endor agrees to execute in favor of the #endee$ or his:their heirs and successors(in(interest a final Deed of Sale of the afore,entioned land and dwelling:i,prove,ents + + +8
Three *ears elapsed -efore the Deed was notari!ed$ and a cop* of the sa,e was given to the private respondents+
 After the land develop,ent and housing construction of %ro&ect '(C were co,pleted in 1.//$ petitioner;s <oard of Trustees increased the purchase price indicated in the Deeds of Conditional Sale covering houses and lots therein+ The new price was -ased on the alleged final cost of construction of the GSIS #illage+ It is noted that$ on the face of the "euterio;s Conditional Deed of Sale is the ,arginal notation 8su-&ect to ad&ust,ent pending approval of the <oard of Trustees+8 The "euterio spouses alleged that this notation was not in the Deed when the* signed the sa,e in 1./4+ Resolving this factual issue$ the trial court found that the appended words were inserted into the docu,ent without the nowledge or consent of the "euterio spouses+ This finding of fact went undistur-ed on appeal to the respondent court+ 5cralawnad
So,eti,e in the earl* 1.30;s$ a group =not including the "euterios> of conditional vendees of houses and lots in %ro&ect '(C of GSIS #illage -rought suit 4 against herein petitioner$ 6uestioning the increase in purchase price+ The* liewise wrote a 8 A %lea For ?ustice8 to then %resident Ferdinand + @arcos$ re6uesting for a directive to petitioner;s ,anage,ent to 8accept pa*,ents of a,orti!ation install,ents on the original a,ounts stated in the Deed=s> of Conditional Sale+8cralaw virtua1aw li-rar*
 As a result$ the ffice of the %resident created a three(,an Ad Boc co,,ittee$ co,posed of representatives of the ffice of the %resident$ the petitioner S*ste,$ and the GSIS #illage Association+ The co,,ittee found that the final cost of the #illage &ustified a higher price range for the houses and lots in the pro&ect+
<ased on the ad hoc co,,ittee;s findings$ the petitioner S*ste,$ with the approval of its <oard of Trustees$ increased the purchase prices of houses and lots in the GSIS #illage+chanro-lesvirtualawli-rar*
n @a* 0$ 1.3$ however$ then %residential xecutive Assistant ?aco-o C+ Clave$ through a ,e,orandu,$ advised petitioner that then %resident @arcos has approved the 8%lea8 and wanted its 8i,,ediate i,ple,entation+8 The atte,pt -* petitioner to have the presidential endorse,ent reconsidered was denied on Dece,-er 1'$ 1.'0+
@eanwhile$ after *ears of diligentl* pa*ing the ,onthl* a,orti!ations / and real estate taxes on the su-&ect propert*$ the private respondents spouses infor,ed 3 petitioner that the pa*,ents ' for the propert* had -een
co,pleted$ and hence$ the execution of an a-solute deed of sale in their favor was in order+ o action on the ,atter was taen -* petitioner+
The instant case was initiated on @a* 20$ 1.'5 in the RTC of @anila$ <r+ 11$ with the filing of a Co,plaint for Specific %erfor,ance ith Da,ages to co,pel petitioner to execute in private respondent;s favor$ the final Deed of Sale over the su-&ect propert*+ . The trial court found for the "euterios+chanro-lesvirtualawli-rar*
n ?anuar* 25$ 1..2$ the Court of Appeals 10 $ in its i,pugned Decision$ upheld the trial court solel* on the -asis of estoppel+ It held that petitioner cannot increase the price of the su-&ect house and lot after it failed$ through the *ears$ to protest against private respondents; %200+00(a,orti!ation or to re6uire the pa*,ent -* the, of -igger ,onthl* install,ents+ 11
%etitioner now urges the setting aside of the i,pugned Decision of the Court of Appeals$ alleging that it erred in7&gc7chanro-les+co,+ph
8I+ + + + B"DIG TBAT TB %TITIR GSIS IS ST%%D FR@ FRCIG TB AD?9ST@T F TB S""IG %RIC
8II+ + + + T B"DIG TBAT TB S%9SS "9TRI @9ST < <9D <E TB RC@@DATI @AD <E TB AD BC C@@ITT
8III+ + + + FAI"IG T CSIDR TB ?9STIFICATI FR TB AD?9ST@T I TB S""IG %RIC F TB "TS AD B9SIG 9ITS
8I# + + + AFFIR@IG TB DCISI F TB TRIA" C9RT BICB RDRD TB %TITIR GSIS T C9T TB FIA" DD F SA"8 12chanro-les lawli-rar* 7 rednad
9pon the other hand$ private respondents$ in their Co,,ent$ 1 contend that the %etition onl* raises factual issues$ which cannot -e settled -* this Court in the instant proceedings+ The* further contend that no reversi-le errors were co,,itted -* the Court of Appeals in its i,pugned Decision+
e find no ,erit in the petition$ -ut for reasons different fro, those espoused -* the respondent Court of  Appeals+
The decisive issue reall* involves a 6uestion of fact whether or not the spouses "euterio agreed to the notation 8su-&ect to ad&ust,ent pending approval of the <oard of Trustees8 appearing on the ,argin of the parties; Conditional Deed of Sale+ If there was no agree,ent$ the "euterio spouses are onl* o-ligated to pa* the purchase price of %1.$350+00 as stipulated in the ,ain -od* of the Conditional Deed of Sale+
Trite to state$ this Court is not a trier of facts+ In a ,ultitude of cases$ we have laid down the un-ending rule that findings of fact of lower courts are -inding on us unless the* are ,arred -* ,anifest errors+ The pleadings -efore us do not de,onstrate that the trial court grossl* erred when it found that the purchase price agreed upon -* the parties was %1.$350+00 and this agree,ent was not ,ade su-&ect to an* posterior event or condition+ This finding of fact was -ased on the explicit testi,on* of private respondent Raul "euterio that when he and his wife signed the Deed of Conditional Sale in 1./4$ the notation 8su-&ect to ad&ust,ent pending approval of the <oard of Trustees8 was not in the Deed+ 15 "iewise$ the Answer of petitioner to the Co,plaint of the private respondents ad,itted the non(existence of this notation at the ti,e the Deed of Conditional Sale was signed$ al-eit$ it called the o,ission an honest ,istae+ 14 e 6uote paragraph 4 of said Answer$ vi!7chanro-les virtualawli-rar* chanro-les+co,7chanro-les+co,+ph
84+ The o,ission of the ,arginal notation reading H=x> su-&ect to ad&ust,ent pending approval of the <oard of Trustees; =Annexes < to <(1(- of the Co,plaint> on the Deed of Conditional Sale signed -* the plaintiffs$ as alleged in paragraph #II of the Co,plaint$ ,ust have -een an honest ,istae on the part of the cler who t*ped the docu,ent+8cralaw virtua1aw li-rar*
This was also confir,ed -* the petitioner in the instant %etition for Review on Certiorari  where it is alleged that+8 + + the respondents(spouses "euterio were not re6uired to sign a new contract as provided in Resolution o+ ../ -ut instead$ the words Hsu-&ect to ad&ust,ent pending approval of the <oard of Trustees; were inserted in the Deed of Conditional Sale executed in 1./4+8 %etitioner is -ound -* these &udicial ad,issions+
)uite clearl*$ therefore$ the purchase price ,utuall* agreed upon -* the parties was %1.$350+00+ The spouses "euterio did not give their consent for petitioner to ,ae a unilateral upward ad&ust,ent of this purchase price depending on the final cost of construction of the su-&ect house and lot+ It is illegal for petitioner to clai, this prerogative$ for Article 153 of the Civil Code provides that 8the fixing of the price can never -e left to the discretion of one of the contracting parties + + + +8cralaw virtua1aw li-rar*
 
hoc co,,ittee as this was set aside -* then %resident Ferdinand + @arcos+ 1/ The re&ection was co,,unicated -* then %residential Assistant ?aco-o Clave to petitioner in a @e,orandu, dated @a* 0$ 1.3+ 13 %etitioner ,oved for its reconsideration -ut the ,otion was denied -* the for,er %resident thru %residential Assistant ?oa6uin #enus$ in a letter dated Dece,-er 1'$ 1..0+ 1'chanro-les virtual lawli-rar*
ext$ petitioner would i,press on us the need to ad&ust the purchase price of the spouses; house and lot in view of the change in the final cost of construction+ If petitioner failed to factor this increase in the cost of construction in the purchase price of the su-&ect house and lot$ it has no-od* to -la,e -ut itself and it alone should suffer the loss+ To -e sure$ given the expertise of its technical people$ it has no reason to -e shortsighted+ In an* event$ our law on contract does not excuse a part* f ro, specificall* perfor,ing his o-ligation on the ground that he ,ade a -ad -usiness &udg,ent+
I #I BRF$ the petition for review on certiorari  is DIS@ISSD+ Cost against petitioner+chanro-les+co, 7 virtual law li-rar*
S RDRD+
 [G.R. No. 1:599. Marc 1, 2005]
*RO)ESSION"( ""EMI *("NS, IN., )R"NISO O("#O a+ 'EN"MIN INO, petitioners, vs. INN"& (. RISOSTOMO, respondent .
E I S I O N
"((EO, SR., J .8
<efore us is a petition for review of the Decision 1J of the Court of Appeals =CA> affir,ing the decision of  the Regional Trial Court in Civil Case o+ .(1.3$ and its Resolution den*ing the ,otion for reconsideration thereof filed -* petitioner %rofessional Acade,ic %lans$ Inc+ =%A%I>+
Te "+;ecee+;
Respondent Dinnah "+ Crisosto,o was the %A%I District @anager for @etro @anila+ As such officer$ she did not receive an* salar* -ut was entitled to a franchise co,,ission e6uivalent to 10K of the pa*,ents on re,ittances of clients whose contracts or agree,ents had -een negotiated -* her$ for and in -ehalf of  %A%I+ She was later pro,oted as Regional @anager+
n @a* 13$ 1.''$ petitioner %A%I wrote Col+ oe S+ Anda*a$ the %resident of the Ar,ed Forces of the %hilippines Savings and "oan Association$ Inc+ =AF%S"AI> offering an Acade,ic Assistance %rogra, for its ,e,-ers$ their children and dependents+
oel Rueda$ a sales consultant of petitioner %A%I$ initiated negotiations for the sale of pre(need educational plans under the said progra, with the AF%S"AI+ Bowever$ -efore an agree,ent was reached$ Rueda;s services were ter,inated+ Respondent Crisosto,o$ as the district ,anager and the i,,ediate supervisor of Rueda$ continued the negotiation of the account together with Guiller,o R+ @acariola$ the  Assistant #ice(%resident for Sales+2J The AF%S"AI agreed to the proposal+
n ove,-er .$ 1.''$ the AF%S"AI and %A%I executed a @e,orandu, of Agree,ent =@A> J in connection with scholarship funding agree,ents to -e entered into -* %A%I and the AF%S"AI ,e,-ers+ These agree,ents shall then e,-od* the provisions of the %rofessional Acade,ic %rogra, Agree,ent+ The parties agreed that all support services would -e provided -* %A%I and that an* a,end,ents and:or  ,odifications to the @A would -e effective onl* upon approval of the parties thereto+
<* then$ Rueda was no longer connected with the petitioner corporation$ hence$ was dis6ualified to receive the franchise co,,ission+ Thus$ the said co,,ission was offered to @acariola who$ however$ declined and waived his right thereto in favor of respondent Crisosto,o$ Rueda;s i,,ediate supervisor+ The xecutive Co,,ittee of petitioner %A%I agreed to give the franchise co,,ission to respondent Crisosto,o+ 5J
Initiall*$ respondent Crisosto,o received the 10K franchise co,,ission fro, Dece,-er 1.'' until  April 1.'.+ "ater$ upon the instance of petitioner <en&a,in Dino$ then Assistant #ice(%resident for @areting$ respondent Crisosto,o;s franchise co,,ission was reduced to 4K to support the operational expenses of 
%A%I+ After a few ,onths$ the said co,,ission was again reduced to 5K+ Two ,onths later$ petitioner %A%I ased for another +24K reductionL hence$ respondent Crisosto,o;s franchise co,,ission was further reduced to +34K+ Finall*$ in ?anuar* 1..1$ petitioner %A%I again ased for a final reduction of the co,,ission to 2K to which respondent Crisosto,o agreed$ on the condition that it -e reduced into writing +4J
Thus$ on Fe-ruar* 3$ 1..1$ petitioner Dino$ and Angelito <+ Cru!$ #ice(%resident for Finance and  Ad,inistration$ signed a @e,orandu, which reads as follows7
This will confir, *our co,pan* franchise on all AF%S"AI -usiness with %rofessional Acade,ic %lans$ Inc+ under the following ter,s and conditions7
1+ Eour franchise co,,ission shall re,ain at 2K excluding ntrance and Service Fees of the first *ear pre,iu, for as long as *ou are connected with the co,pan* at whatever capacit*+
2+ This franchise is not transfera-le+
For *our guidance+
<?A@I S+ DI AG"IT <+ CR9M/J
Crisosto,o received her 2K co,,ission until cto-er 1..1+ 3J In the ,eanti,e$ Col+ #ictor @+ %un!alan succeeded Col+ oe S+ Anda*a as %resident of the AF%S"AI+ 'J In a "etter dated Dece,-er 1/$ 1..1$ Col+ %un!alan infor,ed %A%I of the AF%S"AI;s decision to review the 1.'' @A+
 As an after,ath of the negotiation$ petitioner %A%I and the AF%S"AI executed a @A in April 1..2$ a,ending their prior @A+.J
The AF%S"AI resu,ed its re,ittances of the install,ent pa*,ents of its ,e,-ers to petitioner %A%I in ?une 1..2+10J This ti,e$ however$ Crisosto,o was not paid her co,,ission+ In an Inter(ffice @e,orandu, 11J dated ?une 1$ 1..2$ respondent Crisosto,o;s franchise co,,ission on sales transacted with the AF%S"AI was ter,inated$ for the following reasons7 =1> the new AF%S"AI ,anage,ent cancelled the old @A in cto-er 1..1 due to various ano,alies and the ,isrepresentation co,,itted -* %A%I;s sales forceL =2> the new @A is largel* due to ,anage,ent;s effortL hence$ no franchise would -e granted to an* sales associatesL and => the franchise guidelines as per the @e,orandu, dated ove,-er 1.'' prescri-ed that in order to ,aintain her franchise$ 100 new paid plans should -e co,pleted on a ,onth to ,onth -asis and respondent Crisosto,o was not a-le to ,eet these para,eters for the period of ove,-er 1..1 to @a* 1..2+
onetheless$ respondent Crisosto,o insisted on the release of her 2K franchise co,,ission+ 12J She first approached her i,,ediate supervisor$ @rs+ ditha <a*oneta$ the Senior Assistant #ice(%resident$ -ut to no avail+ She then went to petitioner Dino$ who allegedl* threatened her with ter,ination if she persisted with her de,and+ 9nfa!ed$ she sought a dialogue with the %resident hi,self$ petitioner Francisco Cola*co+ The*$ however$ failed to arrive at a settle,ent+ 1J n ?ul* /$ 1..2$ respondent Crisosto,o sent a de,and letter to petitioner %A%I+ The latter infor,ed her that it could not accede to her de,and for the reasons stated in the Inter(ffice @e,orandu, dated ?une 1$ 1..2+
Thereafter$ Crisosto,o again approached Cola*co who advised her to ,ae a for,al proposal+ She co,plied and su-,itted a lette r 15J on August 1$ 1..2 where she ,ade the following proposal7
 
4 @illion a,ount settle,ent and an i,,ediate irrevoca-le resignation fro, *our good co,pan*$
ption 27 That the 2K franchise fee:co,,ission -e retained even if and when the undersigned is no longer connected with %rofessional Group$ Inc+ for as long as the AF%S"AI is still doing -usiness with the %rofessional Group+ This is considered as the ro*alt* fee+14J
Bowever$ in a "etter 1/J dated August 13$ 1..2$ petitioner Cola*co infor,ed the respondent that her  settle,ent proposal was totall* unaccepta-le and that she was -eing placed under preventive suspension in
 
order to a-ort an* untoward reaction resulting fro, the denial of her re6uest$ which ,a* -e detri,ental to the co,pan*;s interest+ orse$ she was advised not to co,e -ac after the suspension+ Thus$ her services in the co,pan* were ter,inated+
n ?anuar* 21$ 1..$ respondent Crisosto,o filed a co,plaint for su, of ,one* and da,ages against petitioners %A%I$ Cola*co and Dino+ She alleged therein that as of cto-er 2$ 1..2$ petitioner %A%I;s sales of  pre(need plans to the AF%S"AI a,ounted to %.$1.$/3+20L that she was entitled to 2K of such a,ount or the su, of %1'$'/3+5 as franchise co,,issionL and that notwithstanding the said franchise$ petitioner %A%I refused to give her the said co,,issions+ She$ liewise$ pra*ed for the grant of ,oral and exe,plar* da,ages$ plus attorne*;s fees+ 13J
The petitioners averred in their answer to the co,plaint that Crisosto,o was not entitled to the franchise co,,ission -ecause she did not participate in the execution of the 1.'' @A+ The* pointed out that under the Dece,-er 1.'. co,pan* guidelines$ a franchise holder shall -e ,aintained onl* when 100 new paid plans are co,pleted on a ,onth(to(,onth -asis+ The* argued that since respondent Crisosto,o was una-le to ,eet this re6uire,ent for the period of ove,-er 1..1 to @a* 1..2$ her franchise was ter,inated+ The petitioners also clai,ed that the AF%S"AI did not resu,e pa*,ents in 1..2 -ut entered into a new @A after it undertoo new negotiations+ The* ,aintained that under the new @A$ no one is entitled to a franchise$ ,uch less respondent Crisosto,o+1'J
The petitioners adduced testi,onial evidence to show that respondent Crisosto,o had no participation whatsoever in the negotiations which cul,inated in the execution of the two @As -etween petitioner %A%I and the AF%S"AI+ %etitioner Dino testified that -efore respondent Crisosto,o -eca,e the regional ,anager$ she was not an e,plo*ee of %A%I+ According to hi,$ after the ter,ination of Rueda;s e,plo*,ent for cause$ the franchise co,,ission should revert -ac to petitioner %A%I as a rule+ hile the xecutive Co,,ittee agreed to award the co,,ission$ it agreed to give respondent Crisosto,o onl* a 4K co,,ission$ which was reduced to 2K until ?une 1..2 under the 1..2 @A+ @oreover$ Crisosto,o had no participation whatsoever in the negotiations of the two agree,ents+
 After due proceedings$ the trial court rendered a Decision on ove,-er 20$ 1..3$ the dispositive portion of which reads7
%re,ises considered$ &udg,ent is here-* rendered in favor of the plaintiff and as against defendants+ herefore$ defendants are here-* ordered to release to plaintiff7
1+ the su, of one hundred eight*(three thousand eight hundred sixt*(seven thousand and twent*(five centavos =%1'$'/3+24> which constitutes her co,,ission fro, the AF%S"AI contract as of cto-er 1..2$ and the su, e6uivalent to 2K of all future re,ittances -*  AF%S"AI to defendant %A%IL
2+ ,oral da,ages in the a,ount of %200$000+00L
+ exe,plar* da,agesJ of %40$000+00L
5+ attorne*;s fees of %40$000+00L
4+ cost of suit+
S RDRD+1.J
The petitioners appealed the decision to the CA which rendered &udg,ent 20J on August 1$ 2000 affir,ing in toto the decision of the trial court+
Te R+/ o ;e or; o "44ea
 According to the CA$ the letter of Col+ %un!alan did not indicate an* intention to a-rogate the first @A+  At ,ost$ it ,erel* suspended the acceptance of the application for pre(need plans while a thorough review of  the ter,s and conditions of the first @A was -eing ,ade+ The CA held that the second @A did not disclose
an* inco,pati-ilit* with the first @A that would a,ount to an i,plied extinguish,ent of the latterL nor did the new @A use an* word suggesting the cancellation of the first+ The CA then ruled that what was executed in 1..2 was a ,ere ,odification of the first @A+21J
The CA further held that the fact that ,ilitar* and political support intervened in facilitating the revival of  the AF%S"AI account did not di,inish the respondent;s right to the franchise co,,ission$ considering that it was awarded to her -* the executive co,,ittee for successfull* initiating the deal with the AF%S"AI in 1.''+ 22J
The CA ruled that the re6uire,ent of co,pleting 100 new plans ,onthl* as a condition for a franchisee to -e entitled to the co,,ission was superseded -* the @e,orandu, dated Fe-ruar* 3$ 1..1$ which reduced the co,,ission to 2K fro, the earlier 10K+ Respondent Crisosto,o was entitled to receive such reduced co,,ission as long as she was connected with the petitioner corporation in whatever capacit*+ @oreover$ assu,ing that such condition was still in effect$ its non(fulfill,ent fro, ove,-er 1..1 to @a* 1..2 could not -e i,puted to the respondent since it was -rought a-out -* Col+ %un!alan;s order to suspend the acceptance of plan applications pending a review of the first @A +2J
The CA found that the award of ,oral and exe,plar* da,ages$ attorne*;s fees and the costs of the suit$ in favor of the respondent$ was full* supported -* the evidence on record and was &ustified$ in light of the petitioner corporation;s wanton disregard of respondent;s clai, f or her f ranchise co,,ission+ 25J
n ?une 1$ 2001$ the CA denied the petitioners; ,otion for reconsideration for lac of ,erit+ Bence$ the* filed this petition for review on certiorari +
Te *ree+; *e;;o+
The petitioners su-,it the following issues for our consideration7
 A> BTBR R T TB "D @@RAD9@ F AGR@T BAD < CAC""D AD RSCIDD <E AF%S"AIL
<> BTBR R T RS%DT IS TIT"D T TB FRACBIS F R C@@ISSI 9DR TB @@RAD9@ F AGR@T 9DR BICB SB BAD %ARTICI%ATI BATS#R I TB GTIATI AD C9TIL
C> BTBR R T %TITIRS$ I DEIG RS%DTNS C"AI@$ BA# C@@ITTD ACTS TBAT RDR TB@ "GA""E "IA<" FR @RA" AD @%"ARE DA@AGS AD ATTRENS FS AD CST F S9IT+24J
%ri,aril*$ the petitioners assert that the respondent is not entitled to a franchise co,,ission+ The* aver  that the respondent did not participate in initiating$ conceptuali!ing$ and negotiating the first @A with the  AF%S"AI$ except that she was present during its signing+ The franchise co,,ission for the AF%S"AI account under the old @A should have -een granted to oel Rueda$ who initiated and conceptuali!ed the transaction+ The petitioners ,aintain that the franchise co,,ission was onl* awarded to the respondent -ecause those who were entitled to it were dis6ualified to -e franchise holders O Rueda was dis6ualified for  -eing no longer connected with the petitioner co,pan*$ while @acariola was dis6ualified for -eing an e,plo*ee+2/J
 Assu,ing that the respondent was entitled to the franchise co,,ission under the old @A$ the petitioners argue that such privilege was alread* extinguished$ considering that the old @A was cancelled -* the AF%S"AI thru the "etter dated Dece,-er 1/$ 1..1+ The* ,aintain that in writing the said letter$ Col+ %un!alan intended to a-rogate the old @A and not ,erel* suspend the sa,e$ otherwise$ the intention to enter into Pa new agree,ent ,utuall* -eneficialQ to -oth parties would not have -een ,entioned therein+ 23J The* conclude that since there has alread* -een an express cancellation of the old @A$ there is no longer  a need to delve into the issue of whether the new @A declared in une6uivocal ter,s that the old @A was -eing cancelled$ or whether the new @A is inco,pati-le with the old one+ 2'J
The petitioners point out that the respondent had no participation whatsoever in the negotiation or  execution of the new @A+ Considering this and the fact that the old @A had -een dul* cancelled$ the
 
respondent$ therefore$ had no right to the franchise co,,ission on the AF%S"AI account under the new @A+ 2.J
The petitioners assert that the award of ,oral and exe,plar* da,ages and attorne*;s fees has no -asis since the* did not act in -ad faith in den*ing the respondent;s clai,+ 0J
In her Co,,ent on the petition$ the respondent counters that regardless of the execution of the new @A and her non(participation in its negotiation and execution$ her right to the co,,issions fro, all sales e,anating fro, the AF%S"AI transactions su-sists as long as she re,ained connected with %A%I+ She asserts that the petitioners are now in estoppel to 6uestion the grant of her co,,ission since it was granted through the petitioner corporation;s authorit* and it was reduced into writing+ 1J
In their Repl*$ the petitioners stress that the respondent;s entitle,ent to the co,,ission was not a-solute+ It was su-&ect to certain conditions$ i.e., the fact that the respondent ,ust -e connected with the co,pan* in order to -e entitled to it$ and that the old @A ,ust re,ain effective$ since it was the -asis for the grant of the co,,ission+ ith its cancellation$ the right of respondent to the co,,ission$ liewise$ ceased to exist+ ithout the new @A$ there would no longer -e an* applications for acade,ic plans fro, the AF%S"AI and$ conse6uentl*$ no co,,ission to -e earned+ 2J
Te R+/ o ;e or;
Rule 54 of the Rules of Court provides that onl* legal issues ,a* -e raised+ Factual issues are -e*ond the province of the Supre,e Court in a petition for review$ for it is not the Court;s function to weigh the evidence all over again+ J hile the Court ,a*$ in exceptional cases$ resolve factual issues$ the petitioners herein failed to esta-lish an* such exceptional circu,stances+ @oreover$ it is doctrinal that findings of facts of  the CA upholding those of the trial court are -inding upon the Supre,e Court+ 5J
ven after a review of the factual issues raised -* the petitioners$ we find and so rule that the CA was correct in declaring that the first @A had not -een cancelled$ -ut was ,erel* ,odified -* the second @A+
 A reading of the letter of Col+ %un!alan to the petitioner corporation indicates that it ,erel* signified the suspension of the acceptance of new applications under the first @A$ until such ti,e that a thorough stud* was undertaen$ and a new agree,ent ,utuall* -eneficial to -oth parties was entered into+ <* his letter$ Col+ %un!alan did not unilaterall* cancel or rescind the first @A+ Indeed$ the petitioners failed to adduce a ,orsel of evidence to prove that AF%S"AI had agreed to such cancellation or rescission of the first @A+ It -ears stressing that a-andon,ent of contract rights re6uires proof of actual intent to a-andon+  4J
nce a contract is entered into$ no part* can renounce it unilaterall* or without the consent of the other+ /J This is the essence of the principle of ,utualit* of contracts ento,-ed in Article 10' 3J of the Civil Code+ To effectuate a-andon,ent of a contract$ ,utual assent is alwa*s re6uired+ 'J The ,ere fact that one has ,ade a poor -argain ,a* not -e a ground for setting aside the agree,ent+ .J
 As can -e gleaned fro, the second @A$ the parties ,erel* ,ade su-stantial ,odifications to the first @A$ and agreed that onl* those provisions inconsistent with those of the second were considered rescinded$ ,odified and:or superseded+50J
 As graphicall* shown -elow$ the parties agreed to continue with the i,ple,entation of the Acade,ic  Assistance %rogra, under the acron*, P"#SQ ="oans to ffset #er* xpensive Schooling> and to continue i,ple,enting the sa,e+ The rights and o-ligations of the parties under the first @A were ,aintained al-eit with ,odifications$ to wit7
19:: MO" 1992 MO"
I GRA"
 
I GRA"
Agree,ent -etween AF%S"AI and the %A%I to i,ple,ent the ter,s and conditions of the "oans to ffset #er* xpensive Schooling ="#S> %rogra,
 
I@%"@TATI
Assistance -* %A%I to AF%S"AI in ter,s of support services
 
I@%"@TATI
%utting up of an extension office -uilding at the expense of %A%I
Support and services -* %A%I in of the progra,
%AE@T and C""CTI
Financing of the 1st annual pa*,ent -*  AF%S"AI in the for, of educational loan to the ,e,-er 
AF%S"AI as the authori!ed collecting agent of  ,onthl* install,ents of the ,e,-ers
Re,ittance of collections to the %A%I fro, the 2nd *ear until the plan is full* paid
 
%AE@T and C""CTI
Financing in the for, of a 4(*ear ,e,-er e6uivalent to the Gross =GC%> of the plan
Schedule of drawing out the loan *ears
( 20K of GC% upon su-,ission docu,entation -* %A%I an the loan
 
<FITS T AF%S"AI
 
<FITS T AF%S"AI
4+4K out of the 20K of the GC% and discount
4K out of the '0K of the GC% as
I CAS F (%AE@T
AF%S"AI to -eco,e the receiver of the contract in case of failure to pa* ,onthl* a,orti!ations
AF%S"AI to ac6uire all interests fro, the contract in case the 1st *ear assistance is not full* paid -* the ,e,-er 
I CAS F (%AE@T
 
Due to fraud$ forger* or ,isrepresentation of %A%I personnel
( AF%S"AI to act on it and notif* %A%I
( @e,-er;s loan to -e deducted fro, the a,ounts due to %A%I$ or to -e -illed to %A%I$ in case the for,er is insufficient
( no re-ate on the service fee and discount
Due to death of either the ,e,-er or -eneficiar*
( the plan shall -e dee,ed full* paid for 
( to -e acted upon -* %A%I
 
@ISC""A9S
AF%S"AI to -e free fro, an* legal i,plication that ,a* arise as to the agree,ent -etween the ,e,-er and %A%I
ffectivit* of the @A i,,ediatel* upon signing
A,end,ents and ,odifications to -eco,e effective onl* upon approval of the parties
@ISC""A9S
AF%S"AI to -e free fro, an* lia-ilit* arising -etween the ,e,-er and %A%I
ffectivit* of the @A i,,ediatel* upon signing
A,end,ents and ,odifications to -eco,e effective onl* upon approval of the parties
%rior inconsistent agree,ents dee,ed rescinded$
,odified$ or superseded+
The fact that the respondent did not participate in the negotiations of the new @A is of no ,o,ent+ As culled fro, the petitioners; testi,onial evidence$ the franchise co,,ission was awarded as an incentive to the one who initiated and successfull* negotiated the AF%S"AI account within a certain period+ 51J The franchise co,,ission was granted su-&ect to two conditions onl*7 =1> that the respondent ,ust re,ain connected with the co,pan*$ and =2> that it is not transfera-le+ At the ti,e the new @A was executed$ the respondent was still connected with the petitioner corporationL hence$ she was still entitled to her co,,ission+ ven with the ,odification of the first @A -* the second one$ the respondent had the right to continue receiving her  franchise co,,ission fro, the petitioner corporation+
e agree with the respondent that the petitioners are now in estoppel to 6uestion her entitle,ent to the franchise co,,ission under the old @A+ It ,ust -e noted that f ro, Dece,-er 1.'' until cto-er 1..1 the respondent was continuousl* receiving her franchise co,,ission fro, the petitioner corporation+ It was onl* when the re,ittances for AF%S"AI were suspended that the respondent stopped receiving her co,,ission+
n the issue of da,ages$ we rule for the petitioners+ @oral da,ages are recovera-le for -reach of  contract where the -reach was wanton$ recless$ ,alicious or in -ad faith$ oppressive or a-usive+ 52J Bowever$ ,oral da,ages are i,properl* awarded$ a-sent a specific finding and pronounce,ent fro, the trial court that petitioners acted in such ,anner +5J In the instant case$ despite the trial court;s award of ,oral da,ages$ it did not ,ae an* pronounce,ent as to the -asis of such award+ Therefore$ the award of ,oral da,ages ,ust -e deleted+
 As a conse6uence$ the award for exe,plar* da,ages is also vacated+ xe,plar* da,ages are not recovera-le as a ,atter of right$ and although such da,ages need not -e proved$ the plaintiff ,ust first show that he is entitled to ,oral$ te,perate or co,pensator* da,ages -efore a court can favora-l* consider an award of exe,plar* da,ages+55J In this case$ there was no finding that the respondent is entitled to an* such da,agesL hence$ no exe,plar* da,ages ,a* -e awarded+ Finall*$ we also vacate the award of attorne*;s fees since the trial court did not ,ae an* finding that an* of the instances enu,erated in Art+ 220' of the Civil Code exists+
<&ERE)ORE$ the decision of the Court of Appeals is AFFIR@D with @DIFICATI+ The awards for ,oral and exe,plar* da,ages and attorne*;s fees are D"TD+ o pronounce,ent as to costs+
SO ORERE.
T&E M"NI(" R"I(RO" O., plaintiff(appellant$ vs+ (" OM*">I" TR"NS"T("NTI", defendant(appellee+ and T&E "T("NTI G!() ? *"I)I O.,  defendant(appellant+
William A. Kincaid & Thomas L. Hartigan for plaintiff-appellant.
Lawrence, Ross & Bloc for defend ant-appellant Atlantic, !"lf & #acific Co.
!il$ert, Cohn & %isher for defendant-appellee Compaia Transatlantica.
 
STREET, J.:
In @arch 1.15$ the stea,ship Alicante$ -elonging to the Compaia Transatlantica de Barcelona$ arrived at @anila with two loco,otive -oilers a-oard$ the propert* of The @anila Railroad Co,pan*+ The e6uip,ent of the ship for discharging heav* cargo was not sufficientl* strong to handle these -oilers$ and it was therefore necessar* for the Stea,ship Co,pan* to procure assistance in the port of @anila+
The Atlantic$ Gulf and %acific Co,pan* =hereafter called the Atlantic Co,pan*> was accordingl* e,plo*ed -* the Stea,ship Co,pan*$ as having pro-a-l* the -est e6uip,ent for this purpose of an* contracting co,pan* in the cit*+ The service to -e perfor,ed -* the Atlantic Co,pan* consisted in -ringing it s floating crane alongside the Alicante$ lifting the -oilers our of the shipNs hold$ and transferring the, to a -arge which would -e placed read* to receive the,+
9pon the arrival of the Alicante$ the Atlantic co,pan* sent out its crane in charge of one "e*den+ In preparing to hoist the first -oiler the sling was unfortunatel* ad&usted near the ,iddle of the -oiler$ and it was thus raised nearl* in an hori!ontal position+ The -oiler was too long to clear the hatch in this position$ and after one end of the -oiler had e,erged on one side of the hatch$ the other still re,ained -elow on the other side+ hen the -oiler had -een gotten into this position and was -eing hoisted still further$ a river near the head of the -oiler was caught under the edge of the hatch+ The weight on the crane was thus increased -* a strain esti,ated at fifteen tons with the result that the ca-le of the sling parted and the -oiler fell to the -otto, of the shipNs hold+ The sling was again ad&usted to the -oiler -ut instead of -eing placed near the ,iddle it was now slung nearer one of the ends$ as should have -een done at first+ The -oiler was gain liftedL -ut as it was -eing -rought up$ the -olt at the end of the derric -oo -roe$ and again the -oiler fell+
The crane was repaired and the -oiler discharged$ -ut it was found to -e so -adl* da,aged that it had to -e reshipped to ngland where it was re-uilt$ and afterwards was returned to @anila+ The Railroad Co,pan*Ns da,age -* reason of the cost of repairs$ expenses and loss of the use of the -oiler proved to -e %2$5+2.L and as to the a,ount of the da,age so resulting there is practicall* no dispute+ To recover these da,ages the present action was instituted -* the Railroad Co,pan* against the Stea,ship Co,pan*+ the latter caused the  Atlantic Co,pan* to -e -rought in as a codefendant$ and insisted that whatever lia-ilit* existed should -e fixed upon the Atlantic Co,pan* as an independent contractor who had undertaen to discharge the -oilers and had -eco,e responsi-le for such da,age as had -een done+
The &udge of the Court of First Instance gave &udg,ent in favor of the plaintiff against the Atlantic Co,pan*$ -ut the a-solved the Stea,ship Co,pan* fro, the co,plaint+ The plaintiff has appealed fro, the action of the court in failing to give &udg,ent against the Stea,ship co,pan*$ while the Atlantic co,pan* has appealed fro, the &udg,ent against it+
The ,ishap was undou-tedl* due$ as the lower court found$ to the negligence of one "e*den$ the fore,an in chargeL and we ,a* add that the evidence tends to show that his negligence was of a t*pe which ,a* without exaggeration -e deno,inated gross+ The sling was in the first place i,properl* ad&usted$ and the attention of "e*den was at once called to this -* the ,an in charge of the stevedores+ evertheless he proceeded and$ instead of lowering the -oiler when it was seen that it could not readil* pass through the hatch$ he atte,pted
to force it throughL and the shipNs tacle was -rought into use to assist in this ,aneuver+ The second fall was$ it appears$ caused -* the weaening of the -olt at the head of the derric -oo,$ due to the shoc incident to the first accident+ This defect was possi-l* such as not to -e patent to external o-servation -ut we are of the opinion that a person of sufficient sill to -e trusted with the operation of ,achiner* of this character should -e trusted with the operation of ,achiner* of this character should have nown that the crane had possi-l* -een weaened -* the &ar received in the first accident+ The fore,an was therefore guilt* of negligence in atte,pting to hoist the -oiler the second ti,e under the conditions that had thus developed+ It should -e noted that the operation was at all its states entirel* under "e*denNs controlL and$ although in the first lift he utili!ed the shipNs tacle to aid in hoisting the -oiler$ ever*thing was done under his i,,ediate supervision+ There is no evidence tending to show that the first fall of the -oiler ,ight have -een due to an* hidden defect in the lifting apparatusL and if it had not -een for the additional strain caused -* one end of the -oiler catching under the hatch$ the operation would dou-tless have -een acco,plished without difficult*+ The accident is therefore to -e attri-uted to the failure of "e*den to exercise the degree of care which an ordinaril* co,petent and prudent person would have exhi-ited under the circu,stances which then confronted hi,+ This conclusion of fact cannot -e refutedL and$ indeed$ no atte,pt is here ,ade -* the appellant to reverse this finding of the trial court+
Three 6uestions are involved in the case$ na,el*7 =1> Is the stea,ship co,pan* lia-le to the plaintiff -* reason of having delivered the -oiler in 6uestion in a da,aged condition =2> Is the atlantic co,pan* lia-le to -e ,ade to respond to the stea,ship co,pan* for the a,ount the latter ,a* -e re6uired to pa* to the plaintiff for the da,age done Is the Atlantic co,pan* directl* lia-le to the plaintiff$ as the trial court held
It will -e o-served that the contractual relation existed -etween the railroad co,pan* and the stea,ship co,pan*L and the duties of the latter with respect to the carr*ing and deliver* of the -oilers are to -e discovered -* considering the ter,s and legal effect of that contract+ A contractual relation also existed -etween the Stea,ship co,pan* and the atlantic co,pan*L and the duties owing -* the latter to the for,er with respect to the lifting and the transferring of the -oiler are liewise to -e discovered -* considering the ter,s and legal effect of the contract -etween these parties+ n the other hand$ no contractual relation existed directl* -etween the Railroad Co,pan* and the Atlantic Co,pan*+
e are all agreed$ that$ under the contract for transportation fro, ngland to @anila$ the Stea,ship co,pan* is lia-le to the plaintiff for the in&ur* done to the -oiler while it was -eing discharged fro, the ship+ The o-ligation to transport the -oiler necessaril* involves the dut* to conve* and deliver it in a proper condition according to its nature$ and confor,a-l* with good faith$ custo,$ and the law =art+ 124'$ Civ+ Code>+ The contract to conve* i,port the dut* to conve* and deliver safel* and securel* with reference to the degree of care which$ under the circu,stances$ are re6uired -* law and custo, applica-le to the case+ The dut* to carr* and to carr* safel* is all one+
Such -eing the contract of the Stea,ship Co,pan*$ said co,pan* is necessaril* lia-le$ under articles 110 and 1105 of the Civil Code$ for the conse6uences of the o,ission of the care necessar* to the proper perfor,ance of this o-ligation+ The contact to transport and deliver at the port of @anila a loco,otive -oiler$ which was received -* it in proper condition$ is not co,plied with the deliver* at the port of destination of a ,ass of iron the utilit* of which had -een destro*ed+
or does the Stea,ship Co,pan* escape lia-ilit* -* reason of the f act that it e,plo*ed a co,petent independent contractor to discharge the -oilers+ The law applica-le to this feature of the case will -e ,ore full* discussed further on in this opinion+ At this point we ,erel* o-serve that in the perfor,ance of this service the  Atlantic co,pan*$ and it has never *et -een held that the failure to co,pl* with a contractual o-ligation can -e excused -* showing that such delin6uenc* was due to the negligence of one to who, the contracting part* had co,,itted the perfor,ance of the contract+
 
 At the hearing in first instance the Atlantic Co,pan* introduced four witnesses to prove that at the ti,e said co,pan* agreed to lift the -oilers out of the  Alicante$ as upon other later occasions$ the stea,ship co,pan* not -e responsi-le for da,age+ The vice(president of the atlantic co,pan* testified that hew as present upon the occasion when the agent of the Stea,ship co,pan* ,ade arrange,ents for the discharge of the -oilers and he heard the conversation -etween the president and said agent+ According to this witness the su-stance of the agree,ent was that$ while the Atlantic Co,pan* would use all due care in getting the -oilers out$ no responsi-ilit* was assu,ed for da,age done either to ship or cargo+ The inter,ediar* who acted as agent for the Stea,ship Co,pan* in arranging for the perfor,ance of this service stoutl* denied that an* such ter,s were announced -* the officials or an*-od* else connected with the Atlantic Co,pan* at an* ti,e while the arrange,ents were pending+
In the conflict of the evidence$ we recogni!e that$ -* a preponderance of the evidence$ so,e reservation or other was ,ade as to the responsi-ilit* of the Atlantic Co,pan*L was ,ade to the responsi-ilit* of the atlantic co,pan* and though the agent who acted on -ehalf of the stea,ship co,pan* possi-l* never co,,unicated this reservation to his principal$ the latter should nevertheless -e held -ound there-*+ It thus -eco,es necessar* to discover what the exact ter,s of this supposed reservation were+
e thin that we ,ust put aside at once the words of studies precision with which the president of the Atlantic co,pan* could exclude the possi-ilit* of an* lia-ilit* attaching to his co,pan*$ though we ,a* accept his state,ent as showing that the excepted ris conte,plated -reaage of the lifting e6uip,ent+ There is undou-tedl* a larger ele,ent of truth in the ,ore reasona-le state,ent -* the vice(president of the co,pan*+  According to this witness the contract co,-ined two features$ na,el*$ an undertaing on the part of the  Atlantic Co,pan* to use all due care$ co,-ined with a reservation concerning the co,pan*Ns lia-ilit* for da,age+
The Atlantic Co,pan* offered in evidence$ a nu,-er of letters which had -een written -* it at different ti,es$ extending over a period of *ears$ in response to in6uiries ,ade -* other fir,s and person in @anila concerning the ter,s upon which the Atlantic Co,pan* was not accusto,ed to assu,e the ris incident to such wor and re6uired the parties for who, the service ,ight -e rendered either to carr* the ris or insure against it+ ne such letter$ dated nearl* four *ears prior to the occurrence such letter$ dated nearl* four *ears prior to the occurrences which gave rise to this lawsuit$ was addressed to the Compaia Transatlantica de
Barcelona one of the defendants in this case+ It was stated in this co,,unication that the co,pan*Ns derric would -e su-&ect to inspection prior to ,aing the lift -ut that the Atlantic Co,pan* would not assu,e responsi-ilit* for da,age that ,ight occur either to ship or cargo fro, an* whatsoever+ The stea,ship co,pan* re&ected the services of the Atlantic co,pan* in that instance as -eing too onerous+
The letters directed to this parties$ it ,a* o-served$ would not$ generall* speaing$ -e ad,issi-le as against the plaintiff for the purpose of proving that a si,ilar reservation was inserted in the contract with it on this occasionL -ut if nowledge of such custo, is -rought ho,e to the stea,ship co,pan*$ the fact that such reservation was co,,onl* ,ade is of so,e pro-ative force+ Reference to a nu,-er of these letters will show that no particular for,ula was used -* the Atlantic Co,pan* in defining its exe,ption$ and the tenor of these various co,,unications differs ,ateriall*+ e thin$ however$ that so,e of the letters are of value as an aid in interpreting the reservation which the Atlantic Co,pan* ,a* have intended to ,ae+ e therefore 6uote fro, so,e of these letters as follows7
e will use our -est endeavors to carr* out the wor successfull* and will as *ou to inspect our plant -ut we wish it distinctl* understood that we cannot assu,e responsi-ilit* for da,age which ,a* occur + + + while the lift is -eing ,ade+ =To Rear Ad,iral$ 9+S++$ ct+ 5$ 1.0.+>
ur 6uotation is -ased on the understanding that we assu,e no responsi-ilit* fro, an* accident which ,a* happen during our operations+ e alwa*s insert this clause as precautionar* ,easure$ -ut we have never had to avail ourselves of it as *et and do not expect to now+ =To 8l #aradero de @anila$8 ov+ 1$ 1.1+>
 As is custo,ar* in these cases$ we will use all precaution as necessar* to handle the gun in a proper ,anner+ ur e6uip,ent has -een tested and will -e again$ -efore ,aing the lift$ -ut we do not assu,e an* responsi-ilit* for da,age to the gun ship$ or cargo+ =To arner$ <arnes Co+$ ?une 3$ 1.0.+>
The idea expressed in these letters is$ we thin entirel* consonant with the interpretation which the vice( president of the co,pan* placed upon the contract which was ,ade with the stea,ship co,pan* upon this occasion$ that is$ the co,pan* recogni!ed its dut* to exercise due supervisor* careL and the exe,ption fro, lia-ilit*$ whatever ,a* have -een its precise words had reference to disasters which ,ight result fro, so,e inherent hidden defect in the lifting apparatus or other unforeseen occurrence not directl* attri-uta-le to negligence of the co,pan* in the lifting operations+ either part* could have supposed for a ,o,ent that it was intended to a-solve the Atlantic Co,pan* fro, its dut* to use due care in the wor+
It is not pretended that negligence on the part of the Atlantic Co,pan* or its e,plo*ees was expressl* included in the excepted ris$ and we are of the opinion that the contract should not -e understood as covering such an exe,ption+ It is a rudi,entar* principle that the contractor is responsi-le for the wor executed -* persons who, he e,plo*ees in its perfor,ance$ and this expressed in the Civil Code in the for, of a positive rule of law =art+ 14./>+ It is also expressl* declared -* law that lia-ilit* arising fro, negligence is de,anda-le in the fulfill,ent of all inds of o-ligations =art+ 110$ Civil Code>+ ver* contract f or the presentation of service therefore has annexed to it$ as an insepara-le i,plicit o-ligation$ the dut* to exercise due care in the acco,plish,ent of the worL and no reservation where-* the person rendering the services sees to escape fro, the conse6uences of a violation of this o-ligations can viewed with favor+
Contracts against lia-ilit* for negligence are not favored -* law+ In so,e instances$ such as co,,on carriers$ the* are prohi-ited as against pu-lic polic*+ In all cases such contracts should -e construed strictl*$ with ever* intend,ent against the part* seeing its protection+ =Crew vs+ <radstreet Co,pan*$ 15 %a+ St+$ 1/1L 3 "+ R+ A+$ //1L 1. A,+ St+ Rep+$ /'1+>
The strictness with which contracts conferring such an unusual exe,ption are construed is illustrated in <r*an vs+ astern Australian S+ S+ Co+ =2' %hil+ Rep+$ 10>+ The decision in that case is not precisel* applica-le to the case at -ar$ since the court was there appl*ing the law of a foreign &urisdiction$ and the 6uestion at issue involved a doctrine peculiar to contracts of co,,on carriers+ evertheless the case is instructive as illustrating the universal attitude of courts upon the right of a contracting part* to stipulate against the conse6uences of his own negligence+ It there appeared that the plaintiff had purchased fro, the defendant co,pan* a ticet for the transportation of hi,self and -aggage fro, Bongong to @anila <* the ter,s of the contract printed in legi-le t*pe upon the -ac of the ticet it was provided that the co,pan* could not hold itself responsi-le for an* loss or da,age to luggage$ under an* circu,stances whatsoever$ unless it had -een paid for as freight+ It was held that this li,itation upon the lia-ilit* of the defendant co,pan* did not relieve it fro, lia-ilit* of the defendant co,pan* for negligence of its servants -* which the -aggage of the passenger was lost+ Said the court7 rdinaril* this language would see, to -e -road enough to cover ever* possi-le contingenc*$ including the negligent act of the defendantNs servants+ To so hold$ however$ would run counter to the esta-lished law of ngland and the 9nited States on that su-&ect+ The court then 6uoted the following proposition fro, the decision of the UingNs <ench Division in %rice Co+ vs+ 9nion "ighterage Co+ =1.0J$ 1 U+ <+ D+$ 340$ 345>7
8An exe,ption in general words not expressl* relating to negligence$ even though the words are wide enough to include loss -* negligence or default of carriersN servantsN ,ust -e construed as li,iting the lia-ilit* of the carrier as assurer$ and not as relieving fro, the dut* of the exercising reasona-le sill and care+8
ven ad,itting that$ generall* speaing$ a person ,a* stipulate against lia-ilit* for the conse6uences of negligence$ at least in those cases where the negligence is not gross or willful$ the contract conferring such exe,ption ,ust -e so clear as to leave no roo, for the operation of the ordinar* rules of l ia-ilit* consecrated -* experience and sanctioned -* the express provisions of law+
If the exe,ption should -e understood in the scene that counsel for the Atlantic Co,pan* now insists it should -ear$ that is$ as an a-solute exe,ption fro, all responsi-ilit* for negligence$ it is evident that the agree,ent was a ,ost ine6uita-le and unfair one$ and hence it is one that the stea,ship co,pan* can not -e lightl* assu,ed to have ,ade+ 9nderstood in that sense it is the e6uivalent of licensing the Atlantic Co,pan* to perfor, its tass in an* ,anner and fashion that it ,ight please$ and to hold it har,less fro, the conse6uences+
 
disasters of this ind is found in the exercise of due careL and the chief incentive to the exercise of care is a feeling of responsi-ilit* on the part of hi, who undertaes the wor+ aturall* the courts are little inclined to aid tin the efforts of contractors to evade this responsi-ilit*+
There ,a* have -een in the ,inds of the officials of the Atlantic Co,pan* an idea that the pro,ise to use due care in the lifting operations was not acco,panied -* a legal o-ligation$ such pro,ise -eing intended ,erel* for its ,oral effect as an assurance to the stea,ship co,pan* that the latter ,ight rel* upon co,petence and diligence of the e,plo*ees of the Atlantic Co,pan* to acco,plish the wor in a proper wa*+ The contract can not -e per,itted to operate in this one(sided ,anner+ The two features of the engage,ent$ na,el*$ the pro,ise to use due care and the exe,ption fro, lia-ilit* for da,age should -e so construed as to give so,e legal effect to -oth+ The result is$ as alread* indicated$ that the Atlantic Co,pan* was -ound -* its undertaing to use due care and that he exe,ption was intended to cover accidents use to hidden defects in the apparatus or other unforeseea-le occurrences not having their origin in the i,,ediate personal negligence of the part* in charge of the operations+
e now proceed to consider the contention that the Atlantic Co,pan* under the last paragraph of article 1.0 of the Civil Code$ which declares that the lia-ilit* there referred to shall cease when the persons ,entioned therein prove that the* e,plo*ed all the diligence of a good father of a fa,il* to avoid the da,age+ In this connection the conclusion of fact ,ust -e conceded in favor of the Atlantic Co,pan* that it had used proper care in the selection of "e*den and that $ so far as the co,pan* was aware$ he was a person to who, ,ight properl* -e co,,itted the tas of discharging the -oilers+ The answer to the contention$ however is the o-ligation of the Atlantic Co,pan* was created -* contract$ and article 1.0 is not applica-le to negligence arising in the course of the perfor,ance of a contractual o-ligation+ Article 1.0 is exclusivel* concerned with cases where the negligence arises in the a-sence of agree,ent+
In discussing the lia-ilit* of the Stea,ship Co,pan* to the plaintiff Railroad Co,pan* we have alread* shown that a part* is -ound to the full perfor,ance of his contractual engage,ents under articles 1101 et se'+ of the Civil Code$ and other special provisions of the Code relative to contractual o-ligationsL and if he falls short of co,plete perfor,ance -* reason of his own negligence or that of an* person to who, he ,a* co,,it the wor$ he is lia-le for the da,ages resulting therefro,+ hat was there said is also applica-le with reference to the lia-ilit* of the Atlantic Co,pan* upon its contract with the Stea,ship Co,pan*$ and the sa,e need not -e here repeated+ It is desira-le$ however$ in this connection$ to -ring out so,ewhat ,ore full* the distinction -etween negligence in the perfor,ance of a contractual o-ligation =culpa contractual> and neligence considered as an independent source of o-ligation -etween parties not previousl* -ound =culpa a6uiliana>+
This distinction is well esta-lished in legal &urisprudence and is full* recogni!ed in the provisions of the Civil Code+ As illustrative of this$ we 6uote the following passage fro, the opinion of this Court in the well(nown case of Raes vs+ Atlantic$ Gulf %acific Co+ =3 %hil+ Rep+$ 4.$ /4>$ and in this 6uotation we reproduce the first paragraph of here presenting a ,ore correct nglish version of said passage+
The acts to which these articles are applica-le are understood to -e those not growing out of preexisting duties of the parties to one another+ <ut where relations alread* for,ed give arise to duties$ whether springing for, contract or 6uasi(contract$ then -reaches of those duties are su-&ect to articles 1101$ 110$ and 1105 of the sa,e code+ A t*pical application of this distinction ,a* -e found in the conse6uences of a railwa* accident due to defective ,achiner* supplied -* the e,plo*er+ Bis lia-ilit* to his e,plo*ee would arise out of the contract for passage$ while that of the in&ured -*(stander would originate in the negligent act itself+ This distinction is thus clearl* set forth -* @anresa in his co,,entar* on article 10.7
8e see with reference to such o-ligations$ that c"lpa$ or negligence$ ,a* -e understood in two different senses$ either as c"lpa$ s"$stanti(e and independent $ which of itself constitutes the source of an o-ligation -etween two person not for,erl* -ound -* an* other o-ligationL or as an incident  in the perfor,ance of an o-ligation which alread* existed$ and which increases the lia-ilit* arising fro, the alread* existing o-ligation+8
?ustice Trace*$ the author of the opinion fro, which we have 6uoted$ proceeds to o-serve that @anresa$ in co,,enting on articles 1101 and 1105$ has descri-ed these two species of negligence as contractual and
extra(contractual$ the latter -eing the c"lpa a'"iliana of the Ro,an law+ 8This ter,inolog* is unreservedl* accepted -* Sanche! Ro,an =)erecho Ci(il $ fourth section$ chapter I$ article II$ o+ 12>$ and the principle stated is supported -* decisions of the supre,e court of Spain$+ a,ong the, those of ove,-er 2.$ 11'./ ='0 *"rispr"dencia Ci(il $ o+ 141>$ and ?une 23$ 1'.5 =34 *"rispr"dencia Civil$ o+ 1'2+>8
The principle that negligence in the perfor,ance of a contract is not governed -* article of the Civil Code -ut rather -* article 1105 of the sa,e Code was directl* applied -* this court in the case of <aer Senior Co+Ns successors vs+ Co,paVWa @ariti,a =/ %hil+ Rep+$ 214>L and the sa,e idea has -een i,pliedl* if not expressl* recogni!ed in other cases =+ T+ Bashi, Co+ vs+ Rocha Co+$ 1' %hil+ Rep+$ 14L Tan Chiong Sian vs+ Inchausti Co+$ 22 %hil+ Rep+$ 142>+
hat has -een said suffices in our opinion to de,onstrate that the Atlantic Co,pan* is lia-le to the Stea,ship Co,pan* for the da,ages -rought upon the latter -* the failure of the Atlantic co,pan* to use due care in discharging the -oiler$ regardless of the fact that the da,age was caused -* the negligence of an e,plo*ee who was 6ualified for the wor and who had -een chosen -* the Atlantic Co,pan* with due care+
This -rings us to the last 6uestion here to -e answered$ which is$ Can the Atlantic Co,pan* -e held directl* lia-le to the Railroad Co,pan* In other words$ can the &udge,ent entered in the trial court directl* in favor of the plaintiff against the Atlantic Co,pan* -e sustained To answer this it is necessar* to exa,ine carefull* the legal relations existing -etween the Atlantic Co,pan* and the Railroad Co,pan* with reference to this affairL and we shall for a ,o,ent ignore the existence of the contract -etween the stea,ship co,pan* and the atlantic co,pan*$ to which the railroad co,pan* was not a part*+
Baving regard then to the -are fact that the Atlantic Co,pan* undertoo to re,ove the -oiler fro, the shipNs hold and for this purpose too the propert* into its power and control$ there arose a dut* to the owner to use due care in the perfor,ance of that service and to avoid da,aging was o-viousl* in existence -efore the negligent act ,a*$ if we still ignore the existence of the express contract$ -e considered as an act done in violation of this dut*+
The dut* thus to use due care is an i,plied o-ligation$ of a 6uasi contractual nature$ since it is created -* i,plication of lia-ilit* with which we are here confronted is so,ewhat si,ilar to that which i s revealed in the case of the depositar*$ or co,,odatar*$ whose legal dut* with respect to the propert* co,,itted to their care is defined -* law even in the a-sence of express contractL and it can not -e dou-ted that a person who taes possession of the propert* of another for the purpose of ,oving or conve*ing it fro, one place to another$ or for the purpose of perfor,ing an* other service in connection therewith = locatio operis faciendi >$ owes to the owner a positive dut* to refrain fro, da,aging it$ to the sa,e extent as if an agree,ent for the perfor,ance of  such service had -een expressl* ,ade with the owner+ The o-ligation as if an agree,ent ,ade with the owner+ The o-ligation here is reall* a species of contract re$ and it has its source and explanation in vital fact$ that the active part* has taen upon hi,self to do so,ething with or to the propert* and has taen it into his power and control for the purpose of perfor,ing such service+ =Co,pare art+ 1''.$ Civil Code+>
In the passage which we have alread* fro, the decision in the Raes case this Court recogni!ed the fact that the violation of a 6uasi(contractual dut* is su-&ect to articles 1101$ 110$ 1105 of the Civil Code$ and not within the purview of article 1.0+ @anresa also$ in the paragraph reproduced a-ove is of the opinion that negligence$ considered a su-stantive and independent source of lia-ilit*$ does not include cases where the parties are previousl* -ound -* an* other o-ligation+ Again$ it is instructive in this connection to refer to the contents of article 110 of the Civil Code$ where it is de,anda-le in the fulfill,ent of all inds of o-ligations+ These words evidentl* co,prehend -oth for,s of positive o-ligations$ whether arising fro, express contract or fro, i,plied contract =6uasi contract>+
 
the ,ere fact of carriage+ Said %owell$ ?+7 8An action indeed will not lie for not doing the thing$ for want of a sufficient considerationL -ut *et if the -ailee will tae the goods into his custod*$ he shall -e answera-le for the,L for the taing of the goods into his custod* is his own act+8 S. Gould$ ?+7 8+ + + an* ,an that undertaes to carr* goods in lia-le to an action$ -e he a co,,on carrier or whatever he is$ if through his neglect the* are lost or co,e to an* da,age7 + + + + 8 <ehind these expressions was an un-roen line of ancient nglish precedents holding persons lia-le for da,age inflicted -* reason of a ,isfeasance in carr*ing out an undertaing+ The principle deter,ined -* the court in the case cited is expressed in the s*lla-us in these words7 NIf a ,an undertaes to carr* goods safel* and securel*$ he is responsi-le for an* da,age the* ,a* sustain in the carriage through his neglect$ though he was not a co,,on carrier and was to have nothing for the carriage+8 Though not stated in so ,an* words$ this decision recogni!es that fro, the ,ere f act that a person taes the propert* of another into his possession and control there arises an o-ligation in the nature of an assu,psit that he will use due care with respect thereto+ This ,ust -e considered a principle of universal  &urisprudence$ for it is consonant with &ustice and co,,on sense and as we have alread* seen har,oni!es with the doctrine a-ove deduced fro, the provisions of the Civil Code+
The conclusion ,ust therefore -e that if there had -een no contract of an* sort -etween the Atlantic co,pan* and the Stea,ship Co,pan*$ an action could have -een ,aintained -* the Railroad Co,pan*$ as owner$ against the Atlantic Co,pan* to recover the da,ages sustained -* the for,er+ Such da,ages would have -een de,anda-le under article 110 of the Civil Code and the action would not have -een su-&ect to the 6ualification expressed in the last paragraph of article 1.0+
The circu,stance that a contract was ,ade -etween the Atlantic Co,pan* and the Stea,ship co,pan* introduces$ however$ an i,portant$ and in our opinion controlling factor into this -ranch of the case+ It cannot -e denied that the Stea,ship co,pan* has possession of this -oiler in the capacit* of carrier and that as such it was authori!ed to ,ae a contract with Atlantic Co,pan* to discharge the sa,e fro, the ship+ Indeed$ it appears in evidence that even -efore the contract of affreight,ent was ,ade the Railroad Co,pan* was infor,ed that it would necessar* for stea,ship co,pan* to procure the services of so,e contractor in the port of @anila to handle the discharge$ as the shipNs tacle was inade6uate to handle heav* cargo+ It is therefore to -e assu,ed that the Railroad Co,pan* had in fact assented to the e,plo*,ent of a contractor to perfor, this service+
ow$ it cannot -e ad,itted that a person who contract to do a service lie that rendered -* the Atlantic co,pan* in this case incurs a dou-le responsi-ilit* upon entering upon perfor,ance$ na,el*$ a responsi-ilit* to the part* with who, he contracted$ and another entirel* different responsi-ilit* to the owner$ -ased on an i,plied contract+ The two lia-ilities can not in our opinion coexist+ It is a general rule that an i,plied conract never arises where an express contract has -een ,ade+
If dou-le responsi-ilit* existed in such case as this$ it would result that a person who had li,ited his lia-ilit* -* express stipulation ,ight find hi,self lia-le to the owner without regard to the li,itation which he had seen fit to i,pose -* contract+ There appears to -e no possi-ilit* of reconciling the conflict that would -e developed in atte,pting to give effect to those inconsistent lia-ilities+ The contract which was in fact ,ade$ in our opinion$ deter,ine not onl* the character and extent of the lia-ilit* of the Atlantic co,pan* -ut also the person or entit* -* who, the o-ligation is eligi-le+ It is of course 6uite clear that if the Atlantic co,pan* had refused to carr* out its agree,ent to discharge the cargo$ the plaintiff could have enforced specific perfor,ance and could not have recovered da,ages for non(perfor,ance+ =Art+ 1243$ Civil CodeL Donaldson$ Si, Co+ vs+ S,ith$ <ell Co+$ 2 %hil+ Rep+$ 3//L 9* Ta, and 9* Eet vs+ "eonard$ 0 %hil+ Rep+$ 531+> In view of the preceding discussion it is e6uall* o-vious that$ for lac of privit* with the contract$ the Railroad Co,pan* can have no right of action to recover da,ages fro, the Atlantic Co,pan* for the wrongful act which constituted the violation of said contract+ The rights of the plaintiff can onl* -e ,ade effective through the Compaia
Trasatlantica de Barcelona with who, the contract of affreight,ent was ,ade+
The &udg,ent entered in the Court of First Instance ,ust$ therefore -e reversed not onl* with respect to the  &udg,ent entered in favor of the plaintiff directl* against the Atlantic co,pan* -ut also with respect to the a-solution of the stea,ship co,pan* and the further failure of the court to enter &udg,ent in favor of the latter against the Atlantic Co,pan*+ The Compa+a Transatlantic de Barcelonashould -e and is here-* ad&udged to pa* to the @anila Railroad Co,pan* the su, of twent* nine thousand three hundred fort* three pesos and twent* nine centavos =%2$5+2.> with interest fro, @a* 11$ 1.15$ until paidL and when this &udg,ent is satisfied$ theCompaia Transatlantic de Barcelonais declared to -e entitled to recover the sa,e a,ount fro, the Atlantic %acific Gulf Co,pan*$ against who, &udg,ent is to this end here-* rendered in favor of
the Compaia Transatlantica de Barcelona+ o express ad&udication of costs of either instance will -e ,ade+ So ordered+
[G.R. No. 11:2:. "4r 5, 2000]
@ &O(INGS OR*OR"TION, petitioner, vs. O!RT O) "**E"(S, VITOR !. '"RTO(OME a+ REGISTER O) EES )OR METRO M"NI(", ISTRIT III, respondents. ra+c
E I S I O N
 #N"RESAS"NTI"GO,J .8
This is a petition for review on certiorari  seeing the reversal of the Dece,-er 4$ 1..5 Decision of the Court of   Appeals in CA(G+R+ C# o+ 50'5. entitled 8)KC Holdings Corporation (s. ictor . Bartolome, et al.8$ 1J affir,ing in toto the ?anuar* 5$ 1.. Decision of the Regional Trial Court of #alen!uela$ <ranch 132 $2J which dis,issed Civil Case o+ 3(#(.0 and ordered petitioner to pa* %0$000+00 as attorne*;s fees+
The su-&ect of the controvers* is a 15$021 s6uare ,eter parcel of land located in @alinta$ #alen!uela$ @etro @anila which was originall* owned -* private respondent #ictor 9+ <artolo,e;s deceased ,other$ ncarnacion <artolo,e$ under Transfer Certificate of Title o+ <(3/14 of the Register of Deeds of @etro @anila$ District III+ This lot was in front of one of the textile plants of petitioner and$ as such$ was seen -* the latter as a potential warehouse site+
n @arch 1/$ 1.''$ petitioner entered into a Contract of "ease with ption to <u* with ncarnacion <artolo,e$ where-* petitioner was given the option to lease or lease with purchase the su-&ect land$ which option ,ust -e exercised within a period of two *ears counted fro, the signing of the Contract+ In turn$ petitioner undertoo to pa* %$000+00 a ,onth as consideration for the reservation of its option+ ithin the two(*ear period$ petitioner shall serve for,al written notice upon the lessor ncarnacion <artolo,e of its desire to exercise its option+ The contract also provided that in case petitioner chose to lease the propert*$ it ,a* tae actual possession of the pre,ises+ In such an event$ the lease shall -e for a period of six *ears$ renewa-le for another six *ears$ and the ,onthl* rental fee shall -e %14$000+00 for the first six *ears and %1'$000+00 for the next six *ears$ in case of renewal+
%etitioner regularl* paid the ,onthl* %$000+00 provided for -* the Contract to ncarnacion until her death in ?anuar* 1..0+ Thereafter$ petitioner coursed its pa*,ent to private respondent #ictor <artolo,e$ -eing the sole heir of ncarnacion+ #ictor$ however$ refused to accept these pa*,ents+ isa
 
@eanwhile$ on ?anuar* 10$ 1..0$ #ictor executed an Affidavit of Self(Ad&udication over all the properties of ncarnacion$ including the su-&ect lot+ Accordingl*$ respondent Register of Deeds cancelled Transfer Certificate of Title o+ <(3/14 and issued Transfer Certificate of Title o+ #(1525. in the na,e of #ictor <artolo,e+
n @arch 15$ 1..0$ petitioner served upon #ictor$ via registered ,ail$ notice that it was exercising its option to lease the propert*$ tendering the a,ount of %14$000+00 as rent for the ,onth of @arch+ Again$ #ictor refused to accept the tendered rental fee and to surrender possession of the propert* to petitioner+
%etitioner thus opened Savings Account o+ 1(05(0244'(I(1 with the China <aning Corporation$ Cu-ao <ranch$ in the na,e of #ictor <artolo,e and deposited therein the %14$000+00 rental fee for @arch as well as %/$000+00 reservation fees for the ,onths of Fe-ruar* and @arch+
%etitioner also tried to register and annotate the Contract on the title of #ictor to the propert*+ Although respondent Register of Deeds accepted the re6uired fees$ he nevertheless refused to register or annotate the sa,e or even enter it in the da* -oo or pri,ar* register+
Thus$ on April 2$ 1..0$ petitioner filed a co,plaint for specific perfor,ance and da,ages against #ictor and the Register of Deeds$ J doceted as Civil Case o+ 3(#(.0 which was raffled off to <ranch 131 of the Regional Trial Court of #alen!uela+ %etitioner pra*ed for the surrender and deliver* of possession of the su-&ect land in accordance with the Contract ter,sL the surrender of title for registration and annotation thereon of the ContractL and the pa*,ent of %400$000+00 as actual da,ages$ %400$000+00 as ,oral da,ages$ %400$000+00 as exe,plar* da,ages and %00$000+00 as attorne*;s fees+
@eanwhile$ on @a* '$ 1..0$ a @otion for Intervention with @otion to Dis,iss 5J was filed -* one Andres "ano!o$ who clai,ed that he was and has -een a tenant(tiller of the su-&ect propert*$ which was agricultural riceland$ for fort*(five *ears+ Be 6uestioned the &urisdiction of the lower court over the propert* and invoed the Co,prehensive Agrarian Refor, "aw to protect his rights that would -e affected -* the dispute -etween the original parties to the case+ ella
n @a* 1'$ 1..0$ the lower court issued an rder  4J referring the case to the Depart,ent of Agrarian Refor, for preli,inar* deter,ination and certification as to whether it was proper for trial -* said court+
n ?ul* 5$ 1..0$ the lower court issued another rde r /J referring the case to <ranch 132 of the RTC of #alen!uela which was designated to hear cases involving agrarian land$ after the Depart,ent of Agrarian Refor, issued a letter(certification stating that referral to it for preli,inar* deter,ination is no longer re6uired+
n ?ul* 1/$ 1..0$ the lower court issued an rder den*ing the @otion to Intervene $ 3J holding that "ano!o;s rights ,a* well -e ventilated in another proceeding in due ti,e+
 After trial on the ,erits$ the RTC of #alen!uela$ -ranch 132 rendered its Decision on ?anuar* 5$ 1..$ dis,issing the Co,plaint and ordering petitioner to pa* #ictor %0$000+00 as attorne*;s fees+ n appeal to the CA$ the Decision was affir,ed in toto+
Bence$ the instant %etition assigning the following errors7
=A>
FIRST ASSIG@T F RRR
=<>
SCD ASSIG@T F RRR
TB BRA<" C9RT F A%%A"S RRD I R9"IG TBAT TB TIC F %TI @9ST < SR#D <E DUC 9% CARACI <ART"@ %RSA""E+
=C> nigel
TBIRD ASSIG@T F RRR
TB BRA<" C9RT F A%%A"S RRD I R9"IG TBAT TB CTRACT AS (SIDD  AD R9S I FA#R F DUC+
=D>
F9RTB ASSIG@T F RRR
=>
FIFTB ASSIG@T F RRR
TB BRA<" C9RT F A%%A"S RRD I R9"IG TBAT %"AITIFF(A%%""AT AS "IA<" T DFDAT(A%%"" FR ATTRE;S FS+'J
The issue to -e resolved in this case is whether or not the Contract of "ease with ption to <u* entered into -* the late ncarnacion <artolo,e with petitioner was ter,inated upon her death or whether it -inds her sole heir$ #ictor$ even after her de,ise+
<oth the lower court and the Court of Appeals held that the said contract was ter,inated upon the death of ncarnacion <artolo,e and did not -ind #ictor -ecause he was not a part* thereto+
 Article 111 of the Civil Code provides$ as follows(
8ART+ 111+ Contracts tae effect onl* -etween the parties$ their assigns and heirs$ except in case where the rights and o-ligations arising fro, the contract are not trans,issi-le -* their nature$ or -* stipulation or -* provision of law+ The heir is not lia-le -e*ond the value of the propert* he received fro, the decedent+ -rnado
x x x x x x x x x+8
The general rule$ therefore$ is that heirs are -ound -* contracts entered into -* their predecessors(in(interest except when the rights and o-ligations arising therefro, are not trans,issi-le -* =1> their nature$ =2> stipulation or => provision of law+
In the case at -ar$ there is neither contractual stipulation nor legal provision ,aing the rights and o-ligations under the contract intrans,issi-le+ @ore i,portantl*$ the nature of the rights and o-ligations therein are$ -* their nature$ trans,issi-le+
The nature of intrans,issi-le rights as explained -* Arturo Tolentino$ an e,inent civilist$ is as follows7
 
8A,ong contracts which are intrans,issi-le are those which are purel* personal$ either -* provision of law$ such as in cases of partnerships and agenc*$ or -* the ver* nature of the o-ligations arising therefro,$ such as those re6uiring special personal 6ualifications of the o-ligor+ It ,a* also -e stated that contracts for the pa*,ent of ,one* de-ts are not trans,itted to the heirs of a part*$ -ut constitute a charge against his estate+ Thus$ where the client in a contract for professional services of a law*er died$ leaving ,inor heirs$ and the law*er$ instead of presenting his clai, for professional services under the contract to the pro-ate court$ su-stituted the ,inors as parties for his client$ it was held that the contract could not -e enforced against the ,inorsL the law*er was li,ited to a recover* on the -asis of '"ant"m mer"it +8.J
In A,erican &urisprudence$ 8=>here acts stipulated in a contract re6uire the exercise of special nowledge$ genius$ sill$ taste$ a-ilit*$ experience$ &udg,ent$ discretion$ integrit*$ or other personal 6ualification of one or -oth parties$ the agree,ent is of a personal nature$ and ter,inates on the death of the part* who is re6uired to render such service+810J ,arinella
It has also -een held that a good ,easure for deter,ining whether a contract ter,inates upon the death of one of the parties is whether it is of such a character that it ,a* -e perfor,ed -* the pro,issor;s personal representative+ Contracts to perfor, personal acts which cannot -e as well perfor,ed -* others are discharged -* the death of the pro,issor+ Conversel*$ where the service or act is of such a character that it ,a* as well -e perfor,ed -* another$ or where the contract$ -* its ter,s$ shows that perfor,ance -* others was conte,plated$ death does not ter,inate the contract or excuse nonperfor,ance + 11J
In the case at -ar$ there is no personal act re6uired fro, the late ncarnacion <artolo,e+ Rather$ the o-ligation of ncarnacion in the contract to deliver possession of the su-&ect propert* to petitioner upon the exercise -* the latter of its option to lease the sa,e ,a* ver* well -e perfor,ed -* her heir #ictor+
 As earl* as 1.0$ it was held that 8=B>e who contracts does so for hi,self and his heirs+812J In 1.42$ it was ruled that if the predecessor was dut*(-ound to reconve* land to another$ and at his death the reconve*ance had not -een ,ade$ the heirs can -e co,pelled to execute the proper deed for reconve*ance+ This was grounded upon the principle that heirs cannot escape the legal conse6uence of a transaction entered into -* their predecessor(in(interest -ecause the* have inherited the propert* su-&ect to the l ia-ilit* affecting their co,,on ancestor +1J
It is futile for #ictor to insist that he is not a part* to the contract -ecause of the clear provision of Article 111 of the Civil Code+ Indeed$ -eing an heir of ncarnacion$ there is privit* of interest -etween hi, and his deceased ,other+ Be onl* succeeds to what rights his ,other had and what is valid and -inding against her is also valid and -inding as against hi,+15J This is clear fro, #araa'"e Kings nterprises (s. Co"rt of Appeals, /012  where this Court re&ected a si,ilar defense(alon!o
ith respect to the contention of respondent Ra*,undo that he is not priv* to the lease contract$ not -eing the lessor nor the lessee referred to therein$ he could thus not have violated its provisions$ -ut he is nevertheless a proper part*+ Clearl*$ he stepped into the shoes of the owner(lessor of the land as$ -* virtue of his purchase$ he assu,ed all the o-ligations of the lessor under the lease contract+ @oreover$ he received -enefits in the for, of rental pa*,ents+ Further,ore$ the co,plaint$ as well as the petition$ pra*ed for the annul,ent of the sale of the properties to hi,+ <oth pleadings also alleged collusion -etween hi, and respondent Santos which defeated the exercise -* petitioner of its right of first refusal+
In order then to accord co,plete relief to petitioner$ respondent Ra*,undo was a necessar*$ if not indispensa-le$ part* to the case+ A favora-le &udg,ent for the petitioner will necessaril* affect the rights of respondent Ra*,undo as the -u*er of the propert* over which petitioner would lie to assert its right of first option to -u*+
In the case at -ar$ the su-&ect ,atter of the contract is liewise a lease$ which is a propert* right+ The death of a part* does not excuse nonperfor,ance of a contract which involves a propert* right$ and the rights and o-ligations thereunder pass to the personal representatives of the deceased+ Si,ilarl*$ nonperfor,ance is not excused -* the death of the part* when the other part* has a propert* interest in the su-&ect ,atter of the contract+1/J
9nder -oth Article 111 of the Civil Code and &urisprudence$ therefore$ #ictor is -ound -* the su-&ect C ontract of "ease with ption to <u*+
That -eing resolved$ we now rule on the issue of whether petitioner had co,plied with its o-ligations under the contract and with the re6uisites to exercise its option+ The pa*,ent -* petitioner of the reservation fees during the two(*ear period within which it had the option to lease or purchase the propert* is not disputed+ In fact$ the pa*,ent of such reservation fees$ except those for Fe-ruar* and @arch$ 1..0 were ad,itted -* #ictor+ 13J This is clear fro, the transcripts$ to wit(
8ATTE+ @?AD7
  ne re6uest$ Eour Bonor+ The last pa*,ent which was allegedl* ,ade in ?anuar* 1..0 &ust indicate in that stipulation that it was issued ove,-er of 1.'. and postdated ?anaur* 1..0 and then we will ad,it all+ rodpLfo
C9RT7
 ATTE+ @?AD7
  Reservation fee$ Eour Bonor+ There was no pa*,ent with respect to pa*,ent of rentals+ 8 1'J
%etitioner also paid the %14$000+00 ,onthl* rental fee on the su-&ect propert* -* depositing the sa,e in China <an Savings Account o+ 1(05(0244'(I(1$ in the na,e of #ictor as the sole heir of ncarnacion <artolo,e$ 1.J for the ,onths of @arch to ?ul* 0$ 1..0$ or a total of five =4> ,onths$ despite the refusal of #ictor to turn over the su-&ect propert*+20J
"iewise$ petitioner co,plied with its dut* to infor, the other part* of its intention to exercise its option to lease through its letter dated @atch 12$ 1..0$ 21J well within the two(*ear period for it to exercise its option+ Considering that at that ti,e ncarnacion <artolo,e had alread* passed awa*$ it was legiti,ate for petitioner to have addressed its letter to her heir+
It appears$ therefore$ that the exercise -* petitioner of its option to lease the su-&ect propert* was ,ade in accordance with the contractual provisions+ Conco,itantl*$ private respondent #ictor <artolo,e has the o-ligation to surrender possession of and lease the pre,ises to petitioner for a period of six =/> *ears$ pursuant to the Contract of "ease with ption to <u*+ ,ics
Co,ing now to the issue of tenanc*$ we find that this is not for this Court to pass upon in the present petition+ e note that the @otion to Intervene and to Dis,iss of the alleged tenant$ Andres "ano!o$ was denied -* the lower court and that such denial was never ,ade the su-&ect of an appeal+ As the lower court stated in its rder$ the alleged right of the tenant ,a* well -e ventilated in another proceeding in due ti,e+
 
<&ERE)ORE$ in view of the foregoing$ the instant %etition for Review is GRATD+ The Decision of the Court of Appeals in CA(G+R+ C# o+ 50'5. and that of the Regional Trial Court of #alen!uela in Civil Case o+ 3(#(.0 are -oth ST ASID and a new one rendered ordering private respondent #ictor <artolo,e to7
=a> surrender and deliver possession of that parcel of land covered -* Transfer Certificate of Title o+ #(1525. -* wa* of lease to petitioner and to perfor, all o-ligations of his predecessor(in(interest$ ncarnacion <artolo,e$ under the su-&ect Contract of "ease with ption to <u*L
=-> surrender and deliver his cop* of Transfer Certificate of Title o+ #(1525. to respondent Register of Deeds for registration and annotation thereon of the su-&ect Contract of "ease with ption to <u*L
=c> pa* costs of suit+ ScX
Respondent Register of Deeds is$ accordingl*$ ordered to register and annotate the su-&ect Contract of "ease with ption to <u* at the -ac of Transfer Certificate of Title o+ #(1525. upon su-,ission -* petitioner of a cop* thereof to his office+
SO ORERE.
G!TIERRE- &ERM"NOS, plaintiff(appellee$ vs+ ENGR"IO ORENSE,  defendant(appellant+
William A. Kincaid, Thos. L. Hartigan, and Ceferino 3. illareal for appellant.
Rafael de la 4ierra for appellee.
 
TORRES, J.:
 Appeal through -ill of exceptions filed -* counsel for the appellant fro, the &udg,ent on April 15$ 1.1$ -* the Bonora-le %+ @+ @oir$ &udge$ wherein he sentenced the defendant to ,ae i,,ediate deliver* of the propert* in 6uestion$ through a pu-lic instru,ent$ -* transferring and conve*ing to the plaintiff all his rights in the propert* descri-ed in the co,plaint and to pa* it the su, of %3'0$ as da,ages$ and the costs of the suit+
n @arch 4$ 1.1$ counsel for Gutierre! Ber,anos filed a co,plaint$ afterwards a,ended$ in the Court of First Instance of Al-a* against ngacio rense$ in which he set forth that on and -efore Fe-ruar* 15$ 1.03$
the defendant rense had -een the owner of a parcel of land$ with the -uildings and i,prove,ents thereon$ situated in the pue-lo of Guino-atan$ Al-a*$ the location$ area and -oundaries of which were specified in the co,plaintL that the said propert* has up to date -een recorded in the new propert* registr* in the na,e of the said rense$ according to certificate o+ 4$ with the -oundaries therein givenL that$ on Fe-ruar* 15$ 1.03$ ?ose Duran$ a nephew of the defendant$ with the latterNs nowledge and consent$ executed -efore a notar* a pu-lic instru,ent where-* he sold and conve*ed to the plaintiff co,pan*$ for %1$400$ the afore,entioned propert*$ the vendor Duran reserving to hi,self the right to repurchase it for the sa,e price within a period of four *ears fro, the date of the said instru,entL that the plaintiff co,pan* had not entered into possession of the purchased propert*$ owing to its continued occupanc* -* the defendant and his nephew$ ?ose Duran$ -* virtue of a contract of lease executed -* the plaintiff to Duran$ which contract was in force up to Fe-ruar* 15$ 1.11L that the said instru,ent of sale of the propert*$ executed -* ?ose Duran$ was pu-licl* and freel* confir,ed and ratified -* the defendant renseL that$ in order to perfect the title to the said propert*$ -ut that the defendant rense refused to do so$ without an* &ustifia-le cause or reason$ wherefore he should -e co,pelled to execute the said deed -* an express order of the court$ for ?ose Duran is notoriousl* insolvent and cannot rei,-urse the plaintiff co,pan* for the price of the sale which he received$ nor pa* an* su, whatever for the losses and da,ages occasioned -* the said sale$ aside fro, the fact that the plaintiff had suffered da,age -* losing the present value of the propert*$ which was worth %$000L that$ unless such deed of final conve*ance were executed in -ehalf of the plaintiff co,pan*$ it would -e in&ured -* the fraud perpetrated -* the vendor$ Duran$ in connivance with the defendantL that the latter had -een occup*ing the said propert* since Fe-ruar* 15$ 1.11$ and refused to pa* the rental thereof$ notwithstanding the de,and ,ade upon hi, for its pa*,ent at the rate of %0 per ,onth$ the &ust and reasona-le value for the occupanc* of the said propert*$ the possession of which the defendant liewise refused to deliver to the plaintiff co,pan*$ in spite of the continuous de,ands ,ade upon hi,$ the defendant$ with -ad faith and to the pre&udice of the fir, of Gutierre! Ber,anos$ clai,ing to have rights of ownership and possession in the said propert*+ Therefore it was pra*ed that &udg,ent -e rendered -* holding that the land and i,prove,ents in 6uestion -elong legiti,atel* and exclusivel* to the plaintiff$ and ordering the defendant to execute in the plaintiffNs -ehalf the said instru,ent of transfer and conve*ance of the propert* and of all the right$ interest$ title and share which the defendant has thereinL that the defendant -e sentenced to pa* %0 per ,onth for da,ages and rental of the propert* fro, Fe-ruar* 15$ 1.11$ and that$ in c