FRIAS-PANUNCIO, JONAH S.

JD-1 22-00037-L

1. Makati Stock Exchange, Inc. v. Campos, G.R. No. 138814, 16 April 2009

FACTS: Respondent Miguel V. Campos initially instituted against herein petitioner,

Makati Stock Exchange (MKSE), to the Securities and Exchange Commission
(SEC), a Petition to:

1.) Nullify the Resolution of MKSE which allegedly deprived him of his right to
participate equally in the allocation of Initial Public Offerings (IPO) of
corporations registered in MKSE;
2.) Delivery of the IPO shares he was allegedly deprived of; and
3.) Payment of Php2,000,000.00 as moral damages, Php1,000,000.00 as
exemplary damages and Php500,000.00 as attorney’s fees.

The case reached the Court of Appeals as it rendered a decision against MKSE.
MKSE filed a Motion for Reconsideration but was denied by the Court of
Appeals, hence, herein Petition for Review was filed.

MKSE contended that Campos failed to state a cause of action namely: (1) the
legal right of the plaintiff, (2) the correlative obligation of the defendant, and (3)
the act or omission of the defendant in violation of said legal right.

ISSUE: Whether or not Campos, as substituted by his wife Julia Campos, has legal right to
demand that he should subscribe to the IPOs of corporations listed in MKSE.

RULING: No. Campos cannot compel the MKSE to allow him to participate in the IPOs of
corporations listed therein.

The Court ruled that obligations arise from law, contracts, quasi-contracts, delicts
and quasi-delicts. Therefore, an obligation imposed on a person, and the
corresponding right granted to another, must be rooted in at least one of these five
sources. The mere assertion of a right and claim of an obligation in an initiatory
pleading, whether a Complaint or Petition, without identifying the basis or source
thereof, is merely a conclusion of fact and law. A pleading should state the
ultimate facts essential to the rights of action or defense asserted, as distinguished
from mere conclusions of fact or conclusions of law.

The practice of offering IPOs to stock exchange members is not a valid source of
legally demandable or enforceable right, hence, Campos failed to establish the
basis or authority for his alleged right to participate equally in the IPO allocations
of the Exchange.

The Petition for Review was granted. The Decision of the Court of Appeals were
REVERSED and SET ASIDE. The SEC en banc orders granting writ of
 preliminary injunction and dismissal of petition before the SICD were reinstated.
No pronouncement as to costs.

2. Asuncion v. Court of Appeals, G.R. No. 109125, 2 December 1994

FACTS: A complaint for Specific performance was filed by Asuncion et. al to their
landlords, Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan, alleging that
Unjiengs offered that the property which Ausncion et.al are leasing is for sale
and they are the priority buyers being the lessee since 1935. Unjieng offered
the property for Php6M while Asuncion et.al offered Php5M. Petitioners
alleged that the defendant failed to specify the terms and conditions of the offer
to sell and because the defendants are about to sell the property, they filed the
instant case.

The Unjiengs denied all the material allegation of the plaintiffs and alleged that
the plaintiffs lack cause of action. The lower court ruled that should the
defendants subsequently offer their property for sale at a price of P11-million
or below, plaintiffs will have the right of first refusal.

The Court of Appeals ruled that here was no meeting of the minds between the
parties concerning the sale of the property. Absent such requirement, the claim
for specific performance will not lie. The decision of this Court was brought to
the Supreme Court by petition for review on certiorari. The Supreme Court
denied the appeal for insufficiency in form and substances.

The Cu Unjieng spouses executed a Deed of Sale transferring the property in

question to Buen Realty and Development Corporation. Buen Realty, as the
new owner of the subject property, wrote to the lessees demanding the latter to
vacate the premises. In its reply, it stated that Buen Realty and Development
Corporation brought the property subject to the notice of lis pendens. Buen
Realty, as the new owner of the subject property, wrote to the lessees
demanding the latter to vacate the premises. The lessees filed a Motion for
Execution. The court ruled in favor of the petitioners and ordered the
defendants are hereby ordered to execute the necessary Deed of Sale of the
property in litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong and
Arthur Go for the consideration of P15 Million pesos in recognition of
plaintiffs' right of first refusal and that a new Transfer Certificate of Title be
issued in favor of the buyer and ruled that the issuance of another title to Buen
Realty Corporation, has been executed in bad faith.

ISSUE: Whether or not the agreement between the the parties is a perfected contract.

RULING: No. The agreement between Asuncion et.al and the Unjiengs did not constitute
or develop a perfect contract of sale. In the agreement, the right is given to
 Asuncion, however, it lacks the corresponding obligation resulting to an
imperfect contract of sale.

A contract undergoes various stages that include its negotiation or preparation,

its perfection and, finally, its consummation. Until the contract is perfected, it
cannot, as an independent source of obligation, serve as a binding
juridical relation. In a contract of sale, the contract is perfected when the seller
obligates himself, for a certain amount, to deliver and transfer the ownership of
a thing or right to the buyer. In the case at bar, no acceptance from the buyer

3. Buenviaje v. Salonga, G.R. No. 216023, 5 October 2016

FACTS: On May 29, 1997, Jebson, an entity engaged in the real estate business,
through its Executive Vice President, Bañez, entered into a Joint Venture Agreement6
(JVA) with Sps. Salonga. Under the JVA, Sps. Salonga, who owned three (3) parcels of
land with an area of 2,935 square meters situated in Tagaytay City, and covered by
Transfer Certificate of Title (TCT) No. T-9000, agreed for Jebson to construct thereon
ten (10) high-end single detached residential units, to be known as Brentwoods Tagaytay
Villas (Brentwoods). They likewise assumed to subdivide the property into individual
titles upon which Jebson shall assume the liability to pay their mortgage loan with the
Metropolitan Bank and Trust Company. On the other hand, Jebson undertook to
construct the units at its own expense, secure the building and development permits, and
the license to sell from the HLURB, as well as the other permits required. Out of the ten
(10) units, seven (7) units, i.e., Units 3, 4, 5, 6, 8, 9, and 10, will belong to Jebson while
the remaining three (3) units, i.e., Units 1, 2, and 7, will correspond to Sps. Salonga's
share. The units allocated to Sps. Salonga were to be delivered within six (6) months after
Jebson's receipt of the down payment for the units allocated to it. Jebson was also
allowed to sell its allocated units under such terms as it may deem fit, subject to the
condition that the price agreed upon was with the conformity of Sps. Salonga.

On June 9, 1997, Jebson entered into a Contract to Sell12 (subject CTS) with Buenviaje
over Unit 5 for a total consideration of P10,500,000.00, without the conformity of Sps.
Salonga. Out of the purchase price, P7,800,000.00 was paid through a "swapping
arrangement," whereby Buenviaje conveyed to Jebson a house and lot located in Garden
Villas, Tagaytay valued at P5,800,000.00 (house and lot) and Tagaytay Highlands Golf
share No. 0722 (golf share) worth P2,000,000.00 on July 1, 1997, while the remaining
balance was paid periodically. An additional sum of P125,000.00 for the retaining wall
(P70,000.00) and air-conditioning system (P55,000.00) was likewise paid for by
Buenviaje.

However, despite full payment of the contract price, Jebson was unable to complete Unit
5 in violation of its contractual stipulation to finish the same within twelve (12) months
from the date of issuance of the building permit. Thus, in April 1999, Buenviaje formally
demanded the immediate completion and delivery of Unit 5, to which Jebson cited the
1997 financial crisis as the reason for the delay. Accordingly, Jebson asked to be given
until the early part of the year 2000 to complete the same but still failed to do so.
On May 27, 2002, Buenviaje filed before the HLURB Regional Field Office IV
(HLURB-RIV) a Complaint for Specific Performance with Damages and Attorney's Fees,
against Jebson, Bañez, and Sps. Salonga (respondents), praying for the (a) completion of
Unit 5, (b) partition and subdivision of the property, (c) delivery of the title to Unit 5, and
(d) payment of damages and attorney's fees. In the alternative, he prayed for the
rescission of the subject CTS, and the return of all payments made thereunder, with
interest at 24% per annum (p.a.), as well as the house and lot, and golf share pursuant to
the "swapping arrangement."

The complaint was consolidated with those filed by other parties, i.e., Beliz Realty and
Development Corporation (Beliz Realty) and Spouses George and Valentina Co (Sps. Co;
collectively, complainants), who similarly entered into contracts to sell with Jebson, and
sought the completion of the units they purchased.

In their defense, Jebson and Bañez claimed that they were ready to comply with all their
contractual obligations but were not able to secure the necessary government permits
because Sps. Salonga stubbornly refused to cause the consolidation of the parcels of land
covered by TCT No. T-9000, and their partition into ten (10) individuallots.

For their part, Sps. Salonga averred that they were not liable to the complainants since
there was no privity of contract between them, adding that the contracts to sell were
unenforceable against them as they were entered into by Jebson without their conformity,
in violation of the JVA. They maintained that they were ready to cause the subdivision
and individual titling of the subject property. They also filed a cross-claim against Jebson
for the latter's failure to complete and deliver to them the three (3) units corresponding to
their share in Brentwoods, and for representing to the buyers that it owned the land where
Brentwoods was located.

The HLURB-RIV Ruling - found that respondents were not legally authorized to sell
Brentwoods as they have not secured the necessary Registration Certificate and License
to Sell. Furthermore, they failed to complete the construction of the units as well as to
deliver the units to the complainants on time, entitling the latter to the refund of their
payments, including interests. It further found Sps. Salonga solidarily liable with Jebson
and Bañez as joint venture partners liable to the general buying public

The HLURB-BOC Ruling - there was no substantial breach but only a slight or casual
one, which did not justify a rescission of the contracts to sell, especially in view of the
fact that the residential units covered by the said contracts were already at their finishing
stages. Considering the accomplishment level of the work done on the said units, and
further noting that the primary relief sought in the complaints of Buenviaje and Beliz
Realty was specific performance, the HLURB-BOC ruled that the proper remedy,
instead, was to fix the period for completion of the concerned units.

OPs Ruling – affirmed the HLURB-BOC Ruling

Court of Appeals Ruling - OP correctly (a) sustained the HLURB Decision holding the
rescission of the contracts to sell to be impractical; and (b) ordered that the said units be
finished and delivered to Buenviaje and Beliz Realty, rescinding only the "swapping
arrangement" in their respective contracts to sell with Jebson.

ISSUE: Whether or not the CA correctly ruled that: (a) the grant of the remedy of
specific performance in Buenviaje's favor was proper under the prevailing circumstances
of the case; (b) Sps. Salonga are not solidarily liable with Jebson and Banez to Buenviaje
for the completion of the construction and delivery of the unit; (c) the "swapping
arrangement" was invalid; and (d) Buenviaje is liable to Sps. Salonga for moral damages
and attorney's fees.

RULING: Specific performance and "rescission" are alternative remedies available to

a party who is aggrieved by a counter-party's breach of a reciprocal obligation. This is
provided for in Article 1191 of the Civil Code, which partly reads:Art. 1191. The power
to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.The injured party may choose between the
fulfillment and the rescission of the obligation, with the payment of damages in either
case. He may also seek rescission, even after he has chosen fulfillment, if the latter
should become impossible.

In this case, it is undisputed that Sps. Salonga were not parties to the above-mentioned
contract. Under Article 1311[60] of the Civil Code, it is a basic principle in civil law on
relativity of contracts, that contracts can only bind the parties who had entered into it and
it cannot favor or prejudice third persons. Contracts take effect only between the parties,
their successors in interest, heirs and assigns.

Section 40 of PD 957 reads: Section 40. Liability of controlling persons. Every person
who directly or indirectly controls any person liable under any provision of this Decree or
of any rule or regulation issued thereunder shall be liable jointly and severally with and to
the same extent as such controlled person unless the controlling person acted in good
faith and did not directly or indirectly induce the act or acts constituting the violation or
cause of action.

Evidently, the foregoing legal provisions pertain to the obligations of a co-partner in the
event that the partnership to which he belongs is held liable. In this case, Buenviaje never
dealt with any partnership constituted by and between Jebson and Sps. Salonga.

Rescission (as contemplated in Articles 1380 to 1389 of the Civil Code) is a remedy
granted by law to the contracting parties and even to third persons, to secure the
reparation of damages caused to them by a contract, even if this should be valid, by
restoration of things to their condition at the moment prior to the celebration of the
contract. It implies a contract, which even if initially valid, produces a lesion or a
pecuniary damage to someone. In the rescission by reason of lesion or economic
prejudice, the cause of action is subordinated to the existence of that prejudice, because it
is the raison d 'etre as well as the measure of the right to rescind.
4. Lara’s Gifts & Decors, Inc. v. Midtown Industrial Sales, Inc., G.R. No. 225433, 28
August 2019, en banc

FACTS: Petitioner Lara's Gifts & Decors, Inc. (petitioner) is engaged in the business
of manufacturing, selling, and exporting handicraft products. On the other
hand, respondent Midtown Industrial Sales, Inc. (respondent) is engaged in
the business of selling industrial and construction materials, and petitioner is
one of respondent's customers. Respondent alleged that petitioner purchased
from respondent various industrial and construction materials in the total
amount of ₱1,263,104.22. The purchases were on a sixty (60)-day credit
term, with the condition that 24% interest per annum would be charged on
all accounts overdue, as stated in the sales invoices. Petitioner paid for its
purchases by issuing several Chinabank postdated checks in favor of
respondent. However, when respondent deposited the Chinabank checks on
their maturity dates, the checks bounced. After repeated demands from
respondent, petitioner replaced the bounced checks with new postdated
Export and Industry Bank checks. However, THESE CHECKS WERE
ALSO DISHONORED. Respondent sent a demand letters informing
petitioner of the bounced checks and demanding that petitioner settle its
accounts. Still petitioner failed to pay, prompting respondent to file on 5
February 2008 a Complaint for Sum of Money with Prayer for Attachment
against petitioner.

In its Answer, petitioner admitted that it purchased from respondent, on a

60-day credit term, various industrial and construction materials in the total
amount of ₱1,263,104.22. However, petitioner claimed that most of the
deliveries made were substandard and of poor quality. Petitioner alleged that
the checks it issued for payment were not for value because not all of the
materials delivered by respondent were received in good order and
condition. Thus, when petitioner used the raw materials, the finished
product allegedly did not pass the standards required by petitioner's buyers
from the United States (US) who rejected the products. Furthermore, due to
the economic recession in the US, subsequent orders made by petitioner's
US buyers were canceled. Petitioner claimed that on 19 February 2008, a
fire razed its factory and office, destroying its equipment, machineries, and
inventories, including those rejected by the US buyers.

ISSUE: Whether or not [Lara's Gifts & Decors, Inc.] is in default of its contractual
obligations against Midtown industrial Sales Inc.

RULING: Yes. The Court held that the petitioner is in default to its contractual
obligations against respondent. Petitioner admitted the purchases made to
the respondent. The amount and the terms were also admitted. The
allegation that the materials sent by respondent were substandard was not
substantiated by convincing evidence, hence, were not given merit. The best
evidence is the sales invoice that stated that the MERCHANDISE WERE
RECEIVED IN GOOD CONDITION. Furthermore, petitioner admits
issuing postdated checks as payment for the items delivered.

Petitioner was ordered by the court to pay respondent Midtown Industrial

Sales. Inc. the following:

1. ONE MILLION TWO HUNDRED SIXTY THREE THOUSAND ONE

HUNDRED FOUR PESOS and 22/100 (₱1,263,104.22) representing the
principal amount plus stipulated interest at 24% per annum to be computed
from 22 January 2008, the date of extrajudicial demand, until full payment.

2. Legal interest on the 24% per annum interest due on the principal amount
accruing as of judicial demand, at the rate of 12% per annum from the date
of judicial demand on 5 February 2008 until 30 June 2013, and thereafter at
the rate of 6% per annum from 1 July 2013 until full payment.

3. The sum of FIFTY THOUSAND PESOS (₱50,000.00) as attorney's fees,

plus legal interest thereon at the rate of 6% per annum to be computed from
the finality of this Decision until full payment.

4. Cost of the suit.