1

AYALA INC VS. RAY BURTON CORP GR No. 163075, January 23, 2006 FACTS: Ayala Inc. and Ray Burton Corp. Entered into a contract denominated as a Contract to Sell, with a Side Agreement of even date. In these contracts, petitioner agreed to sell to respondent a parcel of land. The contract contains a stipulation in paragraphs 3 and 3.1 for an Event of Default. It provides that in case the purchaser (respondent) fails to pay any installment for any reason not attributable to the seller (petitioner), the latter has the right to assess the purchaser a late penalty interest on the unpaid installment at two (2%) percent per month, computed from the date the amount became due until full payment thereof. And if such default continues for a period of six (6) months, the seller has the right to cancel the contract without need of court declaration by giving the purchaser a written notice of cancellation. In case of such cancellation, the seller shall return to the purchaser the amount he received, less penalties, unpaid charges and dues on the property. Respondent paid thirty (30%) down payment and the quarterly amortization. However in 1998, respondent notified petitioner in writing that it will no longer continue to pay due to the adverse effects of the economic crisis to its business. Respondent then asked for the immediate cancellation of the contract and for a refund of its previous payments as provided in the contract. Petitioner refused to cancel the contract to sell. Instead, it filed with the RTC Makati City, a complaint for specific performance against respondent, demanding from the latter the payment of the remaining unpaid quarterly installments inclusive of interest and penalties. ISSUE:Whether respondents non-payment of the balance of the purchase price gave rise to a cause of action on the part of petitioner to demand full payment of the purchase price HELD: Evidently, before the remedy of specific performance may be availed of, there must be a breach of the contract. Under a contract to sell, the title of the thing to be sold is retained by the seller until the purchaser makes full payment of the agreed purchase price. The non-fulfillment by the respondent of his obligation to pay, which is a suspense condition to the obligation of the petitioners to sell and deliver the title to the property, rendered the contract to sell ineffective and without force and effect; failure of which is

not really a breach, serious or otherwise, but an event that prevents the obligation of the petitioners to convey title from arising, in accordance with Article 1184 of the Civil Code The parties stand as if the conditional obligation had never existed. Article 1191 of the New Civil Code will not apply because it presupposes an obligation already extant. There can be no rescission of an obligation that is still non-existing, the suspensive condition not having happened thus, a cause of action for specific performance does not arise. Here, the provisions of the contract to sell categorically indicate that respondents default in the payment of the purchase price is considered merely as an event, the happening of which gives rise to the respective obligations of the parties mentioned therein.

CANNU vs. GALANG G.R. No. 139523 May 26, 2005 Facts: Respondent spouses Galang agreed to sell their house and lot subject to mortgage with the National Home Mortgage Finance Corp (NHMFC).Petitioner Leticia Cannu agreed to buy the property for 120K & to assume the mortgage obligations with the NHMFC. A deed of sale & assumption of mortgage was executed & petitioners immediately took possession & occupied the house & lot. Despite requests from Fernandina Galang to pay the balance of P45, 000.00 or in the alternative to vacate the property in question, petitioners refused to do so.Because the Cannus, failed to fully comply with their obligations, respondent Galang, paid P233K as full payment of her remaining mortgage loan with NHMFC.8 yrs. had already elapsed and petitioners have not yet complied with the obligation.The RTC ordered the deed of sale with Assumption of Mortgage as rescinded as well as ordered mutual restitution. ISSUE: WON the breach of obligation is substantial , WON rescission is subsidiary HELD: Breach considered being substantial. Cannu failed to comply with her obligation to pay the monthly amortizations due on the mortgage. Also, the tender made by Cannu only after the filing of this case cannot be considered as an effective mode of payment.Resolution of a party to an obligation under Article 1191 is predicated on a breach of faith by the other party that violates the reciprocity between them. In the case at bar, Cannus failure to pay the remaining balance of 45K to be substantial. To give petitioners additional time to comply with their obligation will be putting premium on their blatant non-compliance of their obligation. They had all the time to do what was required of them (i.e., pay the P45,000.00 balance and to properly assume the mortgage loan with the NHMFC), but still they failed to comply. Despite demands for them to pay the balance, no payments were made. Rescission will not be permitted for a slight or casual breach of the contract. Rescission may be had only for such breaches that are substantial and fundamental as to defeat the object of the parties in making the agreement.The rescission in this case is not predicated on injury to economic interests of the party plaintiff but on the breach of faith by the defendant, that violates the reciprocity between the parties. It is not a subsidiary action. The rescission in 1191 is a principal action retaliatory in character; it being unjust that a party be held bound to fulfill his promises when the other violates his.

VICELET LALICON and VICELEN LALICON VS NATIONAL HOUSING AUTHORITY G.R. No. 185440, JULY 13,2011

FACTS: On November 25, 1980 the National Housing Authority (NHA) executed a Deed of Sale with Mortgage over a Quezon City lot in favor of the spouses Isidro and Flaviana Alfaro (the Alfaros). In due time, the Quezon City Registry of Deeds issued Transfer Certificate of Title (TCT) 277321 in the name of the Alfaros. The deed of sale provided, among others, that the Alfaros could sell the land within five years from the date of its release from mortgage without NHAs prior written consent. About nine years later or on November 30, 1990, while the mortgage on the land subsisted, the Alfaros sold the same to their son, Victor Alfaro, who had taken in a common-law wife Cecilia,with whom he had two daughters, petitioners Vicelet and Vicelen Lalicon (the Lalicons). Cecilia, who had the means, had a house built on the property and paid for the amortizations. About four and a half years after the release of the mortgage or on October 4, 1995, Victor registered the November 30, 1990 sale of the land in his favor, resulting in the cancellation of his parents title.The register of deeds issued TCT 140646 in Victors name. On December 14, 1995 Victor mortgaged the land to Marcela Lao Chua, Rosa Sy, Amparo Ong, and Ida See. Subsequently, on February 14, 1997 Victor sold the property to Chua, one of the mortgagees, resulting in the cancellation of his TCT 140646 and the issuance of TCT N-172342 in Chuas name. ISSUE: Whether or not the NHAs right to rescind has prescribed. HELD: It has been held that Article 1191 speaks of rescission in reciprocal obligations within the context of Article 1124 of the Old Civil Code which uses the term resolution. Resolution applies only to reciprocal obligations such that a breach on the part of one party constitutes an implied resolutory condition which entitles the other party to rescission. Resolution grants the injured party the option to pursue, as principal actions, either a rescission or specific performance of the obligation, with payment of damages in either case. the NHA sought annulment of the Alfaros sale to Victor because they violated the five -year restriction against such sale provided in their contract. Thus, the CA correctly ruled that such violation comes under Article 1191 where the applicable prescriptive period is that provided in Article 1144 which is 10 years from the time the right of action accrues. The NHAs right of action accrued on February 18, 1992

when it learned of the Alfaros forbidden sale of the property to Victor. Since the NHA filed its action for annulment of sale on April 10, 1998, it did so well within the 10-year prescriptive period.

CATHAY PACIFIC AIRWAYS VS. VAZQUEZ 399 SCRA 207 (2003)

Facts: Spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa Madrigal Vazquez together with two friends went to Hong Kong for business and pleasure. On their return flight to Manila, they were booked on Cathay Pacifics flight CX-905. Upon boarding, Dr.Vazquez was informed by ground attendant Clara Chiu that they were being upgraded to first class from business class because Business Class was fully booked. Dr.Vazquez refused the upgrade, explaining that it would not look good for them as hosts to travel in First Class while their guests remained in the Business Class Section. Moreover, they were going to discuss business matters during the flight. He also told Ms. Chiu that she could have other passengers transferred to the First Class Section instead of them. Ms. Chiu informed them that since they were Marco Polo Club members they had the priority to be upgraded to First Class. Dr.Vazquez continued to refuse, so Ms. Chiu told them that if they would not avail of the privilege, they would not be allowed to take the flight. Eventually, Dr.Vazquez gave in and proceeded to the First Class Cabin. ISSUES: Whether or not by upgrading the seating accommodations of the Vazquezes from Business Class to First Class, Cathay Pacific Airways breached its contract of carriage with the Vazquezes. HELD: The Vazquezes should have been consulted first whether they wanted to avail of the privilege or consent to a change of seat accommodation before their seat assignments were given to other passengers. The Vazquezes had every right to decline the upgrade and insist on the Business Class accommodation they had booked for. They clearly waived their priority or preference when they asked that other passengers be given the upgrade. It should not have been imposed on them over their vehement objection. By insisting on the upgrade, Cathay Pacific breached its contract of carriage with the Vazquezes. The Court, however, is not convinced that the upgrading or the breach of contract was attended by fraud or bad faith. Bad faith and fraud are allegations of fact that demand clear and convincing proof. The court is not persuaded by the Vazquezes argument that the overbooking of the Business Class Section constituted bad faith on the part of Cathay Pacific Airways. Section 3 of the Economic Regulation No. 7 of The Civil Aeronautics Board, as amended, provides that an overbooking that does not exceed ten percent (10%) is not considered deliberate and therefore does not amount to bad faith. The Court of Appeals awarded each of the Vazquezes moral damages in the amount of P250, 000. In this case, it was ruled that the breach of contract of carriage was not attended by fraud or bad faith. The Court Of Appeals award of moral damages has therefore no leg to stand on.

MARSMAN DRYSDALE LAND, INC., Petitioner, - versus PHILIPPINE GEOANALYTICS, INC. AND GOTESCO PROPERTIES, INC., Respondents. x--------------------------------------------x GOTESCO PROPERTIES, INC., Petitioner, - versus MARSMAN DRYSDALE LAND, INC. AND PHILIPPINE GEOANALYTICS, INC., Respondents. G.R. No. 183374 G.R. No. 183376 June 29, 2010 Facts: Marsman Drysdale Land, Inc. (Marsman Drysdale) and Gotesco Properties, Inc. (Gotesco) entered into a Joint Venture Agreement (JVA) for the construction and development of an office building on a land owned by Marsman Drysdale in Makati City. It is the desire of the Parties herein to implement this Agreement by investing in the PROJECT on a FIFTY (50%) PERCENT- FIFTY (50%) PERCENT basis. Contribution of [Marsman Drysdale]-[Marsman Drysdale] shall contribute the Property. The total appraised value of the Property is PESOS: FOUR HUNDRED TWENTY MILLION (P420,000,000.00). Contribution of [Gotesco]- [Gotesco] shall contribute the amount of PESOS: FOUR HUNDRED TWENTY MILLION (P420,000,000.00) in cash. The joint venture engaged the services of Philippine Geoanalytics, Inc. (PGI) to provide subsurface soil exploration, laboratory testing, seismic study and geotechnical engineering for the project. PGI, was, however, able to drill only four of five boreholes needed to conduct its subsurface soil exploration and laboratory testing, justifying its failure to drill the remaining borehole to the failure on the part of the joint venture partners to clear the area where the drilling was to be made. PGI was able to complete its seismic study though. PGI then billed the joint venture on November 24, 1997 for P284,553.50 representing the cost of partial subsurface soil exploration; and on January 15, 1998 for P250,800 representing the cost of the completed seismic study. Despite repeated demands from PGI, the joint venture failed to pay its obligations. PGI subsequently filed on November 11, 1999 a complaint for collection of sum of money and damages at the Regional Trial Court (RTC) of Quezon City against Marsman Drysdale and Gotesco. Quezon City RTC rendered judgment in favor of PGI. Issue: Which between joint venturers Marsman Drysdale and Gotesco bears the liability to pay PGI its unpaid claims. Held: The Court finds Marsman Drysdale and Gotesco jointly liable to PGI.

PGI executed a technical service contract with the joint venture and was never a party to the JVA. While the JVA clearly spelled out, inter alia, the capital contributions of Marsman Drysdale (land) and Gotesco (cash) as well as the funding and financing mechanism for the project, the same cannot be used to defeat the lawful claim of PGI against the two joint venturers-partners. The TSC clearly listed the joint venturers Marsman Drysdale and Gotesco as the beneficial owner of the project and all billing invoices indicated the consortium therein as the client. As the appellate court held, Articles 1207 and 1208 of the Civil Code, which respectively read: Art. 1207. The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestations. There is a solidary liability only when the obligation expressly so states, or when the law or nature of the obligation requires solidarity. Art. 1208. If from the law, or the nature or the wording of the obligations to which the preceding article refers the contrary does not appear, the credit or debt shall be presumed to be divided into as many equal shares as there are creditors or debtors, the credits or debts being considered distinct from one another, subject to the Rules of Court governing the multiplicity of suits. (emphasis and underscoring supplied), The appellate courts decision must be modified, however. Marsman Drysdale and Gotesco being jointly liable, there is no need for Gotesco to reimburse Marsman Drysdale for 50% of the aggregate sum due to PGI.

PANTALEON vs. AMERICAN EXPRESS GR No. 174269 FACTS: A delay occured in approving Pantaleons transaction when he used his American Express credit card to purchase goods in coaster store at Amsterdam amounting to US $ 13826. He then filed a complaint for moral and exemplary damages before RTC against AmEx Corporation. In his petition he said that he experienced inconvinience and humility due to delay in credit authorizations.

ISSUE: Whether or not AmEx committed a breach of its obligation to Pantaleon as their client. HELD: Yes. The popular notion that credit card purchases are approved within seconds, there really is no strict, legally determinative point on demarcation on how long must it take for a creit card company to approve or disapprove customers purchases. One hour delay appears to be unreasonable lenght of time to approve or disapprove a purchase. The failure of American Express company is not the failure to approve clients purchase but the failure to give decision or authorization as to whether they are going to approve or disapprove their clients transaction.

BARZAGA vs. COURT OF APPEALS GR NO. 115129 FACTS: Petitoners wife was suffering from a disease and is almost dying. The wife requested that upon her death, she wanted to be laid on her niche before December 25 since Christmas was fast approaching and she dont want to burden her family with the wake. After her death, petitioner bought materials from private respndent for the construction of the niche of his late wife. Private respondent however failed to deliver said materials on time despite repeated follow up. The niche was then completed on the afternon of the 27th day of December, and his wife was finally laid to rest. ISSUE: WON theres a delay in the performance of the private respondents obligati on? HELD: Yes since respondent was negligent to his obligation and incured delay in the performace of his contractual obligatin, petitioner is entitled to be indemnified for the damag he suffered as a consequence of the delay or contractual breach. Non perfrmance reciprocal obligation, as in contarct of purchase and sale, petitioner had already done his part, in which he already paid the materials needed. It was now the obligation of th respondent to deliver the god on time otherwise delay will attach.

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LORENZO SHIPPING CRPORATION vs BJ MARTHEL GR NO. 145483 FACTS: Petitioner is a domestic corporaton engaged in coastwise shipping. It used to own cargo vessel m/v Badiangas espress. On the other hand, Respond, is a business enty engaged in trading marketing and selling of varios industrial commodities. It is also on importer and distributor of different brands of engines. From 1987 onwards, respondent supplied petitioner with spare parts for the latters marine engine in 1989, petitioner asked respondent for quotation for various machine parts, taking action with the request, repondent furnished petitioner with formal quotatin and it was stated that delivey is within two months from receipt of the firm order. ISSUE: WON the period of time which lapsed in the sontract causing the delay in delivery of the cylinder liner is essential in the decision of the case at bar? HELD: The court held respondent bound to the quotation it submitted to petitioner particularly wuith respect to the terms of payment and delivery of cylinder liners. It also declared that respondent agreed to the cancellation of the contrcat sale when it returned the post dated checks.

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G.R. No. 170479

February 18, 2008

ANDRE T. ALMOCERA, petitioner vs JOHNNY ONG, respondent FACTS: Johnny Ong tried to acquire a townhome from the defendants. In the contract to sell, defendants agreed to sell the said townhouse to respondent for P3.4 Million. The down payment was P1 Million while the balance of P2.4 Million was to be paid in full upon completion, delivery and acceptance of the townhouse. Defendants agreed to complete and convey to respondent the unit w/in 6 months from the signing thereof. Respondent was able to make down payment of P1, 060.000.00 and that the defendants failed to complete the construction of, as well as deliver to respondent the townhouse w/in six months from the signing of contract. Moreover, respondent was not informed y the defendants at the time of the perfection of their contract that the subject townhouse was already mortgaged to LBP, it was then foreclosed and eventually sold at public auction. Respondent then filed a complaint for Damages before the RTC. The Court ruled against the defendants for not acting in good faith and for not complying with their obligations under their contract with respondent. (Article 1169) The court ordered the defendants to pay solidarily to the respondent the down payment with interest, moral damages attorneys fee and the cost of the suit. Aggrieved, defendants appealed the decision to the Court of Appeals The appeal was denied and Petition for Review on Certiorari was sought by the defendant. ISSUE: HELD: Whether or not there is fraud on behalf of the Petitioner. The trial court had this say: In the light of the foregoing environmental circumstances and milieu, therefore, it appears that the defendants are guilty of fraud in dealing with the plaintiff. They performed voluntary and willful acts which prevent the normal realization of the prestation, knowing the effects which naturally and necessarily arise from such acts. Their acts import a dishonest purpose or some moral obliquity and conscious doing of a wrong. The said acts certainly give rise to liability for damages. Article 1170 of the New Civil Code of the Philippines provides expressly that those who in the performance of their obligations are guilty of fraud and those who in any manner contravene the tenor thereof are liable for damages.

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G.R. No. 181206

October 9, 2009

MEGAWORLD GLOBUS ASIA, INC., Petitioner, vs. MILA S. TANSECO, Respondent. FACTS: On July 7, 1995, petitioner Megaworld Globus Asia, Inc. (Megaworld) and respondent Mila S. Tanseco (Tanseco) entered into a Contract to Buy and Sell1 a 224 square-meter (more or less) condominium unit at a pre-selling project. In their contract, Petitioner agreed on the modes of payment and to the Construction Schedule. Tanseco paid all installments due up to January, 1998, leaving unpaid the balance of P2,520,305.63 pending delivery of the unit.2 Megaworld, however, failed to deliver the unit within the stipulated period on October 31, 1998 or April 30, 1999, the last day of the six-month grace period. A few days shy of three years later, Megaworld, by notice dated April 23, 2002 (notice of turnover), informed Tanseco that the unit was ready for inspection preparatory to delivery.3 Tanseco replied through counsel, by letter of May 6, 2002, that in view of Megaworl ds failure to deliver the unit on time, she was demanding the return ofP14,281,731.70 representing the total installment payment she had made, with interest at 12% per annum from April 30, 1999, the expiration of the six-month grace period. Tanseco pointed out that none of the excepted causes of delay existed. Her demand having been unheeded, Tanseco filed on June 5, 2002 with the Housing and Land Use Regulatory Boards (HLURB) Expanded National Capital Region Field Office a complaint against Megaworld for rescission of contract, refund of payment, and damages. By Decision of May 28, 2003,7 the HLURB Arbiter dismissed Tansecos complaint for lack of cause of action, finding that Megaworld had effected delivery by the notice of turnover before Tanseco made a demand. Tanseco was thereupon ordered to pay Megaworld the balance of the purchase price, moral damages, exemplary damages, and attorneys fees On appeal by Tanseco, the HLURB Board of Commissioners, by Decision of November 28, 2003,sustained the HLURB Arbiters Decision. Tansecos Motion for Reconsideration having been denied, she appealed to the Office of the President which dismissed the appeal by Decision of April 28, 2006 .Her Motion for Reconsideration having been denied by Resolution dated August 30, 2006, Tanseco filed a Petition for Review under Rule 43 with the Court of Appeals. By Decision of September 28, 2007, the appellate court granted Tansecos petition.Its Motion for Reconsideration having been denied by Resolution of January 8, 2008,Megaworld a Petition for Review on Certiorari. ISSUE: HELD: Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable.18 The Court cannot generalize the 1997 Asian financial crisis to be unforeseeable and beyond the control of a business corporation. A real estate enterprise engaged in the pre-selling of condominium units is concededly a master in projections on commodities and currency movements, as well as business risks. Whether or not a Financial Crisis is considered to be an excuse to delay contracts.

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The fluctuating movement of the Philippine peso in the foreign exchange market is an everyday occurrence, hence, not an instance of caso fortuito. Megaworlds excuse for its delay does not thus lie. WHEREFORE, the challenged Decision of the Court of Appeals is, in light of the foregoing, AFFIRMED with MODIFICATION. As modified, the dispositive portion of the Decision reads: The July 7, 1995 Contract to Buy and Sell between the parties is cancelled. Petitioner, Megaworld Globus Asia, Inc., is directed to pay respondent, Mila S. Tanseco, the amount of P14,281,731.70, to bear 6% interest per annum starting May 6, 2002 and 12% interest per annum from the time the judgment becomes final and executory; and to pay P200,000 attorneys fees, P100,000 exemplary damages, and costs of suit. Costs against petitioner.

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Solar Harvest, Inc. vs. Davao Corrugated Carton Corporation GRNo.176858,July26,2010 FACTS: In the 1st Quarter of 1998, Solar Harvest and Davao Corrugated entered into an unwritten agreement. Solar Harvest placed orders for customized boxes for its business of exporting bananas at USD 1.10 each. Petitioner made a full payment of USD 40,150.00. By Jan. 3, 2001 petitioner had not received any of the ordered boxes. On Feb. 19, 2001Davao Corrugated replied that as early as April 3, 1998, order/boxes are completed and Solar Harvest failed to pick them up from their warehouse within 30 days from completion as agreed upon. Respondent mentioned that petitioner even placed additional order of 24,000.00 boxes, out of which, 14,000 had already been manufactured without any advance payment from Solar Harvest. Davao Corrugated then demanded that Solar Harvest remove boxes from their warehouse, pay balance of USD 15,400.00 for the additional boxes and P132, 000 as storage fee. On August 17, 2001 Solar harvest filed complaint against Davao Corrugated for sum of money and damages claiming that the agreement was for the delivery of the boxes, which Davao Corrugated did not do. They further alleged that whenever repeated follow-up was made to Davao Corrugated, they would only see sample boxes and get promise of delivery. Due to Davao Corrugateds failure to deliver, Solar Harvest had to cancel the order and demanded payment and/or refund which Davao Corrugated refused to pay. Davao Corrugated counterclaimed that they had already completed production of the 36,500 boxes plus an additional 14,000 boxes (which was part of the additional 24,000 order that is unpaid). The agreement was for Solar Harvest to pick up the boxes, which they did not do. They even averred that on Oct. 8, 1998 Solar Harvests representative Bobby Que even went to the warehouse to inspect and saw that indeed boxes were ready for pick up. On Feb. 20, 1999, Que visited the factory again and said that they ought to sell the boxes to recoup some of the costs of the14,000 additional orders because their transaction to ship the bananas did not materialize. Solar Harvest denies that they made the additional order. On March 20, 2004 the RTC ruled in favor of Davao Corrugated. ISSUE: Whether or not Davao Corrugated was responsible for breach of contract as Solar Harvest had not yet demanded from it the delivery of the boxes? HELD: NO. The CA held that it was unthinkable that for around 2 years petitioner merely followed up and did not demand the delivery of the boxes. Even assuming that the agreement is for delivery by Davao Corrugated, respondent would not be liable for breach of contract as petitioner had not yet demanded from it the delivery of the boxes. There is no error in the decision of the RTC. Furthermore, the claim for reimbursement is actually one for rescission or resolution of contract under Article 1191 of the Civ. Code. The right to rescind contracts arises once the party defaults in the performance of his obligation. Article 1191 should be taken in conjunction with Article 1169: Those obliged to deliver or to do something in delay from the time the obligee judicially or extra judicially demands form them the fulfillment of their obligation. However the demand from creditor shall not be necessary in order that delay may exist.: 1. When the obligation or the law expressly so declares, or 2. When from the nature and the circumstance of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; OR

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3. When the demand would be useless, as when the obligor has rendered it beyond his power to perform. In reciprocal obligations, the general rule is that the fulfillment of the parties respective obligations should be simultaneous. No demand is necessary because once a party fulfills his obligation and the other party fails to do his, the latter automatically incurs delay. When dates are set, the default for each obligation is determined by the rules given in the 1st paragraph of the article. Thus even in reciprocal obligations, if the period for the fulfillment of the obligation is fixed, demands from the obligee is still necessary before the obligor can be considered in default and before a cause of action for rescission will accrue. In the case of Solar Harvest, merely following up the order was not the same as demanding for the boxes. The SC held that Solar Harvests petition is denied and that Davao Corrugated did not commit breach of contract and may remove the boxes from their premises after petitioner is given a period of time to remove them from their warehouse as they deem proper (Court gave 30day period to comply with this)

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Hulganza vs Court of Appeals 147 SCRA 77 FACTS Matilde Collamar sold the lot 161 Pls 256 in Barrio Mina Otoc, Calatrava, Negros Occidental to Basilia Gemarino in the amount of 10,000.00 Php. On April 13, 1972 Matilde Collamar filed a complaint to repurchase the said property under the provision of Sec. 119 of Public Land Act 141 as amended. ISSUE Whether or not Matilde Collamar has the right to repurchase the property? HELD YES, declarin that the plaintiff have the legal right to exercise of redemption over the lot in question. Ordering the defendant to allow the plaintiff to execise said right of legal redumption out the original purchase price of 10,000.00 Php, which is the principal obligation with accumulated interest, at the legal rate from the date of the execution of the deed of sale up to and until the time of repurchase . The formal offer to redeem, accompanied by a bona fide ender of the redumption price, within the period of redemptionprescribed by law, is only essential to preserve the right of redemption for future enforcement beond such period of resemption and within the period prescribed for he action by the statute of limitation. Where as in instant case, the right to redeem is exercise thru the filing of judicial action within the period of redemption prescribed by the law, the formal offer to redeem accompanied by a bona fide tender of the redemption price, might be proper, but is not essential. The filing of the action itself within the period of redemption is equivalent to a formal offer to redeem. Any other construction, particularly with reference to redemptionof homestead conveyed to third parties, would work hardship on the poor homesteaders who cannot be expected to know the subleties of the law, and would defeat the evident purpose of public land laws to give the homesteader or patentee every chance to preserve for himself and his family the land that the state granted him as a reward for his labor in cleanng and cultivating it.

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MILA A. REYES vs VICTORIA T. TUPARAN G.R. No. 188064

FACTS:

On September 10, 1992, Mila A. Reyes (petitioner) filed a complaint for Rescission of Contract with Damages against Victoria T. Tuparan (respondent) before the RTC. In her Complaint, petitioner alleged, among others, that she was the registered owner of a 1,274 square meter residential and commercial lot located in Karuhatan, Valenzuela City and that; in December 1989, respondent leased from petitioner a space on the ground floor of the RBJ Building for her pawnshop business for a monthly rental of 4,000.00. A close friendship developed between the two which led to the respondent investing thousands of pesos in petitioners financing/lending business from February 7, 1990 to May 27, 1990, with interest at the rate of 6% a month; that on June 20, 1988, petitioner mortgaged the subject real properties to the Farmers Savings Bank and Loan Bank, Inc. (FSL Bank). Petitioner then decided to sell her real properties for at least 6,500,000.00 so she could liquidate her bank loan and finance her businesses. As a gesture of friendship, respondent verbally offered to conditionally buy petitioners real properties for 4,200,000.00 payable on installment basis without interest and to assume the bank loan. Respondent countered, among others, that the tripartite agreement erroneously designated by the petitioner as a Deed of Conditional Sale of Real Property with Assumption of Mortgage was actually a pure and absolute contract of sale with a term period. It could not be considered a conditional sale because the acquisition of contractual rights and the performance of the obligation therein did not depend upon a future and uncertain event. Moreover, the capital gains and documentary stamps and other miscellaneous expenses and real estate taxes up to 1990 were supposed to be paid by petitioner but she failed to do so. The respondent counters that the subject Deed of Conditional Sale with Assumption of Mortgage entered into between the parties is a contract to sell and not a contract of sale because the title of the subject properties still remains with the petitioner as she failed to pay the installment payments in accordance with their agreement.

ISSUE: Whether or not the contract executed by the petitioner and the respondent is a contract to sell or a contract of sale.

HELD:

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The Court agrees with the ruling of the courts below that the subject Deed of Conditional Sale with Assumption of Mortgage entered into by and among the two parties and FSL Bank on November 26, 1990 is a contract to sell and not a contract of sale.A contract of sale is defined in Article 1458 of the Civil Code, thus: Art. 1458. By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent.Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of a contract of sale are the following:

a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;

b) Determinate subject matter; and

c) Price certain in money or its equivalent.

Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking. In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes we shall take as the full payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. In other words, the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and, thus, ownership is retained by the prospective seller without further remedies by the prospective buyer.

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SAHILLIA S. ASADIL LLB-1D EUSEBIO GONZALES, Petitioner, - versus PHILIPPINE COMMERCIAL AND INTERNATIONAL BANK, EDNA OCAMPO, and ROBERTO NOCEDA, Respondents. G.R. No. 180257 Facts: This is an appeal via a Petition for Review on Certiorari under Rule 45 from the Decision dated October 22, 2007 of the Court of Appeals. Petitioner Eusebio Gonzales (Gonzales) was a client of PCIB for a good 15 years before he filed the instant case. In October 30, 1995, Gonzales and his wife obtained a loan for PhP 500,000. Subsequently, on December 26, 1995 and January 3, 1999, the spouses Panlilio and Gonzales obtained two additional loans from PCIB in the amounts of PhP 1,000,000 and PhP 300,000, respectively. These three loans amounting to PhP 1,800,000 were covered by three promissory notes. To secure the loans, a real estate mortgage (REM) over a parcel of land covered by Transfer Certificate of Title (TCT) No. 38012 was executed by Gonzales and the spouses Panlilio. Notably, the promissory notes specified, among others, the solidary liability of Gonzales and the spouses Panlilio for the payment of the loans. However, it was the spouses Panlilio who received the loan proceeds of PhP 1,800,000. The monthly interest dues of the loans were paid by the spouses Panlilio through the automatic debiting of their account with PCIB. But the spouses Panlilio, from the month of July 1998, defaulted in the payment of the periodic interest dues from their PCIB account which apparently was not maintained with enough deposits. PCIB allegedly called the attention of Gonzales regarding the July 1998 defaults and the subsequent accumulating periodic interest dues which were left still left unpaid. Issue:

Whether or not that the liability arising from PROMISSORY NOTES pertained to borrower PANLILIO Spouse and not appellant as recognized and acknowledge by RESPONDENT PHILIPPINE COMMERCIAL & INDUSTRIAL BANK (RESPONDENT BANK).

HELD:

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A close perusal of the records shows that the courts a quo correctly found Gonzales solidarily liable with the spouses Panlilio for the three promissory notes. Gonzales admitted that he merely accommodated the spouses Panlilio at the suggestion of Ocampo, who was then handling his accounts, in order to facilitate the fast release of the loan. Moreover, the first note for PhP 500,000 was signed by Gonzales and his wife as borrowers, while the two subsequent notes showed the spouses Panlilio sign as borrowers with Gonzales. Second, the records of PCIB indeed bear out, that the PhP 1,800,000 loan proceeds went to the spouses Panlilio. The fact that the loans were undertaken by Gonzales when he signed as borrower or co-borrower for the benefit of the spouses Panlilioas shown by the fact that the proceeds went to the spouses Panlilio who were servicing or paying the monthly duesis beside the point. Third, as an accommodation party, Gonzales is solidarily liable with the spouses Panlilio for the loans. Fourth, the solidary liability of Gonzales is clearly stipulated in the promissory notes which uniformly begin, For value received, the undersigned (the BORROWER) jointly and severally promise to pay x x x. Solidary liability cannot be presumed but must be established by law or contract. Article 1207 of the Civil Code pertinently states that there is solidary liability only when the obligation expressly so states, or when the obligation requires solidarity. This is true in the instant case where Gonzales, as accommodation party, is immediately, equally, and absolutely bound with the spouses Panlilio on the promissory notes which indubitably stipulated solidary liability for all the borrowers. Moreover, the three promissory notes serve as the contract between the parties. Contracts have the force of law between the parties and must be complied with in good faith.

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Ahmed-Arqhan A. Ali LLB 1D

Filinvest vs. CA G.R. No. 138980, September 20, 2005

Topic: Article 1229, New Civil Code

Facts: Petitioner awarded to respondent Pacific Equipment Corp (Pecorp) development of its residential subdivisions, a contract amounting to P12,470,000.00. Pecorp posted two surety bonds to guarantee faithful compliance. Both agreed that liquidated damages of P15,000/day shall be paid by Pecorp in case of delay. Petitioner claimed that Pecorp failed to complete the works (94.53%) and claims for damages. Pecorp on the other hand contended that their work stopped due to failure of petitioner to pay for certain completed portion. RTC assigned a commissioner to evaluate the claims and counter-claims. The total amount due to Pecorp was computed to be P1,881,867.66. Petitioner claimed that liquidated damages amounted to P3,990,000.00 Both claims and counter-claims were dismissed. Court of Appeals affirmed the ruling of RTC.

Issue: Whether or not the penalty (liquidated damages) of P15,000.00 per day of delay shall be binding upon mutual agreement of parties.

Ruling: No. As a general rule, courts are not at liberty to ignore the freedom of the parties to agree on such terms and conditions as they see fit as long as they are not contrary to law, morals, good customs, public order or public policy. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable (Art.1229, NCC). A penalty interest of P15,000.00 per day of delay as liquidated damages or P3,990,000.00 (representing 32% penalty of the P12,470,000.00 contract price) is unconscionable considering that the construction was already not far from completion.