Case Digests for Finals

CASES

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William Golangco Construction Corporation v. PCIB G.R. No. 142830 March 24, 2006

• William Golangco Construction Corporation (WGCC) and the Philippine Commercial International Bank (PCIB) entered into a contract for the construction of the extension of PCIB Tower II. • The project included, among others, the application of a granitite wash-out finish on the exterior walls of the building • To answer for any defect arising within a period of one year, WGCC submitted a guarantee bond dated July 1, 1992. • Portions of the granitite wash-out finish of the exterior of the building began peeling off and falling from the walls in 1993. WGCCmade minor repairs after PCIB requested it to rectify the construction defects. • PCIB entered into another contract with Brains and Brawn Construction and Development Corporation to re-do the entire granitite wash-out finish after WGCC manifested that it was "not in a position to do the new finishing work," though it was willing to share part of the cost. PCIB incurred expenses amounting to P11,665,000 for the repair work. • PCIB filed for the reimbursement of its expenses for the repairs made byanother contractor. It complained of WGCC’s alleged non-compliance with their contractual terms on materials and workmanship.

ISSUE: ➡ Whether or not petitioner WGCC is liable for defects in the granitite washout finish that occurred after the lapse of the one year defects liabilities period provided.

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HELD: • No. The autonomous nature of contracts is enunciated in Article 1306 of the Civil Code.

Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

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• The provision/stipulation in the construction contract providing for a defects liability period was not shown as contrary to law, morals, good customs, pubic order or public policy. • In characterizing the contract as having the force of law between the parties, the law stresses the obligatory nature of a binding and valid agreement. The courts will not relieve a party from the effects of unwise, unfavorable, and confused contract freely entered into.

• After the lapse of the period agreed upon therein, he may no longer &e held accountable for whatever defects, deficiencies or imperfections that may be discovered in the work executed by him.

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Sesbreño v. Court of Appeals G.R. No. 117438 June 8, 1995

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FACTS: • 52 employees signed a contigent fee contract whereby they agreed to pay their lawyer 50% of back salaries that may be awarded to them.

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ISSUE: ➡ Whether or not the stipulated amount is excessive or the contracts is unreasonable.

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HELD: • The courts find that the stipulated amount/contract is excessive, unreasonable, or unconscionable. • The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, public policy xxx. • The contracts is against the public policy because it demands that said contract be disregarded to protect the client from unreasonable exaction. • In such case, quantum merit (as much as he deserves), may be used in determining the lawyer’s professional fees. • Under the circumstances, a fee of 20% of back salaries was held as a fair settlement.

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Naawan Community Rural Bank, Inc v. Court of Appeals G.R. No. 128573 January 13, 2003

FACTS: • Guillermo Comayas offered to sell to private respondent-spouses Alfredo and Annabelle Lumo, a house and lot. • Private respondents made inquiries at the RD, they found out that the property was mortgaged for P8,000 to a certain Mrs. Galupo, the couple thus asked Conrado to pay the mortgage advancing money for such purpose. • Conrado executed a Deed of Absolute Sale in favor of the spouses Luna. And on June 9,1988, said Deed of Absolute Sale was registered in the register of deeds of the city and a new title was issued in the name of the couple. • However, it turns out that it was already previously sold to Naawan Community Rural Bank; it was then unregistered. • The Bank foreclosed on the property, purchased the same, and registered it under Act 3344. • The Bank sought to eject the spouses. However, the latter countered with an action for quieting of title.

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ISSUE: ➡ Whether or not the right of the Naawan Bank will bind the third person, Lumo spouses.

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HELD: • No. The Court upheld the right of a party who had registered the sale of land under the Property Registration Decree, as opposed to another who had registered a deed of final conveyance under Act 3344. • Lumo spouses has a better right/title to the land. • The registration of the sale to the respondent Lumo Spouses under the Torrens system was done in good faith, this sale must be upheld over the sale registered under Act 3344 to Petitioner Naawan RB. • “If the real right is not registered, third persons who acted in good faith are protected under the provisions of the Property Registration Decree.” if in bad faith (actual knowledge of the facts, not valid)

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Ace Foods, Inc v. Micro Pacific Technologies Co., Ltd G.R. No. 200602 December 11, 2013

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FACTS: • MTCL sent a letter-proposal for the delivery and sale of the subject products to be installed at various offices of ACE Foods. • ACE Foods accepted MTCL’s proposal and accordingly issued Purchase Order No. 10002310 (Purchase Order) for the subject products amounting to P646,464.00 (purchase price). • After delivery, the subject products were then installed and configured in ACE Foods’s premises. MTCL’s demands against ACE Foods to pay the purchase price • Instead of paying the purchase price, ACE Foods sent MTCL a Letter14 dated September 19, 2002, stating that it "ha[s] been returning the [subject products] to [MTCL] thru [its] sales representative Mr. Mark Anteola who has agreed to pull out the said [products] but had failed to do so up to now.” • ACE Foods likewise claimed that the subject products MTCL delivered are defective and not working.

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ISSUE: Whether or not ACE foods should pay MTCL the purchase price for the subject products.

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HELD: • Yes. a contract of sale is classified as a consensual contract, which means that the sale is perfected by mere consent. No particular form is required for its validity even if parties haven’t affixed their signatures to written form. • Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. • Parties agreed to a contract of sale. A contract of sale has been perfected at the precise moment ACE foods accepted the latter’s proposal to sell the subject products in consideration of the purchase price of P646,464.0 • Upon perfection of the contract, the parties may reciprocally demand performance, to deliver and to pay purchase price respectively. • Since such claims of ACE were not adequately proven in this case, the same cannot be sustained and ACE’s Foods obligation to pay the purchase price and to accept the delivery of goods remain enforceable and subsisting.

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Frias v. Esquivel G.R. No. L-24679 October 30, 1975 FACTS:

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Sanchez v. Rigos G.R. No. L-25494 June 14, 1972

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• Nicolas Sanchez and Severina Rigos executed an instrument entitled “Option toPurchase” wherein Mrs. Rigos agreed, promised and committed to sell to Mr. Sanchez a parcel of land for the amount of P1,510 within two years from the date of the instrument, with the understanding that the said option shall be deemed terminated and elapsed if Mr. Sanchez shall fail to exercise his right to buy the property within the stipulated period. • Several tenders of payment in the amount of P1510 were made by Sanchez within the said period but were rejected by Mrs. Rigos. • Defendant Rigos admitted some of the allegations of the complaint but also added as a special defense, that since the contract between the parties is a “unilateral promise to sell”, the same being unsupported by any valuable consideration by force of the CC is null and void.

ISSUE: ➡ Can an accepted unilateral promise to sell without consideration distinct from the price be withdrawn arbitrarily?

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HELD: • No. An accepted promise to sell is an offer to sell when accepted becomes a contract of sale. • Since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale. • This case abandoned the rule stated in Art. 1479 adhered in SouthwesternSugar & Molasses Co. vs. Atlantic Gulf and Pacific Co. that “if the option is not supported by a consideration which is distinct from the purchase price, offer may still be withdrawn even if the offeree has already accepted it. • The offeror can not exercise this right in an arbitrary or capricious manner. • Cost against Rigos, if acceptance is made before withdrawal of the offer, it constitutes a binding contract of sale although the option if given without consideration. • A bilateral reciprocal contract — to sell and to buy — was generated.

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Yason v. Arciaga G.R. No. 140517 January 28, 2005

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• Sometime in 1989, the children of respondent discovered the falsification and therefore files a complaint with the provincial prosecutor in Makati. However, the complaint was dismissed for lack of probable cause. • Undaunted, they again filed a complaint for annulment of 13 land titles. The RTC dismissed their complaint. • On appeal, 13 land titles were declared null and void being a forged document. The reason for this is that appellants claimed that the vendor was 82 years old, sick, bedridden when she affixed her thumb mark in the contract of sale.

ISSUE: ➡ Whether or not the sale is null and void because of her incapacity to give consent.

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HELD: • Yes. A person is not incapacitated to enter into a contract merely because of advanced years or by reason of physical infirmities impair his mental faculties to the extent that he is unable to properly, intelligently, and fairly understand the provision of the said contract. • Respondents failed to show a clear and convincing evidence that Claudia was deprived of radon to give consent.

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