Doctrine: it is important to note that according to the autonomy characteristic of contracts, 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.[
FACTS: In 2000, Industrial Personnel and Management Services, Inc. (IPAMS) began recruiting
registered nurses for work deployment in the United States of America (U.S.). It takes eighteen
(18) to twenty four (24) months for the entire immigration process to complete. As the process
requires huge amounts of money, such amounts are advanced [to] the nurse applicants. By
reason of the advances made to the nurse applicants, the latter were required to post surety bond.
The purpose of the bond is to guarantee the following during its validity period: (a) that they will
comply with the entire immigration process, (b) that they will complete the documents required,
and (c) that they will pass all the qualifying examinations for the issuance of immigration visa. The
Country Bankers Insurance Corporation (Country Bankers for brevity) and IPAMS agreed to
provide bonds for the said nurses. [Under the agreement of IPAMS and Country Bankers, the
latter will provide surety bonds and the premiums therefor were paid by IPAMS on behalf of the
nurse applicants. A Memorandum of Agreement (MOA) was executed by the said parties on
February 1, 2002 [which stipulated the various requirements for collecting claims from Country
Bankers. F. 1st demand letter requiring his/her to submit complete documents. G. 2nd Demand
letter (follow up of above). H. Affidavit stating reason of any violation to be executed by
responsible office of Recruitment Agency; I. Statement of Account (detailed expenses). J.
Transmittal Claim Letter. IPAMS submitted its claims under the surety bonds issued by Country
Bankers. For its part, Country Bankers, upon receipt of the documents enumerated under the
MOA, paid the claims to IPAMS. However, the counsel of Country Bankers, Atty. Marisol Caleja,
started to oppose the payment of claims and insisted on the production of official receipts of
IPAMS on the expenses it incurred for the application of nurses. IPAMS opposed this, saying that
the Country Bankers' insistence on the production of official receipts was contrary to, and not
contemplated in, the MOA and was an impossible condition considering that the U.S. authorities
did not issue official receipts. In lieu of official receipts, IPAMS submitted statements of accounts,
as provided in the MOA.
ISSUE: Can the parties stipulate on the requirements that must be presented in order to claim
against a surety bond?
RULING: YES, pursuant to the autonomy characteristic of contracts, they can. In an insurance
contract, founded on the autonomy of contracts, the parties are generally not prevented from
imposing the terms and conditions that determine the contract's obligatory force. Hence, it is
crystal clear that the petitioner IPAMS and respondent Country Bankers, by express stipulation,
agreed that in order for the former to have a valid claim under the surety bond, the only
requirements that need to be submitted are the two demand letters, an Affidavit stating reason of
any violation to be executed by responsible officer of the Recruitment Agency, a Statement of
Account detailing the expenses incurred, and the Transmittal Claim Letter. Evidently, the parties
did not include as preconditions for the payment of claims the submission of official
receipts or any other more direct or concrete piece of evidence to substantiate the
expenditures of petitioner IPAMS.
FACTS: In 2007 and 2008, the Philippine Tourism Authority (PTA) entered into five Memoranda of
Agreement (MOA) with respondent Global-V Builders Co. (Global-V). On July 31, 2012, Global-V filed a
Request for Arbitration and a Complaint before the CIAC, seeking payment from the Tourism Infrastructure
and Enterprise Zone Authority (TIEZA), the office took over the functions of PTA, of unpaid bills in
connection with the five projects, as well as payment of interest, moral and exemplary damages, and
attorney's fees. On August 30, 2012, TIEZA filed a Refusal of Arbitration (Motion to Dismiss for Lack of
Jurisdiction), instead of filing an Answer. TIEZA argued that CIAC has no jurisdiction over the case filed by
Global-V because the Complaint does not allege an agreement to arbitrate and the contracts do not contain
an arbitration agreement in accordance with Sections 2.3 and 2.3.1 of the CIAC. TIEZA filed its Rebuttal to
Comment/Opposition, arguing that an arbitration clause is a condition sine qua non before CIAC can acquire
jurisdiction over the subject matter, as provided for in the CIAC Rules.
ISSUE: Whether or not there must be an arbitration clause embodied in the contract in order for the CIAC to
acquire jurisdiction
RULING: No. The jurisdiction of courts and quasi-judicial bodies is determined by the Constitution and the
law. Section 4 of E.O. No. 1008 provides that the CIAC shall have original and exclusive jurisdiction over
disputes arising from, or connected with, construction contracts, which may involve government or private
contracts, provided that the parties to a dispute agree to submit the dispute to voluntary arbitration.
In LICOMCEN, Inc. v. Foundation Specialists, Inc., The Court held that the text of Section 4 of E.O. No. 1008
is broad enough to cover any dispute arising from, or connected with, construction contracts, whether these
involve mere contractual money claims or execution of the works. What is only excluded from the coverage
of E.O. No. 1008 are disputes arising from employer-employee relationships, which shall continue to be
covered by the Labor Code of the Philippines.
DOCTRINE: “obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith." If the terms of a contract are clear and leave no doubt as to the
intention of the contracting parties, the literal meaning of its stipulations shall control.
FACTS: On December 9, 1998, petitioner Goldstar Rivermount, Inc. (Goldstar) borrowed P55,000,000 from
respondent Advent Capital and Finance Corp. (Advent), formerly All Asia Capital and Trust Corp. The loan
was payable in seven years, and it was secured by a real estate mortgage over Goldstar's property, Goldstar
failed to pay its amortizations, which prompted it to offer its mortgaged properties as payment for the loan
that had ballooned to P66,012,292.85. On May 26, 2000, Goldstar and Advent signed a Dation in Payment
as settlement for the loan. They also executed a Memorandum of Agreement, wherein Goldstar was given
the right to redeem the properties within one year, and may continue to occupy and lease it. Later on,
Goldstar learned that Advent had pnwiously assigned its receivables from the loan to the Development
Bank of the Philippines (DBP) on November 24, 1998. Goldstar alleged that Advent was no longer its
creditor when they agreed to a Dation in Payment on May 26, 2000, thus, making the contract void. It is
Goldstar's position that since Advent had assigned its rights to DBP prior to the Dation in Payment, their
contract is a nullity. It is Goldstar's position that since Advent had assigned its rights to DBP prior to the
Dation in Payment, their contract is a nullity.
ISSUE: WHETHER OR NOT THE PETITIONER IS ESTOPPED FROM ASSAILING THE VALIDITY OF THE DACION
IN PAYMENT
RULING: YES. the transfer of rights or credits from Advent to DBP was conditioned on Advent's default in
payment. The CA based its Decision on Sections 8 and 12 of the Deed of Assignment, which clearly
indicate that Advent has the right to administer and enforce the loan, and unless it is in default in its
payment to DBP, only then can DBP substitute Advent as a creditor of Investment Enterprises. ection 10
of the Deed of Assignment gives Advent the authority to act in behalf of DBP in case the Project Loans are
declared due and demandable. Advent has the power to enter into a contract with Investment
Enterprises, such as Goldstar, to secure payment of an outstanding obligation, and to do acts to protect
not just its interest as creditor, but also of DBP as assignee.
In sum, both Sections 9 and 10 of the Deed of Assignment are proof that Advent may validly enter in a
Dation in Payment with Goldstar. Sections 9 and 10 validate the Dacion in Payment and the
Memorandum signed by Goldstar and Advent, as they settle a due and demandable loan and, at the same
time, secure Advent's loan to DBP.
Article 1159 of the New Civil Code states that “obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith." If the terms of a contract are
clear and leave no doubt as to the intention of the contracting parties, the literal meaning of its
stipulations shall control.28 In its Decision, the CA simply enforced what was stated in the terms and
conditions of the Deed of Assignment. Having established its basis in law and evidence on record, we see
no error in the CA's Decision.
G.R. No. 228087, January 24, 2018
H. VILLARICA PAWNSHOP, INC., HL VILLARICA PAWNSHOP, INC., HRV VILLARICA PAWNSHOP,
INC. AND VILLARICA PAWNSHOP, INC., Petitioners, v. SOCIAL SECURITY COMMISSION, SOCIAL
SECURITY SYSTEM, AMADOR M. MONTEIRO, SANTIAGO DIONISIO R. AGDEPPA, MA. LUZ N.
BARROS-MAGSINO, MILAGROS N. CASUGA AND JOCELYN Q. GARCIA, Respondents.
Condonation statutes—being an act of liberality on the part of the State—are strictly
construed against the applicants unless the laws themselves clearly state a contrary
rule of interpretation.
FACTS: Petitioners are private corporations engaged in the pawnshop business and
are compulsorily registered with the Social Security System (SSS) under Republic
Act (R.A.) No. 8282, otherwise known as the Social Security Law of 1997. In 2009,
petitioners paid their delinquent contributions and accrued penalties with the
different branches of the SSS. Congress enacted R.A. No. 9903, otherwise known
as the Social Security Condonation Law of 2009, which took effect on February 1,
2010. The said law offered delinquent employers the opportunity to settle, without
penalty, their accountabilities or overdue contributions within six (6) months from
the date of its effectivity, petitioners claimed that the benefits of the condonation
program extend to all employers who have settled their arrears or unpaid
contributions even prior to the effectivity of the law. the SSS - San Francisco Del
Monte Branch denied petitioner Villarica Pawnshop, Inc.'s request for refund stating
that there was no provision under R.A. No. 9903 allowing reimbursement of
penalties paid before its effectivity. The SSS avers that the payments made by
petitioners before the effectivity of R.A. No. 9903 are valid payments which cannot
be the subject of reimbursement; that petitioners are no longer considered
delinquent employers when R.A. No. 9903 took effect.
ISSUE: Whether or not the Petitioner can reimburse their payment of delinquency
prior to the effectivity of RA 9903
RULING: NO. Condonation statutes—being an act of liberality on the part of the
State—are strictly construed against the applicants unless the laws themselves
clearly state a contrary rule of interpretation.
Statutes are generally applied prospectively unless they expressly allow a
retroactive application. It is a basic principle that laws should only be applied
prospectively unless the legislative intent to give them retroactive effect is
expressly declared or is necessarily implied from the language used. Here, R.A. No.
9903 does not provide that, prior to its effectivity, penalties already paid are
deemed condoned or waived. It is absurd to revive obligations that have already
been extinguished by payment or performance just to be re-extinguished by
condonation or remission so that it may create a resulting obligation on the basis
of solutio indebiti.
G.R. No. 195999, June 20, 2018
LILY S. VILLAMIL, SUBSTITUTED BY HER HEIRS RUDY E. VILLAMIL,
SOLOMON E. VILLAMIL, TEDDY E. VILLAMIL, JR., DEBORAH E. VILLAMIL,
FLORENCE E. VILLAMIL, GENEVIEVE E. VILLAMIL, AND MARC ANTHONY E.
VILLAMIL, Petitioner, v. SPOUSES JUANITO ERGUIZA AND MILA
ERGUIZA, Respondents.
A contract to sell is defined as a bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the subject property despite delivery
thereof to the prospective buyer, binds himself to sell the said property exclusively
to the latter upon his fulfillment of the conditions agreed upon.
FACTS: On 20 September 1972, plaintiff together with her deceased sister,
Corazon Villamil, and deceased brother, Teddy Villamil, entered into an agreement
with Juanito Erguiza for the purpose of selling the above-described property to the
latter subject to the condition that plaintiff and her siblings would file a petition to
secure authorization for minor children from the proper courts. Likewise, that in
case of failure of the plaintiff and her siblings to obtain said authority, the partial
payment made by the defendant Juanito Erguiza shall be applied as rent for twenty
(20) years of the premises, During the course of time, a Deed of Sale executed by
Efren Villamil and Teddy Villamil in favor of the plaintiff. Plaintiff has been paying
religiously the real estate taxes due on said property, after the lapse of twenty (20)
years and the expiration of the twenty (20) years lease, plaintiff demanded from
the defendants to return possession of the property but the latter failed and
refused.
ISSUE: Whether the Contract entered into by parties is a contract of sale or
contract to sell
RULING: It is a Contract to sell. A contract to sell is defined as a bilateral contract
whereby the prospective seller, while expressly reserving the ownership of the
subject property despite delivery thereof to the prospective buyer, binds himself to
sell the said property exclusively to the latter upon his fulfillment of the conditions
agreed upon. Under this definition, a Contract to Sell may not be considered as a
Contract of Sale because the first essential element is lacking. In a contract to sell,
the prospective seller explicity reserves the transfer of title to the prospective
buyer, meaning, the prospective seller does not as yet agree or consent to transfer
ownership of the property subject of the contract to sell until the happening of an
event, which for present purposes we shall take as the full payment of the purchase
price, Hence, We hold that the contract between the petitioner and the respondent
was a contract to sell where the ownership or title is retained by the seller and is
not to pass until the full payment of the price, such payment being a positive
suspensive condition and failure of which is not a breach, casual or serious, but
simply an event that prevented the obligation of the vendor to convey title from
acquiring binding force.
G.R. No. 208336, November 21, 2018
VILLA CRISTA MONTE REALTY & DEVELOPMENT CORPORATION, Petitioner, v. EQUITABLE PCI
BANK (NOW KNOWN AS BANCO DE ORO UNIBANK, INC.), AND THE EX-OFFICIO SHERIFF OF
QUEZON CITY AND/OR HIS DEPUTY OR AUTHORIZED REPRESENTATIVES, Respondents.
An escalation clause without a concomitant de-escalation clause is void and ineffectual for violating
Presidential Decree No. 1684, otherwise known as Amending Further Act No. 2655, As Amended, Otherwise
Known as "The Usury Law," as well as the principle of mutuality of contracts unless the established facts and
circumstances, as well as the admissions of the parties, indicate that the lender at times lowered the
interest rates, or, at least, allowed the borrower the discretion to continue with the repriced rates.
FACTS: Plaintiff-appellant Villa Crista Monte Realty Corporation was organized to engage in the business of
real estate development. In order to fully develop its subdivision project, appellant applied for and was
granted a credit line of P80 Million by then Equitable Philippine Commercial International Bank (E-PCIB),
now Banco De Oro. By way of security appellant executed a Real Estate Mortgage over the 80,000 square
meters of its properties, Appellant reneged on paying its loan obligations amounting to P129,700,00.00,
prompting E-PCIB to initiate foreclosure proceedings on the mortgaged properties. This led to appellant's
filing of the Supplemental Complaint with the RTC Quezon City assailing E-PCIB unilaterally made and
imposed the increases in interest rates on appellant's loan without them being discussed and negotiated
with, much less agreed upon by, appellant and, thus, invalid.
ISSUE: Whether the Escalation Clause indicated in the Promissory Note is valid
RULING: