January 2011 Philippine Supreme Court Decisions on Civil Law

Here are selected January 2011 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Common carriers; standard of diligence. Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or associations engaged in the business of carrying or transporting passenger or goods, or both by land, water or air for compensation, offering their services to the public. A common carrier is distinguished from a private carrier wherein the carriage is generally undertaken by special agreement and it does not hold itself out to carry goods for the general public.  The distinction is significant in the sense that the rights and obligations of the parties to a contract of private carriage are governed principally by their stipulations, not by the law on common carriers.

Loadmasters and Glodel, being both common carriers, are mandated from the nature of their business and for reasons of public policy, to observe the extraordinary diligence in the vigilance over the goods transported by them according to all the circumstances of such case, as required by Article 1733 of the Civil Code.  When the Court speaks of extraordinary diligence, it is that extreme measure of care and caution which persons of unusual prudence and circumspection observe for securing and preserving their own property or rights.  This exacting standard imposed on common carriers in a contract of carriage of goods is intended to tilt the scales in favor of the shipper who is at the mercy of the common carrier once the goods have been lodged for shipment. Thus, in case of loss of the goods, the common carrier is presumed to have been at fault or to have acted negligently. This presumption of fault or negligence, however, may be rebutted by proof that the common carrier has observed extraordinary diligence over the goods.

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August 2010 Philippine Supreme Court Decisions on Civil Law

Here are selected August 2010 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Contract; novation; requirements; novation cannot be presumed.  As a civil law concept, novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which terminates it, either by changing its objects or principal conditions, or by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor. Novation may be extinctive or modificatory.  It is extinctive when an old obligation is terminated by the creation of a new one that takes the place of the former; it is merely modificatory when the old obligation subsists to the extent that it remains compatible with the amendatory agreement. Novation may either be express, when the new obligation declares in unequivocal terms that the old obligation is extinguished, or implied, when the new obligation is on every point incompatible with the old one.  The test of incompatibility lies on whether the two obligations can stand together, each one with its own independent existence.

For novation, as a mode of extinguishing or modifying an obligation, to apply, the following requisites must concur:

1)      There must be a previous valid obligation.

2)      The parties concerned must agree to a new contract.

3)      The old contract must be extinguished.

4)       There must be a valid new contract.

Novatio non praesumitur, or novation is never presumed, is a well-settled principle. Consequently, that which arises from a purported modification in the terms and conditions of the obligation must be clear and express. On petitioners thus rests the onus of showing clearly and unequivocally that novation has indeed taken place.

It has often been said that the minds that agree to contract can agree to novate. And the agreement or consent to novate may well be inferred from the acts of a creditor, since volition may as well be expressed by deeds as by words. In the instant case, however, the acts of EPCIB before, simultaneously to, and after its acceptance of payments from petitioners argue against the idea of its having acceded or acquiesced to petitioners’ request for a change of the terms of payments of the secured loan. Far from it.  Thus, a novation through an alleged implied consent by EPCIB, as proffered and argued by petitioners, cannot be given imprimatur by the Court. St. James College of Parañaque; Jaime T. Torres, represented by his legal representative, James Kenley M. Torres; and Myrna M. Torres vs. Equitable PCI Bank, G.R. No. 179441, August 9, 2010.

Contracts; rescission. Under Article 1191 of the Civil Code, the aggrieved party has a choice between specific performance and rescission with damages in either case.  However, we have ruled that if specific performance becomes impractical or impossible, the court may order rescission with damages to the injured party.  After the lapse of more than 30 years, it is now impossible to implement the loan agreement as it was written, considering the absence of evidence as to the rising costs of construction, as well as the obvious changes in market conditions on the viability of the operations of the hotel.    We deem it equitable and practicable to rescind the obligation of DBP to deliver the balance of the loan proceeds to Maceda.  In exchange, we order DBP to pay Maceda the value of  Maceda’s cash equity of  P6,153,398.05 by way of actual damages, plus the applicable interest rate.  The present ruling comes within the purview of Maceda’s and DBP’s prayers for “other reliefs, just or equitable under the premises.” Bonifacio Sanz Maceda, Jr. vs. DBO / DBP Vs. Bonifacio Sanz Maceda, Jr., G.R. No. 174979 & G.R. No. 175010, August 11, 2010.

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April 2010 Philippine Supreme Court Decisions on Civil Law

Here are selected April 2010 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Agency; sale of land by an unauthorized agent. Respondent sold land owned by her daughter without any written authority. Article 1874 of the Civil Code explicitly requires a written authority before an agent can sell an immovable property. Based on a review of the records, there is absolutely no proof of respondent’s written authority to sell the lot to petitioners. In fact, during the pre-trial conference, petitioners admitted that at the time of the negotiation for the sale of the lot, petitioners were of the belief that respondent was the owner of lot. Consequently, the sale of the lot by respondent who did not have a written authority from the real owner is void. A void contract produces no effect either against or in favor of anyone and cannot be ratified.  Sps. Joselina Alcantara and Antonio Alcantara, et al. vs. Brigida L. Nido, as attorney-in-fact of Revelen Srivastava, G.R. No. 165133, April 19, 2010.

Contracts; breach of; rebus sic stantibus. See Daniel T. So vs. Food Fest Land, Inc./Food Fest Land, Inc. vs. Daniel T. SoG.R. Nos. 183628 & 183670, April 7, 2010, below.

Contracts; void and voidable; prescription. See Manuel O. Fuentes, et al. vs. Conrado G. Roca, et al., G.R. No. 178902, April 21, 2010, below.

Damages; actual damages; unrealized profits. Food Fest leased property from So. Food Fest sought to pre-terminate the lease. So sued Food Fest for ejection, payment of arrears and damages. On the matter of damages, So claims that Food Fest did not exercise care in removing the installations and fixtures, thereby causing destruction to the premises to thus entitle him to damages, as well as to damages corresponding to unrealized profits (lucrum cessans) to answer for the period during which the unit was not rented out.

Unrealized profits fall under the category of actual or compensatory damages. If there exists a basis for a reasonable expectation that profits would have continued to be generated had there been no breach of contract, indemnification for damages based on such expected profits is proper.  This is, however, subject to the rule that a party is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Other than the photographs evincing damage to the premises, no evidence was proffered to show So’s entitlement to unrealized profits. That the leased unit was not subsequently leased is not solely attributable to Food Fest. As borne by the records, no renovation was undertaken by So for almost three years following Food Fest’s vacation of the premises in 2001. The quotations issued by construction companies for purposes of renovation were issued only in 2004. However, So may seek damages pursuant to the contract.

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March 2010 Philippine Supreme Court Decisions on Civil Law

Here are selected March 2010 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Conjugal partnership; effects of legal separation; forfeiture of share in profits. Among the effects of the decree of legal separation is that the conjugal partnership is dissolved and liquidated and the offending spouse would have no right to any share of the net profits earned by the conjugal partnership. Thus it is only the offending spouse’s share in the net profits, and not the share in the property, which is forfeited. Article 102(4) of the Family Code provides that “[f]or purposes of computing the net profits subject to forfeiture in accordance with Article 43, No. (2) and 63, No. (2), the said profits shall be the increase in value between the market value of the community property at the time of the celebration of the marriage and the market value at the time of its dissolution.” Mario Siochi vs. Alfredo Gozon, et al./Inter-Dimensional Realty, Inc. Vs. Mario Siochi, et al., G.R. No. 169900/G.R. No. 169977, March 18, 2010

Conjugal partnership; presumption of conjugal nature; need for marital consent. The Civil Code of the Philippines, the law in force at the time of the celebration of the marriage between Martha and Manuel in 1957, provides all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife. This includes property which is acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses. The court is not persuaded by Titan’s arguments that the property was Martha’s exclusive property because Manuel failed to present before the RTC any proof of his income in 1970, hence he could not have had the financial capacity to contribute to the purchase of the property in 1970; and that Manuel admitted that it was Martha who concluded the original purchase of the property.  In consonance with its ruling in Spouses Castro v. Miat, Manuel was not required to prove that the property was acquired with funds of the partnership. Rather, the presumption applies even when the manner in which the property was acquired does not appear.  Here, we find that Titan failed to overturn the presumption that the property, purchased during the spouses’ marriage, was part of the conjugal partnership. Since the property was undoubtedly part of the conjugal partnership, the sale to Titan required the consent of both spouses.  Article 165 of the Civil Code expressly provides that “the husband is the administrator of the conjugal partnership”.  Likewise, Article 172 of the Civil Code ordains that “(t)he wife cannot bind the conjugal partnership without the husband’s consent, except in cases provided by law”. Titan Construction Corporation Vs. Manuel A. David, Sr. and Martha S. David, G.R. No. 169548, March 15, 2010.

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February 2010 Philippine Supreme Court Decisions on Civil Law

Here are selected February 2010 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Agency; principle of apparent authority; agency relationship between hospital and doctors who practice in its premises. This Court holds that PSI (the owner of the hospital) is liable to the Aganas, not under the principle of respondeat superior for lack of evidence of an employment relationship with a Dr. Ampil (who had left two pieces of gauze in the body of a patient he had operated on) but under the principle of ostensible agency for the negligence of Dr. Ampil and, pro hac vice, under the principle of corporate negligence for its failure to perform its duties as a hospital.

While in theory a hospital as a juridical entity cannot practice medicine, in reality it utilizes doctors, surgeons and medical practitioners in the conduct of its business of facilitating medical and surgical treatment. Within that reality, three legal relationships crisscross: (1) between the hospital and the doctor practicing within its premises; (2) between the hospital and the patient being treated or examined within its premises and (3) between the patient and the doctor. The exact nature of each relationship determines the basis and extent of the liability of the hospital for the negligence of the doctor.

Where an employment relationship exists, the hospital may be held vicariously liable under Article 2176 in relation to Article 2180 of the Civil Code or the principle of respondeat superior. Even when no employment relationship exists but it is shown that the hospital holds out to the patient that the doctor is its agent, the hospital may still be vicariously liable under Article 2176 in relation to Article 1431 and Article 1869 of the Civil Code or the principle of apparent authority. Moreover, regardless of its relationship with the doctor, the hospital may be held directly liable to the patient for its own negligence or failure to follow established standard of conduct to which it should conform as a corporation.

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October 2009 Philippine Supreme Court Decisions on Civil Law

Here are selected October 2009 Philippine Supreme Court decisions on civil law and related laws:

Civil Code

Contract; binding effect. Article 1311 of the New Civil Code states that, “contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law.” In this case, the rights and obligations between petitioner and Alfonso are transmissible. There was no mention of a contractual stipulation or provision of law that makes the rights and obligations under the original sales contract for Lot 3, Block 4, Phase IIintransmissible . Hence, Alfonso can transfer her ownership over the said lot to respondents and petitioner is bound to honor its corresponding obligations to the transferee or new lot owner in its subdivision project.

Having transferred all rights and obligations over Lot 3, Block 4, Phase II to respondents, Alfonso could no longer be considered as an indispensable party. An indispensable party is one who has such an interest in the controversy or subject matter that a final adjudication cannot be made in his absence, without injuring or affecting that interest. Contrary to petitioner’s claim, Alfonso no longer has an interest on the subject matter or the present controversy, having already sold her rights and interests on Lot 3, Block 4, Phase II to herein respondents.   Sta. Lucia Realty & Development, Inc. vs. Spouses Francisco & Emelia Buenaventura, as represented by Ricardo Segismundo, G.R. No. 177113, October 2, 2009.

Contract; compromise agreement. A compromise agreement is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. It contemplates mutual concessions and mutual gains to avoid the expenses of litigation; or when litigation has already begun, to end it because of the uncertainty of the result.

The validity of a compromise agreement is dependent upon its fulfillment of the requisites and principles of contracts dictated by law; and its terms and conditions must not be contrary to law, morals, good customs, public policy and public order. Gov. Antonio P. Calingin vs. Civil Service Commission and Grace L. Anayron, G.R. No. 183322, October 30, 2009.

Contract;  contract to sell. The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised.

In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed,i.e., full payment of the purchase price. A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of asuspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. Delfin Tan vs. Erlinda C. Benolirao, Andrew C. Benolirao, Romano C. Benolirao, Dion C. Benolirao, Sps. Reynaldo Taningco and Norma D. Benolirao, Evelyn T. Monreal and Ann Karina Taningco, G.R. No. 153820, October 16, 2009.

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June 2009 Philippine Supreme Court Decisions on Civil Law

Here are selected June 2009 Philippine Supreme Court decisions on civil and related laws:

Contract; novation. Article 1292 of the Civil Code provides that “[i]n order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other.” Novation is never presumed. Parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one. In the absence of an express agreement, novation takes place only when the old and the new obligations are incompatible on every point. The test of incompatibility is whether or not the two obligations can stand together, each one having its independent existence. If they cannot, they are incompatible and the latter obligation novates the first.

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