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The three cases discuss various principles related to obligations and contracts under Philippine law: 1) Pelayo vs. Lauron establishes that the obligation to pay medical expenses for childbirth falls on the husband, not the parents-in-law, unless there was an express contract otherwise. 2) De la Cruz vs. Northern Theatrical Ent. finds that an employee cannot recover expenses from their employer resulting from acts of third parties while on duty, as no agency relationship existed. 3) NGEI Multi-Purpose Cooperative Inc. vs. Filipinas Palmoil Plantation Inc. upholds the validity and binding nature of a lease contract addendum freely entered into by the parties.

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161 views

Case Cheat Code

The three cases discuss various principles related to obligations and contracts under Philippine law: 1) Pelayo vs. Lauron establishes that the obligation to pay medical expenses for childbirth falls on the husband, not the parents-in-law, unless there was an express contract otherwise. 2) De la Cruz vs. Northern Theatrical Ent. finds that an employee cannot recover expenses from their employer resulting from acts of third parties while on duty, as no agency relationship existed. 3) NGEI Multi-Purpose Cooperative Inc. vs. Filipinas Palmoil Plantation Inc. upholds the validity and binding nature of a lease contract addendum freely entered into by the parties.

Uploaded by

Justin Tayaban
Copyright
© © All Rights Reserved
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Download as DOCX, PDF, TXT or read online on Scribd
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Article 1156 & 1157; Obligations defined

Makati Stock Exchange vs. Campos


G.R. No. 138814, 16 April 2009
Facts:
Issues:
Ruling:

Article 1158; Obligations derived from law are not presumed


Pelayo vs. Lauron (1909)
12 Phil. 453
Facts: Pelayo, herein petitioner, was a doctor who filed a complaint on November 1906, stating that
herein defendant Marcelo Lauron and Juana Abella requested medical assistance from him for their
daughter-in-law who was about to give birth. By consultation, it was agreed upon to remove the fetus as
well as the afterbirth through operation. He estimated his services cost around P500 which the
defendants refuse to pay.
Defendants on the other hand denied everything and alleged as a special defense that the daughter’s
-in-law died because of the childbirth, that said daughter-in-law was living apart from them together with
her husband, and that her stay in their house on the day of childbirth was merely accidental.
The lower court held for the defendants on account of lack of sufficient evidence to establish a right of
action. Hence, this case before the SC.

Issues: Whether or not the defendants are held liable for the obligation?
Ruling: First, the court cited the general law on obligations under Article 1158 stating that “Obligations
arising from law are not presumed.Only those expressly determined in this Code or in special laws are
demandable.
By the express provision of law, the rendering of medical assistance, in case of illness is one of the
mutual obligations of the spouses who are bound by way of mutual support. In this case therefore, if the
dead daughter-in-law could not pay for her childbirth expenses, then the burden will fall on the husband.
The party bound to furnish support is therfore liable for all expenses, including the fees of the medical
expert for his professional services.
It is only the husband, and not his parents who are bound to give support. The fact that it wasn’t the
husband who asked for help from Mr Pelayo is of no moment. Since there was no contract agreed upon
that the defendants will pay for the expenses, then they were not liable. Within the meaning of the law,
the father and mother-in-law are strangers with respect to the obligation that falls upon the husband to
give support.

De la Cruz vs. Northern Theatrical Ent.


95 Phil. 739
Facts: 1941, The Northern Theatrical Enterprises Inc., a domestic corporation operated a movie house
in Laoag, Ilocos Norte. Domingo De La Cruz was employed whose duties were to guard the main
entrance, to maintain peace and order and to report the commission of disorders within premises. He
carried a revolver.
Benjamin Martin wanted to crash the gate or entrance of the movie house. Infuriated by the refusal of
De la Cruz to let him in without first providing himself with a ticket, Martin attacked him with a bolo.
De la Cruz defendant himself as best he could until he was cornered, at which moment to save
himself he shot Martin, resulting in Benjamin Martin’s death. De la Cruz was charged with homicide.
After a reinvestigation conducted by the Provincial Fiscal the latter filed a motion to dismiss the
complaint, which was granted by the court. De la Cruz was again accused of the same crime of
homicide. After trial, he was finally acquitted of the charge.
He then demanded from former employer to repay the expenses but was refused thus filed present
action against the Northern Theatrical Enterprises Inc company and to three members of its Board of
Directors to recover amounts he had paid his lawyers including moral damages said to have been
suffered due to his worry, neglect of his interests and his family as well in the supervision of the
cultivation of his land, a total of P 15,000.
Court of First Instance of Ilocos Norte rejected the theory of De la Cruz because he was an agent of
Northern Theatrical Enterprises Inc. and that as such agent he was entitled to compensate the expenses
incurred by him in connection with the agency. The court found and decided that De La Cruz had no
cause of action and dismissed the complaint without costs.

Issues: Whether or not an agent who’s in the line of duty performs an act that resulted in his incurring
expenses caused by a stranger. May the latter recover the said expenses against his former employer

Ruling: No, because the relationship between the Northern Theatrical Enterprises Inc. and plaintiff was
not that of principal and agent because the principle of representation as a characteristic of agency was
in no way involved. Plaintiff was not employed to represent corporation in its dealings with third parties.
Plaintiff is a mere employee hired to perform a certain specific duty or task, that of acting as a special
guard and staying at the main entrance of the movie house to stop gate crashers and to maintain peace
and order within the premises

Article 1159; Contract is the law between the parties


NGEI Multi-Purpose Cooperative Inc. vs. Filipinas Palmoil Plantation Inc.
684 SCRA 152
Facts: On December 2, 1988, the petitioner NGEI Multi-Purpose Cooperative Inc. (NGEI Coop), a duly
registered agrarian reform workers’ cooperative, was awarded by the Department of Agrarian Reform
(DAR) 3,996.6940 hectares of agricultural land for palm oil plantations located in Rosario and San
Francisco, Agusan del Sur.
-Under the lease agreement, FPPI (as lessee) shall pay NGEI Coop (as lessor) a yearly fixed rental of
₱635.00 per hectare plus a variable component equivalent to 1% of net sales from 1988 to 1996, and ½
% from 1997 to 2007.
-Lease contract extend for another 25 years signed by NGEI and pres, FFPPL dennis villareal
-Petitioner nullification of lease contract annual rental and economic benefits were unjust and onerous
violate DAR A.O in minimum rental not less than yearly amortization and taxes to them and entered by
Daday without authority ultra vires act.
-Regional Adjudicator In favor of the petitioner
-Reversed in favor of respondents prescription and lack of cause of action
-Went to CA
-On May 9, 2008, the CA rendered the assailed decision upholding the validity and binding effect of the
Addendum as it was freely and voluntarily executed between the parties, devoid of any vices of consent.
The CA sustained its validity on the basis of the civil law principle of mutuality of contracts that the
parties were bound by the terms and conditions unequivocally expressed in the addendum which was
the law between them

Issues: WoN CA grave abuse of discretion in not declaring the addendum or lease contract null and void
contrary to law morals customs and public policy

Ruling: It is, thus, beyond the Court’s jurisdiction to review the factual findings of the Regional
Adjudicator, the DARAB and the CA as regards the validity and the binding effect of the Addendum
-Considering that the findings of the Regional Adjudicator and the DARAB are uniform in all material
respects, these findings should not be disturbed. More so in this case where such findings were
sustained by the CA for being supported by substantial evidence and in accord with law and
jurisprudence.
-The Court understands the predicament of these farmer-beneficiaries of NGEI Coop. Under the
prevailing circumstances, however, it cannot save them from the consequences of the binding lease
agreement, the Addendum. The petitioners, having freely and willingly entered into the Addendum with
FPPI, cannot and should not now be permitted to renege on their compliance under it, based on the
supposition that its terms are unconscionable. The contract must bind both contracting parties; its
validity or compliance cannot be left to the will of one of them.19 It is basic that a contract is the law
between the parties. Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith. Unless the stipulations in a contract are contrary to
law, morals, good customs, public order or public policy, the same are binding as between the parties
-Consequently, petitioners cannot unilaterally change the tenor of the terms and conditions of the
Addendum or cancel it altogether after having gone through the solemnities and formalities for its
perfection. In fact, the Addendum had been consummated upon performance by the parties of the
prestations and after they had already reaped the mutual benefits arising from the contract. Mutuality is
one of the characteristics of a contract, and its validity or performance or compliance cannot be left to
the will of only one of the parties. It is a long established doctrine that the law does not relieve a party
from the effects of an unwise, foolish, or disastrous contract, entered into with all the required formalities
and with full awareness of what he was doing
-It must be stressed that the Addendum was found to be a valid and binding contract. The petitioners
failed to show that the Addendum’s stipulated rental rates and economic benefits violated any law or
public policy. The Addendum should, therefore, be given full force and effect, without prejudice to a
renegotiation of the terms of the leasehold agreement in accordance with the provisions of
Administrative Order No. 5, Series of 1997, governing their Addendum, as regards the contracting
procedures and fixing of lease rental in lands planted to palm oil trees

MBTC vs. Rosales


713 SCRA 75
Facts: Petitioner Metrobank is a domestic banking corporation duly organized and existing under the
laws of the Philippines. Respondent Rosales is the owner of a travel agency while Yo Yuk To is her
mother.
     In 2000, respondents opened a Joint Peso Account10 with petitioner’s Pritil-Tondo Branch.
     In May 2002, respondent Rosales accompanied her client Liu Chiu Fang, a Taiwanese National
applying for a retiree’s visa from the Philippine Leisure and Retirement Authority (PLRA), to petitioner’s
branch in Escolta to open a savings account. Since Liu Chiu Fang could speak only in Mandarin,
respondent Rosales acted as an interpreter for her.
     On March 3, 2003, respondents opened with petitioner’s Pritil-Tondo Branch a Joint Dollar Account
with an initial deposit of US$14,000.00.
    On July 31, 2003, petitioner issued a “Hold Out” order against respondents’ accounts.
    On September 3, 2003, petitioner, through its Special Audit Department Head Antonio Ivan Aguirre,
filed before the Office of the Prosecutor of Manila a criminal case for Estafa through False Pretences,
Misrepresentation, Deceit, and Use of Falsified Documents.
                Respondent Rosales, however, denied taking part in the fraudulent and unauthorized
withdrawal from the dollar account of Liu Chiu Fang.
                On December 15, 2003, the Office of the City Prosecutor of Manila issued a Resolution
dismissing the criminal case for lack of probable cause. On September 10, 2004, respondents filed
before the RTC of Manila a complaint for Breach of Obligation and Contract with Damages.

Issues: Whether Metrobank breached its contract with respondents.

Ruling: YES. The Court held that Metrobank’s reliance on the “Hold Out” clause in the Application and
Agreement for Deposit Account is misplaced.
                Bank deposits, which are in the nature of a simple loan or mutuum, must be paid upon
demand by the depositor.
                The “Hold Out” clause applies only if there is a valid and existing obligation arising from any of
the sources of obligation enumerated in Article 1157 of the Civil Code, to wit: law, contracts, quasi-
contracts, delict, and quasi-delict. In this case, petitioner failed to show that respondents have an
obligation to it under any law, contract, quasi-contract, delict, or quasi-delict. And although a criminal
case was filed by petitioner against respondent Rosales, this is not enough reason for petitioner to issue
a “Hold Out” order as the case is still pending and no final judgment of conviction has been rendered
against respondent Rosales.
                In fact, it is significant to note that at the time petitioner issued the “Hold Out” order, the
criminal complaint had not yet been filed. Thus, considering that respondent Rosales is not liable under
any of the five sources of obligation, there was no legal basis for petitioner to issue the “Hold Out” order.
Accordingly, we agree with the findings of the RTC and the CA that the “Hold Out” clause does not apply
in the instant case.
                In view of the foregoing, the Court found that petitioner is guilty of breach of contract when it
unjustifiably refused to release respondents’ deposit despite demand. Having breached its contract with
respondents, petitioner is liable for damages.

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