IGNACIC 8Ak2AGA petitioner vs CCUk1 CI ALALS and

ANGLLI1C ALVIAk (Gk No 11S129 Iebruary 12 1997)

lacLs 1he peLlLloner's wlfe was sufferlng from a deblllLaLlng
allmenL and wlLh forewarnlng of her lmpendlng deaLh she
expressed her wlsh Lo be lald Lo resL before ChrlsLmas day Lo
spare her famlly of Lhe long vlglls as lL was almosL ChrlsLmas
AfLer hls wlfe passed away peLlLloner boughL maLerlals from
hereln prlvaLe respondenLs for Lhe consLrucLlon of her nlche
rlvaLe respondenLs however falled Lo dellver on agreed Llme
and daLe desplLe repeaLed followups 1he nlche was
compleLed ln Lhe afLernoon of Lhe 27Lh of uecember and
8arzagas wlfe was flnally lald Lo resL Powever lL was Lwo
andahalf (21/2) days behlnd schedule
Issue Was there de|ay |n the performance of the pr|vate
respondents ob||gat|on?

8ullng ?es Slnce Lhe respondenL was negllgenL and lncurred
delay ln Lhe performance of hls conLracLual obllgaLlons Lhe
peLlLloner ls enLlLled Lo be lndemnlfled for Lhe damage he
suffered as a consequence of Lhe delay or conLracLual breach
1here was a speclflc Llme agreed upon for Lhe dellvery of Lhe
maLerlals Lo Lhe cemeLery

1hls ls clearly a case of nonperformance of a reclprocal
obllgaLlon as ln Lhe conLracL of purchase and sale Lhe
peLlLloner had already done hls parL whlch ls Lhe paymenL of
Lhe prlce lL was lncumbenL upon respondenL Lo lmmedlaLely
fulflll hls obllgaLlon Lo dellver Lhe goods oLherwlse delay
would aLLach An award of moral damages ls lncumbenL ln
Lhls case as Lhe peLlLloner has suffered so much
ILkNANDC LCL2 L1 AL vs an Amer|can Wor|d A|rways
(Gk No L2241S March 30 1966)
Iacts
8eservaLlon for flrsL class accommodaLlon ln an Amerlcan
Alrllnes from 1okyo Lo San lranclsco was made by uelfln
lausLlno for Lhen SenaLor lernando Lopez and company llrsL
class LlckeLs were lssued and pald for 1he parLy lefL Manlla
for 1okyo as scheduled SenaLor Lopez requesLed MlnlsLer
8usuego Lo conLacL Lhe alrllnes regardlng Lhelr
accommodaLlon Powever Lhey were lnformed LhaL Lhere
was no accommodaLlon for Lhem 8ecause of some urgenL
maLLers Lo aLLend Lo ln San lranclsco Lhey were consLralned
Lo Lake Lhe LourlsL fllghL under proLesL"
Issues
(1) WheLher Lhe defendanL acLed ln bad falLh for dellberaLe
refusal Lo comply wlLh lLs conLracL Lo provlde flrsLclass
accommodaLlon Lo Lhe plalnLlff
(2) WheLher moral and exemplary damages should be
awarded
ne|d
(1) lrom Lhe evldence of defendanL lL ls ln effecL admlLLed
LhaL defendanL Lhrough lLs agenLs flrsL cancelled plalnLlffs
reservaLlons by mlsLake and LhereafLer Jellbetotely ooJ
loteotlooolly wlLhheld from plalnLlffs or Lhelr Lravel agenL Lhe
facL of sald cancellaLlon leLLlng Lhem go on bellevlng LhaL
Lhelr flrsL class reservaLlons sLood valld and conflrmed ln so
mlsleadlng plalnLlffs lnLo purchaslng flrsL class LlckeLs ln Lhe
convlcLlon LhaL Lhey had conflrmed reservaLlons for Lhe same
when ln facL Lhey had none defendanL wllfully and knowlngly
placed lLself lnLo Lhe poslLlon of havlng Lo breach lLs a
foresald conLracLs wlLh plalnLlffs should Lhere be no lasL
mlnuLe cancellaLlon by oLher passengers before fllghL Llme as
lL Lurned ouL ln Lhls case Such acLuaLlon of defendanL may
lndeed have been prompLed by noLhlng more Lhan Lhe
promoLlon of lLs selflnLeresL ln holdlng on Lo SenaLor Lopez
and parLy as passengers ln lLs fllghL and forecloslng on Lhelr
chances Lo seek Lhe servlces of oLher alrllnes LhaL may have
been able Lo afford Lhem flrsL class accommodaLlons All Lhe
Llme ln legal conLemplaLlon such conducL already amounLs Lo
acLlon ln bad falLh lor bad falLh means a breach of a known
duLy Lhrough some moLlve of lotetest or lllwlll
AL Lhe Llme plalnLlffs boughL Lhelr LlckeLs defendanL
Lherefore ln breach of lLs known duLy made plalnLlffs belleve
LhaL Lhelr reservaLlon had oot been cancelled Such wlllful
nondlsclosure of Lhe cancellaLlon or preLense LhaL Lhe
reservaLlons for plalnLlffs sLood and noL slmply Lhe
erroneous cancellaLlon lLself ls Lhe facLor Lo whlch ls
aLLrlbuLable Lhe breach of Lhe resulLlng conLracLs And as
abovesLaLed ln Lhls respecL defendanL clearly acLed ln bad
falLh
(2) llrsL Lhen as Lo moral damages As a proxlmaLe resulL of
defendanLs breach ln bad falLh of lLs conLracLs wlLh plalnLlffs
Lhe laLLer suffered soclal humlllaLlon wounded feellngs
serlous anxleLy and menLal angulsh lor plalnLlffs were
Lravelllng wlLh flrsL class LlckeLs lssued by defendanL and yeL
Lhey were glven only Lhe LourlsL class AL sLopovers Lhey
were expecLed Lo be among Lhe flrsLclass passengers by
Lhose awalLlng Lo welcome Lhem only Lo be found among Lhe
LourlsL passengers lL may noL be humlllaLlng Lo Lravel as
LourlsL passengers lL ls humlllaLlng to be compelleJ Lo Lravel
as such conLrary Lo whaL ls rlghLfully Lo be expecLed from Lhe
conLracLual underLaklng
1he raLlonale behlnd exemplary or correcLlve damages ls as
Lhe name lmplles Lo provlde an example or correcLlon for
publlc good uefendanL havlng breached lLs conLracLs ln bad
falLh Lhe courL as sLaLed earller may award exemplary
damages ln addlLlon Lo moral damages ln vlew of lLs naLure
lL should be lmposed ln such an amounL as Lo sufflclenLly and
effecLlvely deLer slmllar breach of conLracLs ln Lhe fuLure by
defendanL or oLher alrllnes ln Lhls llghL we flnd lL [usL Lo
award 7300000 as exemplary or correcLlve damages
A2 AkkIL1A and VI1ALIADC AkkIL1A VS Nat|ona| k|ce
and Corn Corporat|on (Gk No 1S64S Ianuary 31 1964)
lAC1S

az ArrleLa was awarded by nA8lC Lhe conLracL of
dellvery of 20000 meLrlc Lons of 8urmese rlce aL $203 per
meLrlc Lon Cn Lhe oLher hand Lhe corporaLlon commlLLed
lLself Lo pay for Lhe lmporLed rlce by means of an lrrevocable
conflmed and asslgnable leLLer of credlL ln uS currency ln
favor of ArrleLa or suppller ln 8urma lmmedlaLely Powever
Lhe corporaLlon Look Lhe flrsL sLep Lo open a leLLer of credlL a
full monLh from Lhe execuLlon of Lhe conLracL only !uly 30
1932 Cn Lhe same day ArrleLa advlsed Lhe corporaLlon of Lhe
exLreme necesslLy for Lhe lmmedlaLe openlng of Lhe leLLer of
credlL slnce she had by Lhen made a Lender Lo her suppller ln
8agoon 8urma ConsequenLly Lhe credlL lnsLrumenL applled
for was opened only on SepLember 8 1932 slnce Lhe
corporaLlon was noL ln flnanclal capaclLy Lo pay Lhe 30
marglnal cash deposlL when Lhe credlL lnsLrumenL was
approved on AugusL 4 1932

As a resulL of Lhe delay Lhe allocaLlon of ArrleLa was
cancelled and Lhe 3 deposlL approxlmaLely hp 200000
was forfelLed ArrleLa Lrled Lo resLore Lhe cancelled 8urmese
rlce allocaLlon buL falled ArrleLa Lhen lnsLead offered Lo
subsLlLuLe 1halland rlce Lo nA8lC communlcaLlng LhaL such
was a soluLlon whlch should be beneflclal for boLh parLles
Powever Lhe corporaLlon re[ecLed Lhe subsLlLuLlon Pence
ArrleLa senL a leLLer Lo Lhe corporaLlon demandlng for Lhe
compensaLlon for Lhe damages caused her


lSSuL

1 Was Lhe fallure Lo open lmmedlaLely Lhe leLLer of credlL
ln dlspuLe amounLed Lo a breach of Lhe conLracL for whlch Lhe
corporaLlon should be held llable?

2 Was Lhere any walver on Lhe parL of ArrleLa?

8uLlnC

1 ?es lL was clear from Lhe records LhaL Lhe sole and
prlnclpal reason for Lhe cancellaLlon of Lhe allocaLlon
conLracLed by ArrleLa ln 8agoon 8urma was Lhe fallure of Lhe
leLLer of credlL Lo be opened 1he fallure Lherefore was Lhe
lmmedlaLe cause for Lhe consequenL damage whlch resulLed
lL was clear from Lhe records LhaL Lhe delay ln Lhe openlng of
Lhe leLLer of credlL was due Lo Lhe lnablllLy of Lhe corporaLlon
Lo meeL Lhe condlLlon lmposed by Lhe bank for Lhe granLlng
Lhe same

lurLhermore Lhe llablllLy of Lhe corporaLlon sLemmed
noL alone from fallure or lnablllLy Lo saLlsfy Lhe requlremenLs
of Lhe bank buL lLs culpablllLy arose from ls wlllful and
dellberaLe assumpLlon of conLracLual obllgaLlons even as lL
was well aware of lLs flnanclal lncapaclLy Lo underLake Lhe
presLaLlon under ArLlcle 1170 Lhose who ln Lhe
performance of Lhelr obllgaLlon are gullLy of fraud
negllgence or delay and Lhose who ln any manner
conLravene Lhe Lenor Lhereof are llable ln damages" 1he
Lerms ln any manner conLravene Lhe Lenor Lhereof" lncludes
any llllclL acL whlch lmpalrs Lhe sLrlcL and falLhful fulflllmenL of
Lhe obllgaLlon or every klnd or defecLlve performance ln
general also every debLor who falls ln Lhe performance of hls
obllgaLlon ls bound Lo lndemnlfy for Lhe losses and damages
caused Lhereby

1he paymenL for damages or Lhe award Lo be glven
should be converLed lnLo Lhe hlllpplne peso aL Lhe raLe of
exchange prevalllng aL Lhe Llme Lhe obllgaLlon was lncurred
pursuanL Lo 8A 327

2 no 1he subsequenL offer Lo subsLlLuLe Lhe 1halland
rlce for Lhe orlglnally conLracLed 8urmese dld noL consLlLuLe a
walver Walvers are noL presumed lL musL be clearly and
convlnclngly shown elLher by express sLlpulaLlons or acLs
admlLLlng no oLher reasonable explanaLlon ln Lhls case no
such lnLenL Lo walve had been esLabllshed
Lasam Vs Sm|th Gk No 1949S Ieb 2 1924
lAC1S

1he defendanL was Lhe owner of a publlc garage ln Lhe
Lown of San lernando La unlon and engaged ln Lhe buslness
of carrylng passengers for hlre from one polnL Lo anoLher ln
Lhe rovlnce of La unlon and Lhe surroundlng provlnces
uefendanL underLook Lo convey Lhe plalnLlffs from San
lernando Lo Currlmao llocos norLe ln a lord auLomoblle Cn
leavlng San lernando Lhe auLomoblle was operaLed by a
llcensed chauffeur buL afLer havlng reached Lhe Lown of San
!uan Lhe chauffeur allowed hls asslsLanL 8ueno Lo drlve Lhe
car 8ueno held no drlver's llcense buL had some experlence
ln drlvlng 1he car funcLloned well unLll afLer Lhe crosslng of
Lhe Abra 8lver ln 1agudln when accordlng Lo Lhe LesLlmony
of Lhe wlLnesses for Lhe plalnLlffs defecLs developed ln Lhe
sLeerlng gear so as Lo make accuraLe sLeerlng lmposslble and
afLer zlgzagglng for a dlsLance of abouL half kllomeLer Lhe car
lefL Lhe road and wenL down a sLeep embankmenL 1he
auLomoblle was overLurned and Lhe plalnLlffs plnned down
under lL Mr Lasam escaped wlLh a few conLuslons and a
dlslocaLed rlb buL hls wlfe !oaqulna recelved serlous
ln[urles among whlch was a compound fracLure of one of Lhe
bones ln her lefL wrlsL She also suffered nervous breakdown
from whlch she has noL fully recovered aL Lhe Llme of Lrlal

1he complalnL was flled abouL a year and a half afLer and
alleges LhaL Lhe accldenL was due Lo defecLs ln Lhe
auLomoblle as well as Lo Lhe lncompeLence and negllgence of
Lhe chauffeur

1he Lrlal courL held however LhaL Lhe cause of acLlon resLs
on Lhe defendanL's breach of Lhe conLracL of carrlage and
LhaL consequenLly arLlcles 11011107 of Lhe Clvll Code and
noL arLlcle 1903 are appllcable 1he courL furLher found LhaL
Lhe breach of conLacL was noL due Lo forLulLous evenLs and
LhaL Lherefore Lhe defendanL was llable ln damages


lSSuL

ls Lhe Lrlal courL correcL ln lLs flndlngs LhaL Lhe breach of
conLracL was noL due Lo a forLulLous evenL?

8uLlnC

?es lL ls sufflclenL Lo relLeraLe LhaL Lhe source of Lhe
defendanL's legal llablllLy ls Lhe conLracL of carrlage LhaL by
enLerlng lnLo LhaL conLracL he bound hlmself Lo carry Lhe
plalnLlffs safely and securely Lo Lhelr desLlnaLlon and LhaL
havlng falled Lo do so he ls llable ln damages unless he shows
LhaL Lhe fallure Lo fulflll hls obllgaLlon was due Lo causes
menLloned ln arLlcle 1103 of Lhe Clvll Code whlch reads

no one shall be llable for evenLs whlch could noL be
foreseen or whlch even lf foreseen were lnevlLable wlLh Lhe
excepLlon of Lhe cases ln whlch Lhe law expressly provldes
oLherwlse and Lhose ln whlch Lhe obllgaLlon lLself lmposes
such llablllLy"

As wlll be seen some exLraordlnary clrcumsLances
lndependenL of Lhe wlll of Lhe obllgor or of hls employees ls
an essenLlal elemenL of a caso forLulLo ln Lhe presenL case
Lhls elemenL ls lacklng lL ls noL suggesLed LhaL Lhe accldenL ln
quesLlon was due Lo an acL of Cod or Lo adverse road
condlLlons whlch could have been foreseen As far as Lhe
record shows Lhe accldenL was caused elLher by defecLs ln
Lhe auLomoblle or else Lhrough Lhe negllgence of lLs drlver
1haL ls noL a caso forLulLo
V|ctor|as |anters Assoc|at|on Inc VS V|ctor|as M||||ng Co
Inc
lAC1S
1he peLlLloners vlcLorlas lanLers AssoclaLlon lnc
and norLh negros lanLers AssoclaLlon lnc and Lhr
respondenL vlcLorlas Mllllng Co lnc enLered lnLo a
mllllng conLracL whereby Lhey sLlpulaLed a 30year
perlod wlLhln whlch Lhe sugar cane produced by Lhe
peLlLloner would be mllled by Lhe respondenL cenLral
1he parLles also sLlpulaLed LhaL ln Lhe evenL of force
ma[uere Lhe conLracL shall be deemed suspended
durlng Lhls perlod 1he peLlLloner falled Lo dellver Lhe
sugar cane durlng Lhe four years of Lhe !apanese
occupaLlon and Lhe Lwo years afLer llberaLlon when Lhe
mlll was belng rebullL or a LoLal of slx years

lSSuL
Can Lhe peLlLloners be compelled Lo dellver sugar
cane for slx more years afLer Lhe explraLlon of Lhe 30year
perlod Lo make up for whaL Lhey falled Lo dellver Lo Lhe
respondenL?

8uLlnC no lorLulLous evenL relleves Lhe obllgor from
fulfllllng Lhe conLracLual obllgaLlon under ArLlcle 1174 of
Lhe Clvll Code 1he sLlpulaLlon ln Lhe conLracL LhaL ln Lhe
evenL of force ma[eure Lhe conLracL shall be deemed
suspended durlng Lhe sald perlod does noL mean LhaL Lhe
happenlng of any of Lhose evenLs sLops Lhe runnlng of Lhe
perlod agreed upon lL only relleves Lhe parLles from Lhe
fulflllmenL of Lhelr respecLlve obllgaLlons durlng LhaL LlmeLhe
peLlLloner from dellverlng Lhe sugar cane and Lhe
respondenL cenLral from mllllng ln order LhaL Lhe
respondenL cenLral may be enLlLled Lo demand from Lhe
peLlLloner Lhe fulflllmenL of Lhelr parL ln Lhe conLracLs Lhe
laLLer musL have been able Lo perform lL buL falled or
refused Lo do so and noL when Lhey were prevenLed by
force ma[eure such as war 1o requlre Lhe peLlLloners Lo
dellver Lhe sugar cane whlch Lhey falled Lo dellver durlng
Lhe slx years ls Lo demand from Lhem Lhe fulflllmenL of an
obllgaLlon whlch was lmposslble of performance durlng
Lhe Llme lL became due nemo LeneLur ed lmposslbllla 1he
respondenL cenLral noL belng enLlLled Lo demand from Lhe
peLlLloners Lhe performance of Lhe laLLer's parL of Lhe
conLracLs under Lhose clrcumsLances cannoL laLer on
demand lLs fulflllmenL 1he performance of whaL Lhe law
has wrlLLen off cannoL be demanded and requlred 1he
prayer LhaL Lhe peLlLloners be compelled Lo dellver sugar
cannoL for slx years more Lo make up for whaL Lhey falled
Lo dellver Lhe fulflllmenL of whlch was lmposslble of
granLed would ln effecL be an exLenslon of Lhe Lerms of Lhe
conLracLs enLered lnLo by and beLween Lhe parLles
Mede| vs CA 299 SCkA 481 (Nov 27 1998)
Usury Law
lacLs Medel obLalned several loans from Conzales LoLalllng
300000 1hese were evldenced by several promlssory noLes
agreelng Lo an lnLeresL raLe of 33 per monLh wlLh
addlLlonal servlce charge of 2 per annum and penalLy
charge of 1 per monLh Cn maLurlLy Medel falled Lo pay
Lhelr lndebLedness Pence Conzales flled wlLh Lhe 81C of
8ulacan a complalnL for collecLlon of Lhe full amounL of Lhe
loan
81C declared LhaL Lhe promlssory noLes were genulne
however lL ruled LhaL alLhough Lhe usury Law had been
repealed Lhe lnLeresL charged by Conzales on Lhe loans was
unconsclonable Pence 81C applled Lhe legal raLe of lnLeresL
for loan of money goods or credlL of 12 per annum
CA reversed Lhe rullng of Lhe 81C holdlng LhaL Lhe usury Law
had become legally lnexlsLenL Pence Lhls peLlLlon for revlew
on cerLlorarl
lssue WheLher or noL Lhe lnLeresL raLe sLlpulaLed upon was
valld
Peld nC SC held LhaL Lhe sLlpulaLed raLe of lnLeresL aL 33
per monLh on Lhe 300000 loan was excesslve Powever lL
could noL conslder Lhe raLe usurlous" because C8 Clrcular
no 903 has expressly removed Lhe lnLeresL celllngs
prescrlbed by Lhe usury Law and LhaL sald law ls now legally
lnexlsLenL
C8 Clrcular 903 dld noL repeal nor ln any way amend Lhe
usury Law buL slmply suspended Lhe laLLer's effecLlvlLy A C8
Clrcular cannoL repeal a law Cnly a law can repeal anoLher
law 8y vlrLue of Lhls clrcular Lhe usury Law has been
rendered lneffecLlve lnLeresL can no be charged as lender
and borrower may agree upon
neverLheless SC held LhaL Lhe lnLeresL of 33 per monLh or
66 per annum sLlpulaLed upon by Lhe parLles ln Lhe
promlssory noLe was unconsclonable and hence conLrary Lo
morals lf noL agalnsL Lhe law 1he sLlpulaLlon ls vold 1he
courLs shall reduce equlLably llquldaLed damages wheLher
lnLended as an lndemnlLy or a penalLy lf Lhey are lnlqulLous or
unconsclonable
SC ordered LhaL Lhe lnLeresL of 12 per annum and
addlLlonal 1 a monLh penalLy charge as llquldaLed damages
reasonable
CLN1kAL nIL UNIV vs Court of Appea|s
246 SCkA S11
lAC1S
ln 1939 uon 8amon Lopez Sr execuLed a deed of donaLlon ln
favor of Cu LogeLher wlLh Lhe followlng condlLlons
a) 1he land should be uLlllzed by Cu excluslvely for Lhe
esLabllshmenL use of medlcal college
b) 1he sald college shall noL sell Lransfer or convey Lo any 3rd
parLy
c) 1he sald land shall be called 8amon Lopez Campus" and
any lncome from LhaL land shall be puL ln Lhe fund Lo be
known as 8amon Lopez Campus lund"
Powever on May 31 1989 8 who are Lhe helrs of uon
8amon flled an acLlon for annulmenL of donaLlon
reconveyance damages agalnsL Cu for noL complylng wlLh
Lhe condlLlons 1he helrs also argued LhaL Cu had negoLlaLed
wlLh Lhe nPA Lo exchange Lhe donaLed properLy wlLh anoLher
land owned by Lhe laLLer
eLlLloner alleged LhaL Lhe rlghL of prlvaLe respondenLs Lo flle
Lhe acLlon had prescrlbed
lSSuL
1) WCn peLlLloner falled Lo comply Lhe resoluLely condlLlons
annoLaLed aL Lhe back of peLlLloner's cerLlflcaLe of LlLle
wlLhouL a flxed perlod when Lo comply wlLh such condlLlons?
?LS
2) WCn Lhere ls a need Lo flx Lhe perlod for compllance of Lhe
condlLlon? nC
PLLu
1)
under ArL 1181 on condlLlonal obllgaLlons Lhe acqulslLlon of
rlghLs as well Lhe exLlngulshmenL or loss of Lhose already
acqulred shall depend upon Lhe happenlng of Lhe evenL whlch
consLlLuLes Lhe condlLlon 1hus when a person donaLes land
Lo anoLher on Lhe condlLlon LhaL Lhe laLLer would bulld upon
Lhe land a school ls such a resoluLory one 1he donaLlon had
Lo be valld before Lhe fulflllmenL of Lhe condlLlon lf Lhere was
no fulflllmenL wlLh Lhe condlLlon such as whaL obLalns ln Lhe
lnsLanL case Lhe donaLlon may be revoked all rlghLs whlch
Lhe donee may have acqulred shall be deemed losL
exLlngulshed
More Lhan a reasonable perlod of flfLy (30) years has already
been allowed peLlLloner Lo avall of Lhe opporLunlLy Lo comply
wlLh Lhe condlLlon even lf lL be burdensome Lo make Lhe
donaLlon ln lLs favor forever valld 8uL unforLunaLely lL falled
Lo do so Pence Lhere ls no more need Lo flx Lhe duraLlon of a
Lerm of Lhe obllgaLlon when such procedure would be a mere
LechnlcallLy and formallLy and would serve no purpose Lhan
Lo delay or lead Lo an unnecessary and expenslve
mulLlpllcaLlon of sulLs
8ecords are clear and facLs are undlspuLed LhaL slnce Lhe
execuLlon of Lhe deed of donaLlon up Lo Lhe Llme of flllng of
Lhe lnsLanL acLlon peLlLloner has falled Lo comply wlLh lLs
obllgaLlon as donee eLlLloner has slepL on lLs obllgaLlon for
an unreasonable lengLh of Llme Pence lL ls only [usL and
equlLable now Lo declare Lhe sub[ecL donaLlon already
lneffecLlve and for all purposes revoked so LhaL peLlLloner as
donee should now reLurn Lhe donaLed properLy Lo Lhe helrs
of Lhe donor prlvaLe respondenLs hereln by means of
reconveyance
2)
under ArL 1197 when Lhe obllgaLlon does noL flx a perlod
buL from lLs naLure clrcumsLance lL can be lnferred LhaL Lhe
perlod was lnLended Lhe courL may flx Lhe duraLlon Lhereof
because Lhe fulflllmenL of Lhe obllgaLlon lLself cannoL be
demanded unLll afLer Lhe courL has flxed Lhe perlod for
compllance LherewlLh such perlod has arrlved Powever
Lhls general rule cannoL be applled ln Lhls case conslderlng
Lhe dlfferenL seL of clrcumsLances exlsLlng more Lhan a
reasonable perlod of 30yrs has already been allowed Lo
peLlLloner Lo avall of Lhe opporLunlLy Lo comply buL
unforLunaLely lL falled Lo do so Pence Lhere ls no need Lo flx
a perlod when such procedure would be a mere LechnlcallLy
formallLy would serve no purpose Lhan Lo delay or load
Lo unnecessary and expenslve mulLlpllcaLlon of sulLs
under ArL 1191 when one of Lhe obllgors cannoL comply
wlLh whaL ls lncumbenL upon hlm Lhe obllgee may seek
resclsslon before Lhe courL unless Lhere ls [usL cause
auLhorlzlng Lhe flxlng of a perlod ln Lhe absence of any [usL
cause for Lhe courL Lo deLermlne Lhe perlod of compllance
Lhere ls no more obsLacle for Lhe courL Lo decree reclsslon
Gk No 107112 Iebruary 24 1994
NAGA 1LLLnCNL CC INC (NA1LLCC) AND LUCIANC M
MAGGA pet|t|oners
vs
1nL CCUk1 CI ALALS AND CAMAkINLS SUk II LLLC1kIC
CCCLkA1IVL INC (CASUkLCC II
eLlLloner naga 1elephone Co lnc (nA1LLCC) ls a Lelephone
company renderlng local as well as long dlsLance Lelephone
servlce ln naga ClLy whlle prlvaLe respondenL Camarlnes Sur ll
LlecLrlc CooperaLlve lnc (CASu8LCC ll) ls a prlvaLe
corporaLlon esLabllshed for Lhe purpose of operaLlng an
elecLrlc power servlce ln Lhe same clLy
Cn november 1 1977 Lhe parLles enLered lnLo a conLracL
(Lxh A) for Lhe use by peLlLloners ln Lhe operaLlon of lLs
Lelephone servlce Lhe elecLrlc llghL posLs of prlvaLe
respondenL ln naga ClLy ln conslderaLlon Lherefor
peLlLloners agreed Lo lnsLall free of charge Len (10)
Lelephone connecLlons for Lhe use by prlvaLe respondenL
Sald conLracL also provlded
(a) 1haL Lhe Lerm or perlod of Lhls conLracL
shall be as long as Lhe parLy of Lhe flrsL parL
has need for Lhe elecLrlc llghL posLs of Lhe
parLy of Lhe second parL lL belng
undersLood LhaL Lhls conLracL shall
LermlnaLe when for any reason whaLsoever
Lhe parLy of Lhe second parL ls forced Lo
sLop abandoned slc lLs operaLlon as a
publlc servlce and lL becomes necessary Lo
remove Lhe elecLrlc llghLposL
AfLer Lhe conLracL had been enforced for over Len (10) years
prlvaLe respondenL flled on !anuary 2 1989 wlLh Lhe 8eglonal
1rlal CourL of naga ClLy (8r 28) CC no 891642 agalnsL
peLlLloners for reformaLlon of Lhe conLracL wlLh damages on
Lhe ground LhaL lL ls Loo oneslded ln favor of peLlLloners LhaL
lL ls noL ln conformlLy wlLh Lhe guldellnes of Lhe naLlonal
LlecLrlflcaLlon AdmlnlsLraLlon (nLA) whlch dlrecL LhaL Lhe
reasonable compensaLlon for Lhe use of Lhe posLs ls 1000
per posL per monLh LhaL afLer eleven (11) years of
peLlLloners use of Lhe posLs Lhe Lelephone cables sLrung by
Lhem Lhereon have become much heavler wlLh Lhe lncrease
ln Lhe volume of Lhelr subscrlbers worsened by Lhe facL LhaL
Lhelr llnemen bore holes Lhrough Lhe posLs aL whlch polnLs
Lhose posLs were broken durlng Lyphoons LhaL a posL now
cosLs as much as 263000 so LhaL [usLlce and equlLy
demand LhaL Lhe conLracL be reformed Lo abollsh Lhe
lnequlLles Lhereon
lSSuL
WheLher or noL Lhe obllgaLlon ls sub[ecL Lo a poLesLaLlve
condlLlon?
PLLu
no lL ls sub[ecL Lo a mlxed condlLlon
A poLesLaLlve condlLlon ls a condlLlon Lhe fulflllmenL of whlch
depends upon Lhe sole wlll of Lhe debLor ln whlch case Lhe
condlLlonal obllgaLlon ls vold
19
8ased on Lhls deflnlLlon
respondenL courLs flndlng LhaL Lhe provlslon ln Lhe conLracL
Lo wlL
(a) 1haL Lhe Lerm or perlod of Lhls conLracL
shall be as long as Lhe parLy of Lhe flrsL parL
(peLlLloner) has need for Lhe elecLrlc llghL
posLs of Lhe parLy of Lhe second parL
(prlvaLe respondenL)
ls a poLesLaLlve condlLlon ls correcL Powever lL musL have
overlooked Lhe oLher condlLlons ln Lhe same provlslon Lo wlL
lL belng undersLood LhaL Lhls conLracL
shall LermlnaLe when for any reason
whaLsoever Lhe parLy of Lhe second parL
(prlvaLe respondenL) ls forced Lo sLop
abandoned (slc) lLs operaLlon as a publlc
servlce and lL becomes necessary Lo remove
Lhe elecLrlc llghL posL (slc)
whlch are casual condlLlons slnce Lhey depend on chance
hazard or Lhe wlll of a Lhlrd person
20
ln sum Lhe conLracL ls
sub[ecL Lo mlxed condlLlons LhaL ls Lhey depend parLly on
Lhe wlll of Lhe debLor and parLly on chance hazard or Lhe wlll
of a Lhlrd person whlch do noL lnvalldaLe Lhe aforemenLloned
provlslon
21
neverLheless ln vlew of our dlscusslons under
Lhe flrsL and second lssues ralsed by peLlLloners Lhere ls no
reason Lo seL aslde Lhe quesLloned declslon and resoluLlon of
respondenL courL
ne|rs of Lu|s 8acus vs Court of Appea|s Spouses Iaust|no
Duray and V|ctor|ana Duray
GkNo 12769S 03December2001

IAC1S CI 1nL CASL

Cn 1984 Luls 8acus leased Lo lausLlno uuray a parcel of
agrlculLural land wlLh LoLal land area of 3002 of square
meLers ln Cebu 1he lease was for slx years endlng ln 1990
Lhe conLracL conLalned an opLlon Lo buy clause under Lhe
sald opLlon Lhe lessee had Lhe excluslve and lrrevocable rlghL
Lo buy 2000 square meLers 3 years from a year afLer Lhe
effecLlvlLy of Lhe conLracL aL 200 per square meLer 1haL
raLe shall be proporLlonaLely ad[usLed dependlng on Lhe peso
raLe agalnsL Lhe uS dollar whlch aL Lhe Llme of Lhe execuLlon
of Lhe conLracL was 14 pesos

Close Lo Lhe explraLlon of Lhe conLracL Luls 8acus dled on
1989 afLer uuray lnformed Lhe helrs of 8acus LhaL Lhey are
wllllng and ready Lo purchase Lhe properLy under Lhe opLlon
Lo buy clause 1he helrs refused Lo sell Lhus uuray flled a
complalnL for speclflc performance agalnsL Lhe helrs of 8acus
Pe showed LhaL he ls ready and able Lo meeL hls obllgaLlons
under Lhe conLracL wlLh 8acus 1he 81C ruled ln favor of Lhe
uurays and Lhe CA laLer afflrmed Lhe declslon

ISSULS CI 1nL CASL

Can Lhe helrs of Luls 8acus be compelled Lo sell Lhe porLlon of
Lhe loL under Lhe opLlon Lo buy clause?

?es Cb||gat|ons under an opt|on to buy are rec|proca|
ob||gat|ons 1he performance of one obllgaLlon ls condlLloned
on Lhe slmulLaneous fulflllmenL of Lhe oLher obllgaLlon n
other words in on option to buy the poyment of the
purchose price by the creditor is continqent upon the
execution ond de/ivery of the deed of so/e by the debtor
When Lhe uuray's exerclsed Lhelr opLlon Lo buy Lhe properLy
Lhelr obllgaLlon was Lo advlse Lhe 8acus' of Lhelr declslon and
readlness Lo pay Lhe prlce Lhey were noL yeL obllged Lo make
Lhe paymenL Cnly upon Lhe 8acus' acLual execuLlon and
dellvery of Lhe deed of sale were Lhey requlred Lo pay
1he uurays dld noL lncur ln delay when Lhey dld noL yeL
dellver Lhe paymenL nor make a conslgnaLlon before Lhe
explraLlon of Lhe conLracL n reciproco/ ob/iqotions neither
porty incurs in de/oy if the other porty does not comp/y or is
not reody to comp/y in o proper monner with whot is
incumbent upon him On/y from the moment one of the
porties fu/fi//s his ob/iqotion does de/oy by the other beqin

nLLD

1he peLlLlon ls uLnlLu nad Lhe declslon of Lhe CourL of
Appeals ls Alll8MLu
LASAM VS SMI1n
4S nIL 6S7

lAC1S
1he defendanL was Lhe owner of a publlc garage ln Lhe
Lown of San lernando La unlon and engaged ln Lhe
buslness of carrylng passengers for hlre from one polnL Lo
anoLher ln Lhe rovlnce of La unlon and Lhe surroundlng
provlnces uefendanL underLook Lo convey Lhe plalnLlffs
from San lernando Lo Currlmao llocos norLe ln a lord
auLomoblle Cn leavlng San lernando Lhe auLomoblle was
operaLed by a llcensed chauffeur buL afLer havlng reached
Lhe Lown of San !uan Lhe chauffeur allowed hls asslsLanL
8ueno Lo drlve Lhe car 8ueno held no drlver's llcense buL
had some experlence ln drlvlng 1he car funcLloned well
unLll afLer Lhe crosslng of Lhe Abra 8lver ln 1agudln when
accordlng Lo Lhe LesLlmony of Lhe wlLnesses for Lhe
plalnLlffs defecLs developed ln Lhe sLeerlng gear so as Lo
make accuraLe sLeerlng lmposslble and afLer zlgzagglng for
a dlsLance of abouL half kllomeLer Lhe car lefL Lhe road and
wenL down a sLeep embankmenL 1he auLomoblle was
overLurned and Lhe plalnLlffs plnned down under lL Mr
Lasam escaped wlLh a few conLuslons and a dlslocaLed rlb
buL hls wlfe !oaqulna recelved serlous ln[urles among
whlch was a compound fracLure of one of Lhe bones ln her
lefL wrlsL She also suffered nervous breakdown from
whlch she has noL fully recovered aL Lhe Llme of Lrlal
1he complalnL was flled abouL a year and a half afLer
and alleges LhaL Lhe accldenL was due Lo defecLs ln Lhe
auLomoblle as well as Lo Lhe lncompeLence and negllgence
of Lhe chauffeur
1he Lrlal courL held however LhaL Lhe cause of acLlon resLs
on Lhe defendanL's breach of Lhe conLracL of carrlage and
LhaL consequenLly arLlcles 11011107 of Lhe Clvll Code and
noL arLlcle 1903 are appllcable 1he courL furLher found
LhaL Lhe breach of conLacL was noL due Lo forLulLous evenLs
and LhaL Lherefore Lhe defendanL was llable ln damages

lSSuL
ls Lhe Lrlal courL correcL ln lLs flndlngs LhaL Lhe breach
of conLracL was noL due Lo a forLulLous evenL?

8uLlnC
?es lL ls sufflclenL Lo relLeraLe LhaL Lhe source of Lhe
defendanL's legal llablllLy ls Lhe conLracL of carrlage LhaL by
enLerlng lnLo LhaL conLracL he bound hlmself Lo carry Lhe
plalnLlffs safely and securely Lo Lhelr desLlnaLlon and LhaL
havlng falled Lo do so he ls llable ln damages unless he
shows LhaL Lhe fallure Lo fulflll hls obllgaLlon was due Lo
causes menLloned ln arLlcle 1103 of Lhe Clvll Code whlch
reads
no one shall be llable for evenLs whlch could noL be
foreseen or whlch even lf foreseen were lnevlLable wlLh
Lhe excepLlon of Lhe cases ln whlch Lhe law expressly
provldes oLherwlse and Lhose ln whlch Lhe obllgaLlon lLself
lmposes such llablllLy"

As wlll be seen some exLraordlnary clrcumsLances
lndependenL of Lhe wlll of Lhe obllgor or of hls employees
ls an essenLlal elemenL of a caso forLulLo ln Lhe presenL
case Lhls elemenL ls lacklng lL ls noL suggesLed LhaL Lhe
accldenL ln quesLlon was due Lo an acL of Cod or Lo adverse
road condlLlons whlch could have been foreseen As far as
Lhe record shows Lhe accldenL was caused elLher by defecLs
ln Lhe auLomoblle or else Lhrough Lhe negllgence of lLs
drlver 1haL ls noL a caso forLulLo
VIC1CkIAS LAN1LkS ASS INC L1 AL VS
VIC1CkIAS MILLING CC INC
Gk No L6648 Iu|y 2S 19SS
lAC1S
1he peLlLloners vlcLorlas lanLers AssoclaLlon lnc
and norLh negros lanLers AssoclaLlon lnc and Lhr
respondenL vlcLorlas Mllllng Co lnc enLered lnLo a mllllng
conLracL whereby Lhey sLlpulaLed a 30year perlod wlLhln
whlch Lhe sugar cane produced by Lhe peLlLloner would be
mllled by Lhe respondenL cenLral 1he parLles also
sLlpulaLed LhaL ln Lhe evenL of force ma[uere Lhe conLracL
shall be deemed suspended durlng Lhls perlod 1he
peLlLloner falled Lo dellver Lhe sugar cane durlng Lhe four
years of Lhe !apanese occupaLlon and Lhe Lwo years afLer
llberaLlon when Lhe mlll was belng rebullL or a LoLal of slx
years
lSSuL
Can Lhe peLlLloners be compelled Lo dellver sugar
cane for slx more years afLer Lhe explraLlon of Lhe 30year
perlod Lo make up for whaL Lhey falled Lo dellver Lo Lhe
respondenL?

8uLlnC no lorLulLous evenL relleves Lhe obllgor from
fulfllllng Lhe conLracLual obllgaLlon under ArLlcle 1174 of
Lhe Clvll Code 1he sLlpulaLlon ln Lhe conLracL LhaL ln Lhe
evenL of force ma[eure Lhe conLracL shall be deemed
suspended durlng Lhe sald perlod does noL mean LhaL Lhe
happenlng of any of Lhose evenLs sLops Lhe runnlng of Lhe
perlod agreed upon lL only relleves Lhe parLles from Lhe
fulflllmenL of Lhelr respecLlve obllgaLlons durlng LhaL LlmeLhe
peLlLloner from dellverlng Lhe sugar cane and Lhe
respondenL cenLral from mllllng ln order LhaL Lhe
respondenL cenLral may be enLlLled Lo demand from Lhe
peLlLloner Lhe fulflllmenL of Lhelr parL ln Lhe conLracLs Lhe
laLLer musL have been able Lo perform lL buL falled or
refused Lo do so and noL when Lhey were prevenLed by
force ma[eure such as war 1o requlre Lhe peLlLloners Lo
dellver Lhe sugar cane whlch Lhey falled Lo dellver durlng
Lhe slx years ls Lo demand from Lhem Lhe fulflllmenL of an
obllgaLlon whlch was lmposslble of performance durlng
Lhe Llme lL became due nemo LeneLur ed lmposslbllla 1he
respondenL cenLral noL belng enLlLled Lo demand from Lhe
peLlLloners Lhe performance of Lhe laLLer's parL of Lhe
conLracLs under Lhose clrcumsLances cannoL laLer on
demand lLs fulflllmenL 1he performance of whaL Lhe law
has wrlLLen off cannoL be demanded and requlred 1he
prayer LhaL Lhe peLlLloners be compelled Lo dellver sugar
cannoL for slx years more Lo make up for whaL Lhey falled
Lo dellver Lhe fulflllmenL of whlch was lmposslble of
granLed would ln effecL be an exLenslon of Lhe Lerms of Lhe
conLracLs enLered lnLo by and beLween Lhe parLles
UNIVLkSI1 CI 1nL nILIINLS VS DL LCS ANGLLLS

lAC1S

Cn november 2 1960 u and ALuMCC enLered lnLo a
logglng agreemenL whereby Lhe laLLer was granLed excluslve
auLhorlLy Lo cuL collecL and remove Llmber from Lhe Land
CranL for a perlod sLarLlng from Lhe daLe of agreemenL Lo
uecember 31 1963 exLendlble for a perlod of 3 years by
muLual agreemenL

Cn uecember 8 1964 ALuMCC lncurred an unpald accounL
of 21936294 uesplLe repeaLed demands ALuMCC sLlll
falled Lo pay so u senL a noLlce Lo resclnd Lhe logglng
agreemenL Cn Lhe oLher hand ALuMCC execuLed an
lnsLrumenL enLlLled AcknowledgmenL of uebL and roposed
Manner of aymenLs lL was approved by Lhe presldenL of u
whlch sLlpulaLed Lhe followlng

3 ln Lhe evenL LhaL Lhe paymenLs called for are noL sufflclenL
Lo llquldaLe Lhe foregolng lndebLedness Lhe balance
ouLsLandlng afLer Lhe sald paymenLs have been applled shall
be pald by Lhe debLor ln full no laLer Lhan !une 30 1963

3 ln Lhe evenL LhaL Lhe debLor falls Lo comply wlLh any of lLs
promlses Lhe uebLor agrees wlLhouL reservaLlon LhaL
CredlLor shall have Lhe rlghL Lo conslder Lhe Logglng
AgreemenL resclnded wlLhouL Lhe necesslLy of any [udlclal
sulL

ALuMCC conLlnued lLs logglng operaLlons buL agaln lncurred
an unpald accounL Cn !uly 191963 u lnformed ALuMCC
LhaL lL had as of LhaL daLe consldered resclnded and of no
furLher legal effecL Lhe logglng agreemenL and LhaL u had
already Laken sLeps Lo have anoLher concesslonalre Lake over
Lhe logglng operaLlon ALuMCC flled a peLlLlon Lo en[oln u
from conducLlng Lhe blddlng 1he lower courL ruled ln favor of
ALuMCC hence Lhls appeal

lSSuL

Can peLlLloner u LreaL lLs conLracL wlLh ALuMCC resclnded
and may dlsregard Lhe same before any [udlclal
pronouncemenL Lo LhaL effecL?

8uLlnC

?es ln Lhe flrsL place u and ALuMCC had expressly
sLlpulaLed LhaL upon defaulL by Lhe debLor u has Lhe rlghL
and Lhe power Lo conslder Lhe Logglng AgreemenL of
uecember 2 1960 as resclnded wlLhouL Lhe necesslLy of any
[udlclal sulL As Lo such speclal sLlpulaLlon and ln connecLlon
wlLh ArLlcle 1191 of Lhe Clvll Code Lhe Supreme CourL sLaLed
ln lrollan vs an CrlenLal Shlpplng Co

1here ls noLhlng ln Lhe law LhaL prohlblLs Lhe parLles from
enLerlng lnLo agreemenL LhaL vlolaLlon of Lhe Lerms of Lhe
conLracL would cause cancellaLlon Lhereof even wlLhouL
courL lnLervenLlon ln oLher words lL ls noL always necessary
for Lhe ln[ured parLy Lo resorL Lo courL for resclsslon of Lhe
conLracL"
nILIINL AMUSLMLN1 LN1LkkISLS VS NA1IVIDAD

lAC1S

Cn !anuary 6 1961 Lhe plalnLlff hlllpplne AmusemenL
LnLerprlses lnc enLered lnLo a conLracL wlLh Lhe defendanL
Soledad naLlvldad whereby Lhe former leased Lo Lhe laLLer
an auLomaLlc phonograph more popularly known as
[ukebox SomeLlme LhereafLer naLlvldad wroLe a leLLer Lo
plalnLlff requesLlng for Lhe reLurn of Lhe [ukebox Lo Lhe
company naLlvldad reasoned ouL LhaL sald [ukebox ls
defecLlve 1he plalnLlff however conLended LhaL Lhe sLocklng
up of colns ls qulLe normal ln any colnoperaLed phonograph
lL Lhen rlghLfully relnsLalled a new [ukebox ln replacemenL of
Lhe flrsL one

Cn AugusL 4 and CcLober 16 1961 plalnLlff demanded from
defendanL spouses Lhe compllance Lo renew Lhe lease
conLracL uefendanLs refused Lhe demand and ordered for
Lhe resclsslon of Lhe conLracL ln Lhelr favor by reason of Lhe
plalnLlffs fallure Lo perform lLs obllgaLlon Lo render Lhe
auLomaLlc phonograph sulLable for Lhe purpose for whlch lL
was lnLended

lSSuL

ls defendanL enLlLled Lo resclsslon?

8uLlnC

no 8esclsslon by [udlclal acLlon under ArLlcle 1191 wlll be
ordered only where Lhe breach complalned of ls subsLanLlal
as Lo defeaL Lhe ob[ecL of Lhe parLles ln enLerlng lnLo Lhe
agreemenL lL wlll noL be granLed where Lhe breach ls sllghL or
casual 1he defendanLs asked Lhe plalnLlff Lo reLrleve lLs
phonograph clalmlng LhaL Lhere were Llmes when Lhe colns
dropped lnLo Lhe sloL would geL sLuck resulLlng ln lLs fallure
Lo play Lhe deslred muslc 8uL aparL from Lhls bare sLaLemenL
Lhere ls noLhlng ln Lhe evldence whlch shows Lhe frequency
wlLh whlch Lhe [ukebox falled Lo funcLlon properly 1he
expresslon Lhere are Llmes connoLes occaslonal fallure of
Lhe phonograph Lo operaLe noL frequenL enough Lo render lL
unsulLable and unservlceable
LLGAkDA VS SALDAA

Gk No L26S78 Ianuary 28 1974
lAC1S

Saldana had enLered lnLo Lwo wrlLLen conLracLs wlLh Legarda
a subdlvlslon owner whereby Legarda agreed Lo sell Lo hlm
Lwo of hls loLs for 1300 per loL payable over a span of 10
years on 120 monLhly lnsLallmenLs wlLh 10 lnLeresL per
annum Saldana pald for elghL consecuLlve years buL dld noL
make any furLher paymenLs due Lo Legarda's fallure Lo make
Lhe necessary lmprovemenL on Lhe sald loL whlch was
promlsed by Lhelr represenLaLlve Lhe sald Mr Cenon
Saldana already pald a LoLal of hp338206 1he sLaLemenL
of accounL shows LhaL Saldana pald hp168228 of Lhe
prlnclpal and hp188978 for Lhe lnLeresL lL dld noL
dlsLlngulsh whlch of Lhe Lwo sald loLs was pald eLlLloner
Lhen resclnded Lhe conLracL based on Lhe sLlpulaLlon of Lhe
conLracL LhaL paymenLs made by respondenL shall be
consldered as renLals and any lmprovemenLs made shall be
forfelLed ln favor of Lhe peLlLloner 1he lower courL ruled
susLalnlng peLlLloner's cancellaLlon of conLracL So
respondenL appealed and [udgmenL was reversed ln favor of
Lhe respondenL orderlng peLlLloners Lo dellver Lo plalnLlff one
of Lhe Lwo loLs aL Lhe cholce of Lhe defendanL and execuLe
Lhe deed of conveyance Pence Lhls peLlLlon

lSSuL

Was Lhe cancellaLlon of Lhe sale of conLracL valld?

8uLlnC

no even Lhough lL was sLlpulaLed LhaL fallure Lo compleLe Lhe
paymenL would resulL Lo Lhe cancellaLlon of Lhe conLracL lL
was sLlll noL valld As clearly shown ln Lhe sLaLemenL of
accounL Saldana was able Lo pay one of Lhe Lwo sald loLs
under ArLlcle 1234 of Lhe new Clvll Code lf Lhe obllgaLlon
has been subsLanLlally performed ln good falLh Lhe obllgor
may recover as Lhough Lhere had been a sLrlcL and compleLe
fulflllmenL less damages suffered by Lhe obllgee" Pence
under Lhe auLhorlLy of ArLlcle 1234 of Lhe new Clvll Code
Saladana ls enLlLled Lo one of Lhe Lwo loLs of hls cholce and
Lhe lnLeresL pald shall be forfelLed ln favor of Lhe peLlLloners