HONGKONG VS BIENVENIDO AND BROQUEZA FACTS: SPOUSES BIENVENIDO AND BROQUEZA ARE EMPLOYEES OF HEREIN PETITIONER HSBC.

THEY ARE ALSO MEMBERS OF HSBCL-SRP, A RETIREMENT PLAN ESTABLISHED BY HSBC. BROQUEZA OBTAINED A CAR AND APPLIANCE LOAN IN THE AMOUNT OF p175,00 AND P24,000 RESPECTIVELY. GERONG BIENVENIDO APPLIED AND WAS GRANTED AN EMERGENCY LOAN IN THE AMOUNT OF P35,780. THESE LOANS ARE PAID THROUGH AUTOMATIC SALARY DEDUCTION. A LABOR DISPUTE AROSE BETWEEN HSBC AND ITS EMPLOYEES CAUSING THE TERMINATION OF EMPLOYEES, INCLUDING THE SPOUSES. THUS, THEY WERE NOT ABLE TO PAY THE MONTHLY AMORTIZATION. HSBC FILED A CIVIL CASE AGAINST THE SPOUSES FOR RECOVERY AND COLLECTION OF SUMS OF MONEY. ISSUE: W/N HSBCL-SRP HAS THE RIGHT TO DEMAND IMMEDIATE PAYMENT HELD: THE COURT RULED THAT HSBCL-SRP HAS THE RIGHT TO DEMAND IMMEDIATE PAYMENT BECAUSE AS STATED IN ART.1179, “EVERY OBLIGATION WHOSE PERFORMANCE DOES NOT DEPEND UPON A FUTURE OR UNCERTAIN EVENT, OR UPON A PAST EVENT UNKNOWN TO THE PARTIES, IS DEMANDABLE AT ONCE.” THE OBLIGATION OF THE SPOUSES IS A PURE OBLIGATION

PAY VS PALANCA FACTS: THE LATE JUSTO PALANCA AND HIS WIFE, ROSA, PROMISED TO PAY GEORGE PAY IN THE AMOUNT OF p26,900 WITH INTEREST THEREON AT THE RATE OF 12% PER ANNUM. GEORGE PAY IS ASKING THE SURVIVING SPOUSE OF PALANCA, THE ADMINISTRATIX OF CERTAIN PROPERTIES OF PALANCA. PAY IS NO FILING A CLAIM AGAINST THE ADMINISTRATIX. HOWEVER, THE SURVIVING SPOUSE OF PALANCA DENIED THAT SHE IS THE ADMINISTRATIX, THAT THE PROPERTY IS NO LONGER THE DEBTOR’S, AND THAT THE CREDITOR’S RIGHT OF ACTIN HAS PRESCRIBED. 15YRS HAVE ALREADY ELAPSED SINCE THE EXECUTION OF THE PROMISSORY NOTE. ISSUE: W/N GEORGE PAY IS BARRED BY PRESCRIPTION. HELD: THE COURT RULED THAT ACCDG TO ART.1179, PURE OBLIGATIONS ARE DEMANDABLE AT ONCE. IN THIS CASE, THE FILING OF THE ACTION FOR RECOVERY AND COLLECTION OF PAYMENT IS ALREADY TOO LATE,

15YRS HAVING ELAPSED. ACCDG TO THE CIVIL CODE, THE PRESCRIPTIVE PERIOD FOR A WRITTEN CONTRACT IS THAT OF 10 YEARS.

Natino vs. IAC

Facts: Petitioners Trinidad and Epifanio Natino executed a real-estate mortgage in favor of respondent-bank Rural Bank of Aguilar, for security to a loan amounting to P2000. On the agreed date, the spouses failed to pay the said loan and in the foreclosure of the property, the bank was the highest bidder at its auction. Along with the certificate of sale, a notice for the redemption period was sent to the spouses. Still, upon the expiration of the said period, no redemption was made. Upon finalization of the deed of sale, the spouses deposited P4000 to the bank, and stated that they were granted the extension of the redemption period and it was understood that it was a “pay when able” arrangement. This said agreement was not approved by the bank’s Board of Directors, nor was it ratified. The coart ruled in favor of the bank, hence this petition Issue: W/N the agreement is valid and therefore, binding. Held: Given the provisions of article 1180, the contentions of the petitioner would be meritous. However, because of the fact that such agreement was not approved by the Board of Directors, it was held that a “meeting of minds” did not occur, therefore making the said arrangement not binding. The case was dismissed

CENTRAL PHILIPPINE UNIVERSITY vs. COURT OF APPEALS, REMEDIOS FRANCO, FRANCISCO N. LOPEZ, CECILIA P. VDA. DE LOPEZ, REDAN LOPEZ AND REMARENE LOPEZ. G.R. No. 112127 July 17, 1995

BELLOSILLO, J.: Facts:

Sometime in 1939, the late Don Ramon Lopez, Sr. executed a deed of donation in favor of the Central Philippine College (now Central Philippine University [CPU]) of a parcel of land with the following annotations copied from the deed of donation — 1. The land described shall be utilized by the CPU exclusively for the establishment and use of a medical college with all its buildings as part of the curriculum; 2. The said college shall not sell, transfer or convey to any third party nor in any way encumber said land; 3. The said land shall be called "RAMON LOPEZ CAMPUS", and the said college shall be under obligation to erect a cornerstone bearing that name. Any net income from the land or any of its parks shall be put in a fund to be known as the "RAMON LOPEZ CAMPUS FUND" to be used for improvements of said campus and erection of a building thereon. On 31 May 1989, private respondents, who are the heirs of Don Ramon Lopez, Sr., filed an action for annulment of donation, reconveyance and damages against CPU alleging that since 1939 up to the time the action was filed the latter had not complied with the conditions of the donation. Private respondents also argued that petitioner had in fact negotiated with the National Housing Authority (NHA) to exchange the donated property with another land owned by the latter. In its answer petitioner alleged that the right of private respondents to file the action had prescribed; that it did not violate any of the conditions in the deed of donation because it never used the donated property for any other purpose than that for which it was intended; and, that it did not sell, transfer or convey it to any third party. On 31 May 1991, the trial court held that petitioner failed to comply with the conditions of the donation and declared it null and void. Petitioner was directed to execute a deed of the reconveyance of the property in favor of the heirs of the donor, namely, private respondents herein. Petitioner appealed to the Court of Appeals which ruled that the annotations at the back of petitioner's certificate of title were resolutory conditions breach of which should terminate the rights of the donee thus making the donation revocable. The appellate court also found that while the first condition mandated petitioner to utilize the donated property for the establishment of a medical school, the donor did not fix a period within which the condition must be fulfilled, hence, until a period was fixed for the fulfillment of the condition, petitioner could not be considered as having failed to comply with its part of the bargain. Thus, the appellate court rendered its decision reversing the appealed decision and remanding the case to the court of origin for the determination of the time within which petitioner should comply with the first condition annotated in the certificate of title.

Issue:

Whether or not the quoted annotations in the certificate of title of petitioner are onerous obligations and resolutory conditions of the donation which must be fulfilled, non-compliance of which would render the donation revocable.

Held: Yes. Under Art. 1181 of the Civil Code, on conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. Thus, when a person donates land to another on the condition that the latter would build upon the land a school, the condition imposed was not a condition precedent or a suspensive condition but a resolutory one. It is not correct to say that the schoolhouse had to be constructed before the donation became effective, that is, before the donee could become the owner of the land, otherwise, it would be invading the property rights of the donor. The donation had to be valid before the fulfillment of the condition. If there was no fulfillment or compliance with the condition, such as what obtains in the instant case, the donation may now be revoked and all rights which the donee may have acquired under it shall be deemed lost and extinguished. The claim of petitioner that prescription bars the instant action of private respondents is unavailing. The condition imposed by the donor, i.e., the building of a medical school upon the land donated, depended upon the exclusive will of the donee as to when this condition shall be fulfilled. When petitioner accepted the donation, it bound itself to comply with the condition thereof. Since the time within which the condition should be fulfilled depended upon the exclusive will of the petitioner, it has been held that its absolute acceptance and the acknowledgment of its obligation provided in the deed of donation were sufficient to prevent the statute of limitations from barring the action of private respondents upon the original contract which was the deed of donation. Moreover, the time from which the cause of action accrued for the revocation of the donation and recovery of the property donated cannot be specifically determined in the instant case. A cause of action arises when that which should have been done is not done, or that which should not have been done is done.

Tayag vs. Court of Appeals and Leyva 2072010 TAYAG vs. CA and LEYVA G.R. No. 96053 March 3, 1993 Facts:

Siblings Juan Galicia Sr. and Celerina Labuguin entered into a contract to sell a parcel of land in Nueva Ecija to a certain Albrigido Leyva: o 3K upon agreement o 10K ten days after the agreement o 10K representing vendor’s indebtedness to Phil Veterans Bank o 27K payable within one year from execution of contract. Leyva only paid parts of the obligation. But even after the grace period for payment made in the contract and while litigation of such case, the petitioners still allowed Leyva to make payments. With regards to the obligation payable to the Phil Veterans bank by the vendee, as they deemed that it was not paid in full, such obligation they completed by adding extra amount to fulfill such obligation. This was fatal in their case as this is Leyva’s argument that they constructively fulfilled the obligation which is rightfully due to him. (Trivia: It was Celerina, Juan’s sister, that paid the bank to complete such obligation). Petitioners claim that they are only “OBLIGEES” with regards to the contract, so the principle of constructive fulfillment cannot be invoked against them. Petitioners, being both creditor and debtor to private respondent, in accepting piecemeal payment even after the grace period, are barred to take action through estoppel. Issue: 1. WON there was constructive fulfillment in the part of the petitioners that shall make rise the obligation to deliver to Leyva the deed of sale? YES 2. WON they are still entitled to rescind the contract? NO, barred by estoppel. Held: 1. In a contract of purchase, both parties are mutually obligors and also obligees, and any of the contracting parties may, upon non-fulfillment by the other privy of his part of the prestation, rescind the contract or seek fulfillment (Article 1191, Civil Code). In short, it is puerile for petitioners to say that they are the only obligees under the contract since they are also bound as obligors to respect the stipulation in permitting private respondent to assume the loan with the Philippine Veterans Bank which petitioners impeded when they paid the balance of

said loan. As vendors, they are supposed to execute the final deed of sale upon full payment of the balance as determined hereafter. 2. Petitioners accepted Leyva’s delayed payments not only beyond the grace periods but also during the pendency of the case for specific performance. Indeed, the right to rescind is not absolute and will not be granted where there has been substantial compliance by partial payments. By and large, petitioners’ actuation is susceptible of but one construction — that they are now estopped from reneging from their commitment on account of acceptance of benefits arising from overdue accounts of private respondent. -----------------------------------------------------------------------------Coronel et al vs CA GR no. 103577. Oct. 7, 1996 Facts: Ramona Alcatraz and Romulo Coronel had an agreement for a sale of land worth 1.24 million. Ramona gave a downpayment of 50k with the condition that upon receipt of the downpayment, the Coronels would cause the transfer of Ramona’s name over the TCT of the land. The title of the land was in the name of Romulo’s father. Furthermore, upon transfer of Ramona’s name, the Coronels would execute a deed of absolute sale in favor of Ramona, and that Ramona would pay the remaining balance of 1.9 million. The Coronels did transfer Ramona’s name upon receipt of the downpayment but the Coronels later sold the land to Catalina Mabanag for the price of 1.5 million. The Coronels then rescinded the earlier contract of sale. Ramona filed specific performance against Coronel and caused the annotation of lis pendens at the back of TCT. Issues: 1. Is the agreement between Coronel and Ramona as evidenced by receipt of down payment a contract to sell or contract of sale? 2. Is the contract of sale between Coronel and Catalina valid? Held: 1. The contract entered upon by Coronel and Ramona is a contract of sale and not a contract to sell. Check 1305, 1458, and 1479. The agreement could not have been a contract to sell because the sellers herein made no express reservation of ownership or title to the subject parcel of land. Furthermore, the circumstance which prevented the parties from entering into an absolute contract of sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the purchase price.

2. The sale between Coronel and Catalina is void. Check Art. 1544- double sale. The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of the second sale cannot defeat the first buyer’s rights except when the second buyer first registers in good faith the second sale. Conversely, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register, since knowledge taints his registration with bad faith. In a case of double sale, what finds relevance and materiality is not whether or not the second buyer in good faith but whether or not said second buyer registers such second sale in good faith, that is, without knowledge of any defect in the title of the property sold. Mabanag could not have in good faith, registered the sale entered into on February 18, 1985 because as early as February 22, 1985, a notice of lis pendens had been annotated on the transfer certificate of title in the names of petitioners. -----------------------------------------------------------------Buot vs. Court of Appeals 4072010 BUOT vs. Court of Appeals G.R. No. 119679 May 18, 2001 Facts: Encarnacion Diaz vda. De Reston is the original owner of the land in question, found at Tulay, Minglanilla, Cebu. On December 6, 1974, Encarnacion allegedly sold to the Buot spouses the eastern part of the parcel of land for an amount of P18K. The MOA states that P1K shall be pain in earnest as downpayment, and the remaining amount to shall be delivered by the Buot spouses when Encarnacion shall notify them that the title shall be ready for the transfer of their names. It was also agreed that title to, ownership, possession and enjoyment of the portion sold shall remain with the vendor until the full consideration of the sale shall have been received by her and acknowledged in a document duly executed for said purpose. Thereafter, Encarnacion mortgaged the whole parcel of land to the del Rosario spouses. As mortgagee, he was given the power to buy the property. After three months, he bought it for P100K, P20k as the downpayment. The del Rosario spouses filed for a free patent of the land and was consequently approved. The Buot spouses are now seeking for the reconveyance of the land, as they were the rightful owners. The del Rosario spouses contend that they bought the said property in good faith. Encarnacion, deceased, is now represented by her heirs.

The Buot spouses contend that the sale was perfected from the moment the parties agreed on the object of the contract and the price. They also contend that the del Rosario spouses defrauded them. Issue: 1. WON the Memorandum of Agreement the Buot spouses entered into with Encarnacion is a contract of sale? NO 2. WON the Buot spouses are entitled to recover the property in question? NO 3. WON the Buot spouses may recover the partial payments they made to Encarnacion? YES Held: 1. THERE WAS NO ACTUAL SALE UNTIL FULL PAYMENT was made by the vendees, and that on the part of the vendees, no full payment would be made until a certificate of title was ready for transfer in their names. The MOA is neither a contract of sale nor an option to purchase, but it is a contract to sell. An option is a contract granting a privilege to buy or sell at a determined price within an agreed time, the specific length or duration of which is not present in the Memorandum of Agreement. In a contract to sell, the title over the subject property is transferred to the vendee only upon the full payment of the stipulated consideration. Unlike in a contract of sale, the title in a contract to sell does not pass to the vendee upon the execution of the agreement or the Delivery of the thing sold. Encarnacion clearly reserved to herself ownership and possession of the property until full payment of the purchase price by the vendees, such payment being a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an event which prevented the obligation from acquiring obligatory force. 2. Petitioners clearly had no right to ask for reconveyance of the property on the ground of fraud as there was no perfected contract of sale between them and Encarnacion. Only the person who has been deprived of his property through fraud, either actual or constructive and who was not at fault may file a personal action for reconveyance. The pretension that there was fraud when Mariano was able to obtain a Free Patent Title, is not supported by evidence. On the contrary, fraud cannot be presumed and must be established by clear and sufficient evidence. 3. Even if the Buot spouses did not mistakenly make partial payments, inasmuch as the suspensive condition was not fulfilled, it is only fair and just that the Buot spouses be allowed to recover what they

had paid in expectancy that the condition would happen; otherwise, there would be unjust enrichment on the part of Encarnacion.

UNIVERSAL FOOD CORPORATION VS. CA 33 SCRA 1

FACTS: This is a petition for certiorari by the UFC against the CA decision of February 13, 1968 declaring the BILL OF ASSIGNMENT rescinded, ordering UFC to return to Magdalo Francisco his Mafran sauce trademark and to pay his monthly salary of P300.00 from Dec. 1, 1960 until the return to him of said trademark and formula.

In 1938, plaintiff Magdalo V. Francisco, Sr. discovered a formula for the manufacture of a food seasoning (sauce) derived from banana fruits popularly known as MAFRAN sauce. It was used commercially since 1942, and in the same year plaintiff registered his trademark in his name as owner and inventor with the Bureau of Patents. However, due to lack of sufficient capital to finance the expansion of the business, in 1960, said plaintiff secured the financial assistance of Tirso T. Reyes who, after a series of negotiations, formed with others defendant Universal Food Corporation eventually leading to the execution on May 11, 1960 of the

aforequoted "Bill of Assignment".

On May 31, 1960, Magdalo Francisco entered into contract with UFC stipulating among other things that he be the Chief Chemist and Second Vice-President of UFC and shall have absolute control and supervision over the laboratory assistants and personnel and in the purchase and safekeeping of the chemicals used in the preparation of said Mafran sauce and that said positions are permanent in nature.

In line with the terms and conditions of the Bill of Assignment, Magdalo Francisco was appointed Chief Chemist with a salary of P300.00 a month. Magdalo Francisco kept the formula of the Mafran sauce secret to himself. Thereafter, however, due to the alleged scarcity and high prices of raw materials, on November 28, 1960, Secretary-Treasurer Ciriaco L. de Guzman of UFC issued a Memorandum duly approved by the President and General Manager Tirso T. Reyes that only Supervisor Ricardo Francisco should be retained in the factory and that the salary of plaintiff Magdalo V. Francisco, Sr., should be stopped for the time being until the corporation should resume its operation. On December 3, 1960, President and General Manager Tirso T. Reyes, issued a memorandum to

Victoriano Francisco ordering him to report to the factory and produce "Mafran Sauce" at the rate of not less than 100 cases a day so as to cope with the orders of the corporation's various distributors and dealers, and with instructions to take only the necessary daily employees without employing permanent employees. Again, on December 6, 1961, another memorandum was issued by the same President and General Manager instructing the Assistant Chief Chemist Ricardo Francisco, to recall all daily employees who are connected in the production of Mafran Sauce and also some additional daily employees for the production of Porky Pops. On December 29, 1960, another memorandum was issued by the President and General Manager instructing Ricardo Francisco, as Chief Chemist, and Porfirio Zarraga, as Acting Superintendent, to produce Mafran Sauce and Porky Pops in full swing starting January 2, 1961 with further instructions to hire daily laborers in order to cope with the full blast operation. Magdalo V. Francisco, Sr. received his salary as Chief Chemist in the amount of P300.00 a month only until his services were terminated on November 30, 1960. On January 9 and 16, 1961, UFC, acting thru its President and General Manager, authorized Porfirio Zarraga and Paula de Bacula to look for a buyer of the corporation including its trademarks, formula and assets at a price of not less

than P300,000.00. Due to these successive memoranda, without plaintiff Magdalo V. Francisco, Sr. being recalled back to work, he filed the present action on February 14, 1961. Then in a letter dated March 20, 1961, UFC requested said plaintiff to report for duty, but the latter declined the request because the present action was already filed in court.

ISSUES: 1. Was the Bill of Assignment really one that involves transfer of the formula for Mafran sauce itself? 2. Was petitioner’s contention that Magdalo Francisco is not entitled to rescission valid?

RULING:

1. No. Certain provisions of the bill would lead one to believe that the formula itself was transferred. To quote, “the respondent patentee "assign, transfer and convey all its property rights and interest over said Mafran trademark and formula for MAFRAN SAUCE unto the Party of the Second Part," and the last paragraph states that such "assignment, transfer and conveyance is absolute and irrevocable (and) in no case shall the PARTY OF THE First Part ask, demand or sue

for the surrender of its rights and interest over said MAFRAN trademark and mafran formula."

“However, a perceptive analysis of the entire instrument and the language employed therein would lead one to the conclusion that what was actually ceded and transferred was only the use of the Mafran sauce formula. This was the precise intention of the parties.”

The SC had the following reasons to back up the above conclusion. First, royalty was paid by UFC to Magdalo Francisco. Second, the formula of said Mafran sauce was never disclosed to anybody else. Third, the Bill acknowledged the fact that upon dissolution of said Corporation, the patentee rights and interests of said trademark shall automatically revert back to Magdalo Francisco. Fourth, paragraph 3 of the Bill declared only the transfer of the use of the Mafran sauce and not the formula itself which was admitted by UFC in its answer. Fifth, the facts of the case undeniably show that what was transferred was only the use. Finally, our Civil Code allows only “the least transmission of right, hence, what better way is there to show the least transmission of right of the transfer of the use of the transfer of the formula itself.”

2. No. Petitioner’s contention that Magdalo

Francisco’s petition for rescission should be denied because under Article 1383 of the Civil Code of the Philippines rescission can not be demanded except when the party suffering damage has no other legal means to obtain reparation, was of no merit because “it is predicated on a failure to distinguish between a rescission for breach of contract under Article 1191 of the Civil Code and a rescission by reason of lesion or economic prejudice, under Article 1381, et seq.” This was a case of reciprocal obligation. Article 1191 may be scanned without disclosing anywhere that the action for rescission thereunder was subordinated to anything other than the culpable breach of his obligations by the defendant. Hence, the reparation of damages for the breach was purely secondary. Simply put, unlike Art. 1383, Art. 1191 allows both the rescission and the payment for damages. Rescission is not given to the party as a last resort, hence, it is not subsidiary in nature.

Bustamante vs Rosel Facts: Petitioner Natalia Bustamante and her late husband Ismael, entered into a loan agreement with the respondent Norma Rosel. As collateral, the petitioners agreed that Norma would have the option to purchase a 70 sq-meter lot at a pre-set price of P2000,000 in the event that they fail to pay the loan (worth P100k) with interest of 18% per annum. Before the loan was to mature, the respondent proposed to buy the property, where it was denied by Natalia, and instead she asked for the extension of the loan, and to sell different parcel of land. Her offers were also denied. Nevertheless, the maturity date came, and she was able to present the money which was rejected by Norma. Natalia deposited the money to Norma’s bank account which was then returned to her. A civil case was filed ordering Natalia to sell the property to Norma, which the lower court ruled in the respondent’s favor. Hence this petition

Issue: W/N the petitioner maybe ordered to sell the property.

Held: No, although it was stipulated in their contract, Natalia cannot be compelled to sell. Mainly for 2 reasons, (1) she did not fail to pay the debt, and (2) their agreement is within the concept of “Pactum Commissiorium” which assumes the property is already sold, in which case, such stipulation is void. The decision appealed from is reversed.

PEREZ VS CA Facts Primitivo B. Perez had been insured with the BF Lifeman Insurance Corporation since 1980 for P20,000.00. an agent of the insurance corporation, Rodolfo Lalog, visited Perez in Guinayangan, Quezon and convinced him to apply for additional insurance coverage of P50,000.00Primitivo B. Perez accomplished an application form for the additional insurance coverage of P50,000.00. On November 25, 1987, Perez died in an accident. He was riding in a banca which capsized during a storm. At the time of his death, his application papers for the additional insurance of P50,000.00 were still with the Gumaca office in Quezon which office was supposed to forward the papers to the Manila office. Without knowing that Perez died on November 25, 1987, BF Lifeman Insurance Corporation approved the application and issued the corresponding policy for the P50,000.00 on December 2, 1987.[4] Ncmâ Petitioner Virginia Perez went to Manila to claim the benefits under the insurance policies of the deceased. She was paid under the first insurance policy but the insurance company refused to pay the claim under the additional policy coverage of P50,000.00 On September 21, 1990, private respondent BF Lifeman Insurance Corporation filed a complaint against Virginia A. Perez seeking the rescission and declaration of nullity of the insurance contract in question. Petitioner Virginia A. Perez, on the other hand, averred that the deceased had fulfilled all his prestations under the contract and all the elements of a valid contract are present. RTC ruled in favor of [etitoner. CA reversed the decision. Hence this petition. Issue WON the condition that that the policy issued by the corporation be delivered and received by the applicant in good health, is potestative, being dependent upon the will of the insurance company, and is therefore null and void. Held

No A potestative condition depends upon the exclusive will of one of the parties. For this reason, it is considered void. Article 1182 of the New Civil Code states: When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. The condition imposed by the corporation that the policy must have been delivered to and accepted by the applicant while he is in good health can hardly be considered as a potestative or facultative condition. On the contrary, the health of the applicant at the time of the delivery of the policy is beyond the control or will of the insurance company. Rather, the condition is a suspensive one whereby the acquisition of rights depends upon the happening of an event which constitutes the condition. In this case, the suspensive condition was the policy must have been delivered and accepted by the applicant while he is in good health. There was non-fulfillment of the condition, however, inasmuch as the applicant was already dead at the time the policy was issued. Hence, the non-fulfillment of the condition resulted in the non-perfection of the contract.

CATUNGAL VS CA Facts Agapita T. Catungal (Agapita) owned a parcel of land in her name situated in the Barrio of Talamban, Cebu City. The said property was allegedly the exclusive paraphernal property of Agapita. gapita, with the consent of her husband Jose, entered into a Contract to Sell[6] with respondent Rodriguez. Subsequently, the Contract to Sell was purportedly "upgraded" into a Conditional Deed of Sale. It was agreed that P25,000,000.00 shall be payable in installments after after the VENDEE have (sic)' successfully negotiated, secured and provided a Road Right of Way either by widening the existing Road Right of Way or by securing a new Road Right of Way. If however said Road Right of Way could not be negotiated, the VENDEE shall give notice to the VENDOR for them to reassess and solve the problem by taking other options and should the situation ultimately prove futile, he shall take steps to rescind or cancel the herein Conditional Deed of Sale. the spouses Catungal requested an advance of P5,000,000.00 on the purchase price for personal reasons. Shortly after his refusal to pay the advance, he purportedly learned that the Catungals were offering the property for sale to third parties. Jose Catungal demanded that the former make up his mind about buying the land or exercising his "option" to buy the property. Should Rodriguez fail to exercise his option to buy the land, the Catungals warned that they would consider the contract cancelled and that they were free to look for other buyers. Jose cancelled the contract. Rodriquez filed for a restraining order a writ of preliminary injunction. The Catungals alleged that there was contractual breach and bad faith on the part of Rodriguez. Rodriguez alleged that the Catungals were guilty of several misrepresentations which purportedly induced Rodriguez to buy the property at the price of P25,000,000.00. RTC ru;ed in favor of Rodriguez. Hence this petition. Issue

WON the provisions of the condtional deed of sale constitute a postative condition Held No. aragraph 1(b) of the Conditional Deed of Sale, stating that respondent shall pay the balance of the purchase price when he has successfully negotiated and secured a road right of way, is not a condition on the perfection of the contract nor on the validity of the entire contract or its compliance as contemplated in Article 1308. It is a condition imposed only on respondent's obligation to pay the remainder of the purchase price. In our view and applying Article 1182, such a condition is not purely potestative as petitioners contend. It is not dependent on the sole will of the debtor but also on the will of third persons who own the adjacent land and from whom the road right of way shall be negotiated. In a manner of speaking, such a condition is likewise dependent on chance as there is no guarantee that respondent and the third party-landowners would come to an agreement regarding the road right of way. This type of mixed condition is expressly allowed under Article 1182 of the Civil Code. Furthermore, In sum, Rodriguez's option to rescind the contract is not purely potestative but rather also subject to the same mixed condition as his obligation to pay the balance of the purchase price - i.e., the negotiation of a road right of way. In the event the condition is fulfilled (or the negotiation is successful), Rodriguez must pay the balance of the purchase price. In the event the condition is not fulfilled (or the negotiation fails), Rodriguez has the choice either (a) to not proceed with the sale and demand return of his downpayment or (b) considering that the condition was imposed for his benefit, to waive the condition and still pay the purchase price despite the lack of road access. This is the most just interpretation of the parties' contract that gives effect to all its provisions.

Congregation of the Religious of the Virgin Mary vs. Orola

G.R. No. 169790, April 30, 2008

Nachura, J.

Facts: On April 1999, petitioner, acting through Sr. Fe Enhenco, and respondents mets to talk about the sale of the property of respondents adjacent to St. Mary’s Academy. Said property is Lot 159-B-2 which is registered in the name of Manuel Laserna. Josepehine Orola went to Manila on May, 1999 for the

subject property and was enetertained by Ma. Clarita Balleque. A contract to sale was made between the parties where petitioners are bounde to pay the property for Php. 5,555,000.00 with 10% of the total consideration payable upon the execution of the contract. This was signed by Sr. Enhenco as witness. On June 7, 1999, Josephine and Antonio receieved the RCBC check bearing the amount of P555,550.00 as down payment by petitioner. An extrajudicial settlement was executed for the estate of Trinidad Andrada Laserna adjudicating to themselves the subject property. Transfer Certificates were now under their names. With an undated Absolute Deed of Sale, respondents scheduled to meet with petitioner for the remaining balance. Petitioner did not arrive. They instead refused to pay respondents due to unreasonable grounds. This made respondents file a complaint before the RTC with alternative causes of action or rescission. RTC granted respondets.On appeal, the matter was resolved by the appellate court through Article 1378 of the New Civil Code.

Issue: Whether or not Article 1191 should be applied instead of Article 1378 of the New Civil Code.

Held: Yes. Such case falls under Article 1191 because it applies to breach of reciprocal obligations. Article 1191 speaks of the remedy of rescission in reciprocal obligations. In the present case, when RVM refused to pay the balance which breached the contract, respondents have availed of the remedies granted by Article 1191. They are entitled to damages regardless of the relief that would be granted by the Court. Hence, the court should apply Article 1191 of the New Civil Code.

Ong vs. Bognalbal

501 SCRA 490, September 12, 2006

Chico-Nazario, J.

Facts: Respondent, an architect, entered into a contract with petitioner for the construction of the proposed boutique at the 3rd floor of Shangri-La Plaza. It provides that the contractor agrees to furnish labor, tools and equipment to work on the boutique within 45 days excluding Sundays from the date of the delivery of the materials. Payment is through progress billing to be collected every 2 weeks based on the accomplishment work value certified by the architect assigned on the site. It also stipulated that additional cost shall be added to the amount and deduct if such would be omitted. The first three progress billings were paid justly be petitioner. On the fourth progress billing, petitioner refused to pay respondent due to the misunderstanding regarding the flooring and that the accomplishment value is excessive. Respondent, despite demands of payment, stopped finishing the construction. He filed an action for sum of money with damages with the MeTC, which ruled in favor of him(respondent). Petitioner appealed on RTC which rendered judgment in favor of her (petitioner). Respondent’s petition was granted by the appellate court.

Issue: Whether or not damages should be awarded to petitioner since respondent is unjustified in abandoning the project.

Held: No. Article 1192 of the New Civil Code applies to them since both parties committed a breach of their respective obligations. In the provision, the first infractor will be liable but such will be tempered by the courts because the the other party commits a breach of the obligation too. In the case at bar, it was petitioner who is liable for damages since she is the first infractor. Such will be mitigated by courts upon its discretion. Thus, damages should not be awarded to petitioner.

Schenker v. Gemperle

5 SCRA 1042

August 31, 1962

Paredes, J.

Facts: In 1953, at Zurich, Switzerland, plaintiff and defendant agreed to organize a Philippine Corporation and divide the capital stock equally between them. This was a verbal agreement acknowledged and confirmed in writing in a letter dated September 14 of the same year. Defendant made articles of incorporation that should be drafted and sent to plaintiff. Due to mistaken trust, plaintiff signed and remitted it to defendant which placed only 24 % subscription to him and 76 % to defendant. Explaining the discrepancy, defendant told him that Philippine laws require that 75 % must be for Filipnos and promised him to give his share. Despite repeated demands by plaintiff for his share, a complaint was filed praying that relief be made that would be just and equitable in the eyes of the Court. On the Answer of defendant, he said that the obligation is not yet due since there was no time indicated. Trial Court dismissed the complaint due to the unfixed time and such constituted that the obligation was not due and is still premature.

Issue: Whether or not Article 1197 should apply in this case

Held: Yes. To be able to benefit from this provision, facts should be alleged like (1) those showing that a contract was entered into, imposing on one of the parties an obligation or obligations in favor of the other and (2) those showing that the performance of the obligation was left to the will of the obligor or clearly showing or from which an inference may reasonably be drawn, that a period was intended by the

parties. The first fact was alleged in this case. Thus, even though the plaintiff does not sought this relief, the court could render the remedy indicated in Article 1197 of the Civil Code.

Araneta v. Philippine Sugar Estates Inc.

20 SCRA 330 May 31, 1967

Reyes, J.B.L., J.

Facts: J.M. Tuason is the owner of the a large are of land in Quezon City known as Sta. Mesa Heights Subdivision. Gregorio Aranerta Inc. (J.M. Tuason) sold a portion of the area to Philippine Sugar Estates for P430,514.00. In the contract of purchase, the buyer is obliged to build on said land the Sto. Domingo Church, while the seller was obliged to make streets of which, one will be named Sto. Domingo Avenue. The buyer finished the said Church. However, the seller was not able to finish his obligation due to a certain manuel Abundo, whose property has been situated in the middle part of the land. Philippine Sugar estates now filed a complaint for specific performance of the obligataion and payment for damages. Petitoner’s defense was that the obligation is without a definite period, that such shall be

fixed by the court for the action to prosper. So, defendant prayed that the court fix the period which was opposed by petitioner because it is not expressly stated in its complaint. The lower court granted defendant’s motion to fix the period. The period fixed was 2 years. On appeal, the CA declared that the fixing of the period is within the pleadings.

Issue: Whether or not the lower court erred in fixing the period of the fulfillment of the obligation.

Held: Yes. The complaint, without stating that it should fix a period, should not do so unless the complaint was amended. There is also no conclusion that the period should be set at two years. Hence, there is no justification that the setting of date must be done by the lower court because it was not stated in his first pleading, making the lower court commit reversible error.

Millare v. Hon. Hernando

151 SCRA 484, June 30, 1987

Feliciano, J.:

Facts: Pacifica Millare and spouses Co entered into a five-year Contarct of Lease, where Pacifica agreed to rent out “People’s Restaurant” with a monthly rate of P 350.00. In 1980, Pacifica informed spouses that the lease will continue if they will pay P 1,200.00 a month. Spouses opposed, bargaining that P 700.00 a month will be paid. Spouses thought that the Contract of Lease was renewed that they continued to occupy the said property. On July 1980, Pacifica wrote Spouses Co to vacate the premises because the Lease Contract will not be renewed. Another letter of demand was given by Pacifica. The spouses now filed a complaint seeking the renewal of the Lease Contract. On the other hand, Pacifica filed an ejectment case against the spouses. The judge dismissed the case and ordered the renewal of the Contract.

Issue: Whether or not Article 1197 of the Civil Code is applicable.

Held: No. The first paragraph of the said provision is inapplicable because the contract fixed a period. The second paragraph will also not apply because the duration of renewal of the contract lies to the will of both parties. Lastly, the provision will not apply since the contract was not renewed. Hence, Article 1197 is not applicable to the case at bar.

Insular Life v. CA

G.R. No. 126850, April 28, 2004

Austria-Martinez, J. :

Facts: Sun Brothers & Company filed a petition for declaratory relief seeking the judicial interpretation of the “option to review” clause in a Contract of Lease. Under the contract, Sun Brothers leased a parcel of land and a building thereon for 5 years. The lease was renewable for additional of five years provided that the option to renew must be in writing sent to Insular Life at least 90 days before the expiration of the period. For the first year, monthly rentals would be 50,000 and an increase of 10% per annum for the following years exclusive of real estate taxes and insurance premiums. Sun Brothers alleged that since the lease contract has no terms when it comes to the renewal, the monthly payments should be the same. In its Answer, Insular Life argued that it has bee their agreement that Sun Brothers has no right to impose on its sole will the renewal of the lease when it comes to the periods. The trial court ruled in favor of Sun Brothers, by renewing the contract. The CA affirmed the decision.

Issue: Whether or not the court has the duty to impose the period which the contract has not provided when it comes to renewal of lease contract.

Held: No. When the language of the contract is explicit leaving no doubt as to the intention of the drafters, the court may not read into it any other intention that would contradict its plain import. It would be deemed that the Court have rewritten the contract. The Court has no right to make new contracts. Hence, it is not the duty of the courts.

Sign up to vote on this title
UsefulNot useful