IGNACIC 8Ak2AGAţ petitionerţ vsŦ CCUk1 CI AÞÞLALS and

ANGLLI1C ALVIAk (GŦkŦ NoŦ 11S129Ŧ Iebruary 12ţ 1997)
lacLsť 1he peLlLloner's wlfe was sufferlng from a deblllLaLlng
allmenL and wlLh forewarnlng of her lmpendlng deaLhţ she
expressed her wlsh Lo be lald Lo resL before ChrlsLmas day Lo
spare her famlly of Lhe long vlglls as lL was almosL ChrlsLmasŦ
AfLer hls wlfe passed awayţ peLlLloner boughL maLerlals from
hereln prlvaLe respondenLs for Lhe consLrucLlon of her nlcheŦ
ÞrlvaLe respondenLs however falled Lo dellver on agreed Llme
and daLe desplLe repeaLed followŴupsŦ 1he nlche was
compleLed ln Lhe afLernoon of Lhe 27Lh of uecemberţ and
8arzagaƌs wlfe was flnally lald Lo resLŦ Poweverţ lL was LwoŴ
andŴaŴhalf (2Ŵ1/2) days behlnd scheduleŦ
Issueť Was there de|ay |n the performance of the pr|vate
respondentƌs ob||gat|on?

8ullngť ?esŦ Slnce Lhe respondenL was negllgenL and lncurred
delay ln Lhe performance of hls conLracLual obllgaLlonsţ Lhe
peLlLloner ls enLlLled Lo be lndemnlfled for Lhe damage he
suffered as a consequence of Lhe delay or conLracLual breachŦ
1here was a speclflc Llme agreed upon for Lhe dellvery of Lhe
maLerlals Lo Lhe cemeLeryŦ

1hls ls clearly a case of nonŴperformance of a reclprocal
obllgaLlonţ as ln Lhe conLracL of purchase and saleţ Lhe
peLlLloner had already done hls parLţ whlch ls Lhe paymenL of
Lhe prlceŦ lL was lncumbenL upon respondenL Lo lmmedlaLely
fulflll hls obllgaLlon Lo dellver Lhe goods oLherwlse delay
would aLLachŦ An award of moral damages ls lncumbenL ln
Lhls case as Lhe peLlLloner has suffered so muchŦ
ILkNANDC LCÞL2ţ L1 AL vs Þan Amer|can Wor|d A|rways
(GŦkŦ NoŦ LŴ2241S March 30ţ 1966)
Iactsť
8eservaLlon for flrsL class accommodaLlon ln Þan Amerlcan
Alrllnes from 1okyo Lo San lranclsco was made by uelfln
lausLlno for Lhen SenaLor lernando Lopez and companyŦ llrsL
class LlckeLs were lssued and pald forŦ 1he parLy lefL Manlla
for 1okyo as scheduledŦ SenaLor Lopez requesLed MlnlsLer
8usuego Lo conLacL Lhe alrllnes regardlng Lhelr
accommodaLlonŦ Poweverţ Lhey were lnformed LhaL Lhere
was no accommodaLlon for LhemŦ 8ecause of some urgenL
maLLers Lo aLLend Lo ln San lranclscoţ Lhey were consLralned
Lo Lake Lhe LourlsL fllghL ºunder proLesL"Ŧ
Issuesť
(1) WheLher Lhe defendanL acLed ln bad falLh for dellberaLe
refusal Lo comply wlLh lLs conLracL Lo provlde flrsLŴclass
accommodaLlon Lo Lhe plalnLlff
(2) WheLher moral and exemplary damages should be
awarded
ne|dť
(1) lrom Lhe evldence of defendanL lL ls ln effecL admlLLed
LhaL defendanL Ŵ Lhrough lLs agenLs Ŵ flrsL cancelled plalnLlffsţ
reservaLlons by mlsLake and LhereafLer Jellbetotely ooJ
loteotlooolly wlLhheld from plalnLlffs or Lhelr Lravel agenL Lhe
facL of sald cancellaLlonţ leLLlng Lhem go on bellevlng LhaL
Lhelr flrsL class reservaLlons sLood valld and conflrmedŦ ln so
mlsleadlng plalnLlffs lnLo purchaslng flrsL class LlckeLs ln Lhe
convlcLlon LhaL Lhey had conflrmed reservaLlons for Lhe sameţ
when ln facL Lhey had noneţ defendanL wllfully and knowlngly
placed lLself lnLo Lhe poslLlon of havlng Lo breach lLs a
foresald conLracLs wlLh plalnLlffs should Lhere be no lasLŴ
mlnuLe cancellaLlon by oLher passengers before fllghL Llmeţ as
lL Lurned ouL ln Lhls caseŦ Such acLuaLlon of defendanL may
lndeed have been prompLed by noLhlng more Lhan Lhe
promoLlon of lLs selfŴlnLeresL 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 accommodaLlonsŦ All Lhe
Llmeţ ln legal conLemplaLlon such conducL already amounLs Lo
acLlon ln bad falLhŦ lor bad falLh means a breach of a known
duLy Lhrough some moLlve of lotetest or lllŴwlllŦ
AL Lhe Llme plalnLlffs boughL Lhelr LlckeLsţ defendanLţ
Lhereforeţ ln breach of lLs known duLyţ made plalnLlffs belleve
LhaL Lhelr reservaLlon had oot been cancelledŦ Such wlllfulŴ
nonŴdlsclosure of Lhe cancellaLlon or preLense LhaL Lhe
reservaLlons for plalnLlffs sLood Ŵ and noL slmply Lhe
erroneous cancellaLlon lLself Ŵ ls Lhe facLor Lo whlch ls
aLLrlbuLable Lhe breach of Lhe resulLlng conLracLsŦ Andţ as
aboveŴsLaLedţ ln Lhls respecL defendanL clearly acLed ln bad
falLhŦ
(2) llrsLţ Lhenţ as Lo moral damagesŦ As a proxlmaLe resulL of
defendanLƌs breach ln bad falLh of lLs conLracLs wlLh plalnLlffsţ
Lhe laLLer suffered soclal humlllaLlonţ wounded feellngsţ
serlous anxleLy and menLal angulshŦ lor plalnLlffs were
Lravelllng wlLh flrsL class LlckeLs lssued by defendanL and yeL
Lhey were glven only Lhe LourlsL classŦ AL sLopŴoversţ Lhey
were expecLed Lo be among Lhe flrsLŴclass passengers by
Lhose awalLlng Lo welcome Lhemţ only Lo be found among Lhe
LourlsL passengersŦ lL may noL be humlllaLlng Lo Lravel as
LourlsL passengersŤ lL ls humlllaLlng to be compelleJ Lo Lravel
as suchţ conLrary Lo whaL ls rlghLfully Lo be expecLed from Lhe
conLracLual underLaklngŦ
1he raLlonale behlnd exemplary or correcLlve damages lsţ as
Lhe name lmpllesţ Lo provlde an example or correcLlon for
publlc goodŦ uefendanL havlng breached lLs conLracLs ln bad
falLhţ Lhe courLţ as sLaLed earllerţ may award exemplary
damages ln addlLlon Lo moral damagesŦ ln vlew of lLs naLureţ
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 alrllnesŦ ln Lhls llghLţ we flnd lL [usL Lo
award Þ73ţ000Ŧ00 as exemplary or correcLlve damagesŦ
ÞA2 ÞŦ AkkIL1A and VI1ALIADC AkkIL1A VS Nat|ona| k|ce
and Corn Corporat|on (Gk NoŦ 1S64S Ianuary 31ţ 1964)
lAC1Sť

Þaz ArrleLa was awarded by nA8lC Lhe conLracL of
dellvery of 20ţ000 meLrlc Lons of 8urmese rlce aL $203 per
meLrlc LonŦ Cn Lhe oLher handţ Lhe corporaLlon commlLLed
lLself Lo pay for Lhe lmporLed rlce by means of an lrrevocableţ
conflmedţ and asslgnable leLLer of credlL ln uS currency ln
favor of ArrleLa or suppller ln 8urma lmmedlaLelyŦ Poweverţ
Lhe corporaLlon Look Lhe flrsL sLep Lo open a leLLer of credlL a
full monLh from Lhe execuLlon of Lhe conLracL only !uly 30ţ
1932Ŧ Cn Lhe same dayţ 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 8urmaŦ ConsequenLlyţ Lhe credlL lnsLrumenL applled
for was opened only on SepLember 8ţ 1932ţ slnce Lhe
corporaLlon was noL ln flnanclal capaclLy Lo pay Lhe 30Ʒ
marglnal cash deposlL when Lhe credlL lnsLrumenL was
approved on AugusL 4ţ 1932Ŧ

As a resulL of Lhe delayţ Lhe allocaLlon of ArrleLa was
cancelled and Lhe 3Ʒ deposlLţ approxlmaLely Þhp 200ţ000ţ
was forfelLedŦ ArrleLa Lrled Lo resLore Lhe cancelled 8urmese
rlce allocaLlonţ buL falledŦ ArrleLa Lhen lnsLead offered Lo
subsLlLuLe 1halland rlce Lo nA8lCţ communlcaLlng LhaL such
was a soluLlon whlch should be beneflclal for boLh parLlesŦ
Poweverţ Lhe corporaLlon re[ecLed Lhe subsLlLuLlonŦ Penceţ
ArrleLa senL a leLLer Lo Lhe corporaLlonţ demandlng for Lhe
compensaLlon for Lhe damages caused herŦ


lSSuLť

1Ŧ 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?

2Ŧ Was Lhere any walver on Lhe parL of ArrleLa?

8uLlnCť

1Ŧ ?esŦ lL was clear from Lhe records LhaL Lhe sole and
prlnclpal reason for Lhe cancellaLlon of Lhe allocaLlon
conLracLed by ArrleLa ln 8agoonţ 8urma was Lhe fallure of Lhe
leLLer of credlL Lo be openedŦ 1he fallureţ Lhereforeţ was Lhe
lmmedlaLe cause for Lhe consequenL damage whlch resulLedŦ
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 sameŦ

lurLhermoreţ Lhe llablllLy of Lhe corporaLlon sLemmed
noL alone from fallure or lnablllLy Lo saLlsfy Lhe requlremenLs
of Lhe bankţ 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
presLaLlonŦ under ArLlcle 1170ţ ºLhose who ln Lhe
performance of Lhelr obllgaLlon are gullLy of fraudţ
negllgenceţ or delay and Lhose who ln any manner
conLravene Lhe Lenor Lhereofţ are llable ln damagesŦ" 1he
Lerms ºln any manner conLravene Lhe Lenor Lhereof" lncludes
any llllclL acL whlch lmpalrs Lhe sLrlcL and falLhful fulflllmenL of
Lhe obllgaLlonţ or every klnd or defecLlve performanceŦ ln
general alsoţ every debLor who falls ln Lhe performance of hls
obllgaLlon ls bound Lo lndemnlfy for Lhe losses and damages
caused LherebyŦ

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

2Ŧ noŦ 1he subsequenL offer Lo subsLlLuLe Lhe 1halland
rlce for Lhe orlglnally conLracLed 8urmese dld noL consLlLuLe a
walverŦ Walvers are noL presumedŦ lL musL be clearly and
convlnclngly shown elLher by express sLlpulaLlons or acLs
admlLLlng no oLher reasonable explanaLlonŦ ln Lhls caseţ no
such lnLenL Lo walve had been esLabllshedŦ
Lasam Vs Sm|th Gk NoŦ 1949S Ieb 2ţ 1924
lAC1Sť

1he defendanL was Lhe owner of a publlc garage ln Lhe
Lown of San lernandoţ La unlonţ and engaged ln Lhe buslness
of carrylng passengers for hlre from one polnL Lo anoLher ln
Lhe Þrovlnce of La unlon and Lhe surroundlng provlncesŦ
uefendanL underLook Lo convey Lhe plalnLlffs from San
lernando Lo Currlmaoţ llocos norLeţ ln a lord auLomoblleŦ Cn
leavlng San lernandoţ Lhe auLomoblle was operaLed by a
llcensed chauffeurţ buL afLer havlng reached Lhe Lown of San
!uanţ Lhe chauffeur allowed hls asslsLanLţ 8uenoţ Lo drlve Lhe
carŦ 8ueno held no drlver's llcenseţ buL had some experlence
ln drlvlngŦ 1he car funcLloned well unLll afLer Lhe crosslng of
Lhe Abra 8lver ln 1agudlnţ whenţ accordlng Lo Lhe LesLlmony
of Lhe wlLnesses for Lhe plalnLlffsţ defecLs developed ln Lhe
sLeerlng gear so as Lo make accuraLe sLeerlng lmposslbleţ and
afLer zlgzagglng for a dlsLance of abouL half kllomeLerţ Lhe car
lefL Lhe road and wenL down a sLeep embankmenLŦ 1he
auLomoblle was overLurned and Lhe plalnLlffs plnned down
under lLŦ MrŦ Lasam escaped wlLh a few conLuslons and a
dlslocaLed rlbţ buL hls wlfeţ !oaqulnaţ recelved serlous
ln[urlesţ among whlch was a compound fracLure of one of Lhe
bones ln her lefL wrlsLŦ She also suffered nervous breakdown
from whlch she has noL fully recovered aL Lhe Llme of LrlalŦ

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 chauffeurŦ

1he Lrlal courL heldţ howeverţ LhaL Lhe cause of acLlon resLs
on Lhe defendanL's breach of Lhe conLracL of carrlage and
LhaLţ consequenLlyţ arLlcles 1101Ŵ1107 of Lhe Clvll Codeţ and
noL arLlcle 1903ţ are appllcableŦ 1he courL furLher found LhaL
Lhe breach of conLacL was noL due Lo forLulLous evenLs and
LhaLţ Lherefore Lhe defendanL was llable ln damagesŦ


lSSuLť

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

8uLlnCť

?esŦ lL ls sufflclenL Lo relLeraLe LhaL Lhe source of Lhe
defendanL's legal llablllLy ls Lhe conLracL of carrlageŤ LhaL by
enLerlng lnLo LhaL conLracL he bound hlmself Lo carry Lhe
plalnLlffs safely and securely Lo Lhelr desLlnaLlonŤ 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 Codeţ whlch readsť

ºno one shall be llable for evenLs whlch could noL be
foreseen or whlchţ even lf foreseenţ were lnevlLableţ wlLh Lhe
excepLlon of Lhe cases ln whlch Lhe law expressly provldes
oLherwlse and Lhose ln whlch Lhe obllgaLlon lLself lmposes
such llablllLyŦ"

As wlll be seenţ some exLraordlnary clrcumsLances
lndependenL of Lhe wlll of Lhe obllgorţ or of hls employeesţ ls
an essenLlal elemenL of a caso forLulLoŦ ln Lhe presenL caseţ
Lhls elemenL ls lacklngŦ 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 foreseenŦ As far as Lhe
record showsţ Lhe accldenL was caused elLher by defecLs ln
Lhe auLomoblle or else Lhrough Lhe negllgence of lLs drlverŦ
1haL ls noL a caso forLulLoŦ
V|ctor|as Þ|anters Assoc|at|on IncŦ VS V|ctor|as M||||ng CoŦţ
IncŦ
lAC1Sť
1he peLlLloners vlcLorlas ÞlanLers AssoclaLlonţ lncŦ
and norLh negros ÞlanLers AssoclaLlonţ lncŦ and Lhr
respondenL vlcLorlas Mllllng CoŦţ lnc enLered lnLo a
mllllng conLracL whereby Lhey sLlpulaLed a 30Ŵyear
perlod wlLhln whlch Lhe sugar cane produced by Lhe
peLlLloner would be mllled by Lhe respondenL cenLralŦ
1he parLles also sLlpulaLed LhaL ln Lhe evenL of force
ma[uereţ Lhe conLracL shall be deemed suspended
durlng Lhls perlodŦ 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 yearsŦ

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

8uLlnCť noŦ lorLulLous evenL relleves Lhe obllgor from
fulfllllng Lhe conLracLual obllgaLlon under ArLlcle 1174 of
Lhe Clvll CodeŦ 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 uponŦ 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 mllllngŦ ln order LhaL Lhe
respondenL cenLral may be enLlLled Lo demand from Lhe
peLlLloner Lhe fulflllmenL of Lhelr parL ln Lhe conLracLsţ 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 warŦ 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
obllgaLlonţ whlch was lmposslble of performance durlng
Lhe Llme lL became dueŦ nemo LeneLur ed lmposslblllaŦ 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 fulflllmenLŦ 1he performance of whaL Lhe law
has wrlLLen off cannoL be demanded and requlredŦ 1he
prayer LhaL Lhe peLlLloners be compelled Lo dellver sugar
cannoL for slx years more Lo make up for whaL Lhey falled
Lo dellverţ Lhe fulflllmenL of whlch was lmposslbleţ of
granLedţ would ln effecL be an exLenslon of Lhe Lerms of Lhe
conLracLs enLered lnLo by and beLween Lhe parLlesŦ
Mede| vsŦ CA ż299 SCkA 481 (Nov 27 1998)Ž
Usury Law
lacLsť Medel obLalned several loans from Conzales LoLalllng
Þ300ţ000Ŧ 1hese were evldenced by several promlssory noLes
agreelng Lo an lnLeresL raLe of 3Ŧ3Ʒ per monLh wlLh
addlLlonal servlce charge of 2Ʒ per annumţ and penalLy
charge of 1Ʒ per monLhŦŦ Cn maLurlLyţ Medel falled Lo pay
Lhelr lndebLednessŦ Penceţ Conzales flled wlLh Lhe 81C of
8ulacan a complalnL for collecLlon of Lhe full amounL of Lhe
loanŦ
81C declared LhaL Lhe promlssory noLes were genulneţ
howeverţ lL ruled LhaL alLhough Lhe usury Law had been
repealedţ Lhe lnLeresL charged by Conzales on Lhe loans was
unconsclonableŦ Penceţ 81C applled Lhe legal raLe of lnLeresL
for loan of moneyţ goods or credlL of 12Ʒ per annumŦ
CA reversed Lhe rullng of Lhe 81C holdlng LhaL Lhe usury Law
had become legally lnexlsLenLŦ Penceţ Lhls peLlLlon for revlew
on cerLlorarlŦ
lssueť WheLher or noL Lhe lnLeresL raLe sLlpulaLed upon was
valldŦ
Peldť nCŦ SC held LhaL Lhe sLlpulaLed raLe of lnLeresL aL 3Ŧ3Ʒ
per monLh on Lhe Þ300ţ000 loan was excesslveŦ Poweverţ lL
could noL conslder Lhe raLe ºusurlous" because C8 Clrcular
noŦ 903 has expressly removed Lhe lnLeresL celllngs
prescrlbed by Lhe usury Law and LhaL sald law ls now legally
lnexlsLenLŦ
C8 Clrcular 903 dld noL repeal nor ln any way amend Lhe
usury Law buL slmply suspended Lhe laLLer's effecLlvlLyŦ A C8
Clrcular cannoL repeal a lawŦ Cnly a law can repeal anoLher
lawŦ 8y vlrLue of Lhls clrcularţ Lhe usury Law has been
rendered lneffecLlveŦ lnLeresL can no be charged as lender
and borrower may agree uponŦ
neverLhelessţ SC held LhaL Lhe lnLeresL of 3Ŧ3Ʒ per monLhţ or
66Ʒ per annumţ sLlpulaLed upon by Lhe parLles ln Lhe
promlssory noLe was unconsclonableţ and henceţ conLrary Lo
moralsţ lf noL agalnsL Lhe lawŦ 1he sLlpulaLlon ls voldŦ 1he
courLs shall reduce equlLably llquldaLed damagesţ wheLher
lnLended as an lndemnlLy or a penalLy lf Lhey are lnlqulLous or
unconsclonableŦ
SC ordered LhaL Lhe lnLeresL of 12Ʒ per annum and
addlLlonal 1Ʒ a monLh penalLy charge as llquldaLed damages
reasonableŦ
CLN1kAL ÞnIL UNIVŦ vsŦ Court of Appea|s
246 SCkA S11
lAC1Sť
ln 1939ţ uon 8amon Lopez SrŦ execuLed a deed of donaLlon ln
favor of CÞu LogeLher wlLh Lhe followlng condlLlonsť
a) 1he land should be uLlllzed by CÞu excluslvely for Lhe
esLabllshmenL Ǝ use of medlcal collegeŤ
b) 1he sald college shall noL sell Lransfer or convey Lo any 3rd
parLyŤ
c) 1he sald land shall be called º8amon Lopez Campus" and
any lncome from LhaL land shall be puL ln Lhe fund Lo be
known as º8amon Lopez Campus lund"Ŧ
Poweverţ on May 31ţ 1989ţ Þ8ţ who are Lhe helrs of uon
8amon flled an acLlon for annulmenL of donaLlonţ
reconveyance Ǝ damages agalnsL CÞu for noL complylng wlLh
Lhe condlLlonsŦ 1he helrs also argued LhaL CÞu had negoLlaLed
wlLh Lhe nPA Lo exchange Lhe donaLed properLy wlLh anoLher
land owned by Lhe laLLerŦ
ÞeLlLloner alleged LhaL Lhe rlghL of prlvaLe respondenLs Lo flle
Lhe acLlon had prescrlbedŦ
lSSuLť
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
PLLuť
1)
under ArLŦ 1181ţ on condlLlonal obllgaLlonsţ 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 condlLlonŦ 1husţ when a person donaLes land
Lo anoLher on Lhe condlLlon LhaL Lhe laLLer would bulld upon
Lhe land a school ls such a resoluLory oneŦ 1he donaLlon had
Lo be valld before Lhe fulflllmenL of Lhe condlLlonŦ lf Lhere was
no fulflllmenL wlLh Lhe condlLlon such as whaL obLalns ln Lhe
lnsLanL caseţ Lhe donaLlon may be revoked Ǝ all rlghLs whlch
Lhe donee may have acqulred shall be deemed losL Ǝ
exLlngulshedŦ
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 burdensomeţ Lo make Lhe
donaLlon ln lLs favor forever valldŦ 8uLţ unforLunaLelyţ lL falled
Lo do soŦ Penceţ 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 sulLsŦ
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 acLlonţ peLlLloner has falled Lo comply wlLh lLs
obllgaLlon as doneeŦ ÞeLlLloner has slepL on lLs obllgaLlon for
an unreasonable lengLh of LlmeŦ Penceţ lL ls only [usL and
equlLable now Lo declare Lhe sub[ecL donaLlon already
lneffecLlve andţ for all purposesţ revoked so LhaL peLlLloner as
donee should now reLurn Lhe donaLed properLy Lo Lhe helrs
of Lhe donorţ prlvaLe respondenLs herelnţ by means of
reconveyanceŦ
2)
under ArLŦ 1197ţ when Lhe obllgaLlon does noL flx a perlod
buL from lLs naLure Ǝ clrcumsLance lL can be lnferred LhaL Lhe
perlod was lnLendedţ 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 Ǝ such perlod has arrlvedŦ Poweverţ
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
unforLunaLelyţ lL falled Lo do soŦ Penceţ Lhere ls no need Lo flx
a perlod when such procedure would be a mere LechnlcallLy
Ǝ formallLy Ǝ would serve no purpose Lhan Lo delay or load
Lo unnecessary and expenslve mulLlpllcaLlon of sulLsŦ
under ArLŦ 1191ţ when one of Lhe obllgors cannoL comply
wlLh whaL ls lncumbenL upon hlmţ Lhe obllgee may seek
resclsslon before Lhe courL unless Lhere ls [usL cause
auLhorlzlng Lhe flxlng of a perlodŦ 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 reclsslonŦ
GŦkŦ NoŦ 107112 Iebruary 24ţ 1994
NAGA 1LLLÞnCNL CCŦţ INCŦ (NA1LLCC) AND LUCIANC MŦ
MAGGA¥ţ pet|t|onersţ
vsŦ
1nL CCUk1 CI AÞÞLALS AND CAMAkINLS SUk II LLLC1kIC
CCCÞLkA1IVLţ INCŦ (CASUkLCC II
ÞeLlLloner naga 1elephone CoŦţ lncŦ (nA1LLCC) ls a Lelephone
company renderlng local as well as long dlsLance Lelephone
servlce ln naga ClLy whlle prlvaLe respondenL Camarlnes Sur ll
LlecLrlc CooperaLlveţ lncŦ (CASu8LCC ll) ls a prlvaLe
corporaLlon esLabllshed for Lhe purpose of operaLlng an
elecLrlc power servlce ln Lhe same clLyŦ
Cn november 1ţ 1977ţ Lhe parLles enLered lnLo a conLracL
(LxhŦ ƍAƍ) for Lhe use by peLlLloners ln Lhe operaLlon of lLs
Lelephone servlce Lhe elecLrlc llghL posLs of prlvaLe
respondenL ln naga ClLyŦ ln conslderaLlon Lhereforţ
peLlLloners agreed Lo lnsLallţ free of chargeţ Len (10)
Lelephone connecLlons for Lhe use by prlvaLe respondenLŦ
Sald conLracL also provldedť
(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 whaLsoeverţ
Lhe parLy of Lhe second parL ls forced Lo
sLopţ abandoned żslcŽ lLs operaLlon as a
publlc servlce and lL becomes necessary Lo
remove Lhe elecLrlc llghLposLŤ
AfLer Lhe conLracL had been enforced for over Len (10) yearsţ
prlvaLe respondenL flled on !anuary 2ţ 1989 wlLh Lhe 8eglonal
1rlal CourL of naga ClLy (8rŦ 28) CŦCŦ noŦ 89Ŵ1642 agalnsL
peLlLloners for reformaLlon of Lhe conLracL wlLh damagesţ on
Lhe ground LhaL lL ls Loo oneŴslded ln favor of peLlLlonersŤ 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 Þ10Ŧ00
per posLţ per monLhŤ LhaL afLer eleven (11) years of
peLlLlonersƌ use of Lhe posLsţ Lhe Lelephone cables sLrung by
Lhem Lhereon have become much heavler wlLh Lhe lncrease
ln Lhe volume of Lhelr subscrlbersţ worsened by Lhe facL LhaL
Lhelr llnemen bore holes Lhrough Lhe posLs aL whlch polnLs
Lhose posLs were broken durlng LyphoonsŤ LhaL a posL now
cosLs as much as Þ2ţ630Ŧ00Ť so LhaL [usLlce and equlLy
demand LhaL Lhe conLracL be reformed Lo abollsh Lhe
lnequlLles LhereonŦ
lSSuLť
WheLher or noL Lhe obllgaLlon ls sub[ecL Lo a poLesLaLlve
condlLlon?
PLLuť
noŦ lL ls sub[ecL Lo a mlxed condlLlonŦ
A poLesLaLlve condlLlon ls a condlLlonţ Lhe fulflllmenL of whlch
depends upon Lhe sole wlll of Lhe debLorţ ln whlch caseţ Lhe
condlLlonal obllgaLlon ls voldŦ
19
8ased on Lhls deflnlLlonţ
respondenL courLƌs flndlng LhaL Lhe provlslon ln Lhe conLracLţ
Lo wlLť
(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) Ŧ Ŧ ŦŦ
ls a poLesLaLlve condlLlonţ ls correcLŦ Poweverţ lL musL have
overlooked Lhe oLher condlLlons ln Lhe same provlslonţ Lo wlLť
Ŧ Ŧ Ŧ lL belng undersLood LhaL Lhls conLracL
shall LermlnaLe when for any reason
whaLsoeverţ Lhe parLy of Lhe second parL
(prlvaLe respondenL) ls forced Lo sLopţ
abandoned (slc) lLs operaLlon as a publlc
servlce and lL becomes necessary Lo remove
Lhe elecLrlc llghL posL (slc)Ť
whlch are casual condlLlons slnce Lhey depend on chanceţ
hazardţ or Lhe wlll of a Lhlrd personŦ
20
ln sumţ Lhe conLracL ls
sub[ecL Lo mlxed condlLlonsţ LhaL lsţ Lhey depend parLly on
Lhe wlll of Lhe debLor and parLly on chanceţ hazard or Lhe wlll
of a Lhlrd personţ whlch do noL lnvalldaLe Lhe aforemenLloned
provlslonŦ
21
neverLhelessţ ln vlew of our dlscusslons under
Lhe flrsL and second lssues ralsed by peLlLlonersţ Lhere ls no
reason Lo seL aslde Lhe quesLloned declslon and resoluLlon of
respondenL courLŦ
ne|rs of Lu|s 8acus vs Court of Appea|sţ Spouses Iaust|no
Duray and V|ctor|ana Duray
GŦkŦNoŦ 12769S 03December2001

IAC1S CI 1nL CASLť

Cn 1984 Luls 8acus leased Lo lausLlno uuray a parcel of
agrlculLural land wlLh LoLal land area of 3ţ002 of square
meLersţ ln CebuŦ 1he lease was for slx years endlng ln 1990ţ
Lhe conLracL conLalned an opLlon Lo buy clauseŦ under Lhe
sald opLlonţ Lhe lessee had Lhe excluslve and lrrevocable rlghL
Lo buy 2ţ000 square meLers 3 years from a year afLer Lhe
effecLlvlLy of Lhe conLracLţ aL Þ200 per square meLerŦ 1haL
raLe shall be proporLlonaLely ad[usLed dependlng on Lhe peso
raLe agalnsL Lhe uS dollarţ whlch aL Lhe Llme of Lhe execuLlon
of Lhe conLracL was 14 pesosŦ

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

ISSULS CI 1nL CASLť

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

Ŵ ?esţ Cb||gat|ons under an opt|on to buy are rec|proca|
ob||gat|onsŦ 1he performance of one obllgaLlon ls condlLloned
on Lhe slmulLaneous fulflllmenL of Lhe oLher obllgaLlonŦ n
other wordsţ in on option to buyţ 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 debtorŦ
Ŵ 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 prlceţ Lhey were noL yeL obllged Lo make
Lhe paymenLŦ Cnly upon Lhe 8acus' acLual execuLlon and
dellvery of Lhe deed of sale were Lhey requlred Lo payŦ
Ŵ 1he uurays dld noL lncur ln delay when Lhey dld noL yeL
dellver Lhe paymenL nor make a conslgnaLlon before Lhe
explraLlon of Lhe conLracLŦ n reciproco/ ob/iqotionsţ 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 himŦ On/y from the moment one of the
porties fu/fi//s his ob/iqotionţ does de/oy by the other beqinŦ

nLLDť

1he peLlLlon ls uLnlLu nad Lhe declslon of Lhe CourL of
Appeals ls Alll8MLuŦ
LASAM VSŦ SMI1n
4S ÞnIL 6S7

lAC1Sť
1he defendanL was Lhe owner of a publlc garage ln Lhe
Lown of San lernandoţ La unlonţ and engaged ln Lhe
buslness of carrylng passengers for hlre from one polnL Lo
anoLher ln Lhe Þrovlnce of La unlon and Lhe surroundlng
provlncesŦ uefendanL underLook Lo convey Lhe plalnLlffs
from San lernando Lo Currlmaoţ llocos norLeţ ln a lord
auLomoblleŦ Cn leavlng San lernandoţ Lhe auLomoblle was
operaLed by a llcensed chauffeurţ buL afLer havlng reached
Lhe Lown of San !uanţ Lhe chauffeur allowed hls asslsLanLţ
8uenoţ Lo drlve Lhe carŦ 8ueno held no drlver's llcenseţ buL
had some experlence ln drlvlngŦ 1he car funcLloned well
unLll afLer Lhe crosslng of Lhe Abra 8lver ln 1agudlnţ whenţ
accordlng Lo Lhe LesLlmony of Lhe wlLnesses for Lhe
plalnLlffsţ defecLs developed ln Lhe sLeerlng gear so as Lo
make accuraLe sLeerlng lmposslbleţ and afLer zlgzagglng for
a dlsLance of abouL half kllomeLerţ Lhe car lefL Lhe road and
wenL down a sLeep embankmenLŦ 1he auLomoblle was
overLurned and Lhe plalnLlffs plnned down under lLŦ MrŦ
Lasam escaped wlLh a few conLuslons and a dlslocaLed rlbţ
buL hls wlfeţ !oaqulnaţ recelved serlous ln[urlesţ among
whlch was a compound fracLure of one of Lhe bones ln her
lefL wrlsLŦ She also suffered nervous breakdown from
whlch she has noL fully recovered aL Lhe Llme of LrlalŦ
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 chauffeurŦ
1he Lrlal courL heldţ howeverţ LhaL Lhe cause of acLlon resLs
on Lhe defendanL's breach of Lhe conLracL of carrlage and
LhaLţ consequenLlyţ arLlcles 1101Ŵ1107 of Lhe Clvll Codeţ and
noL arLlcle 1903ţ are appllcableŦ 1he courL furLher found
LhaL Lhe breach of conLacL was noL due Lo forLulLous evenLs
and LhaLţ Lherefore Lhe defendanL was llable ln damagesŦ

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

8uLlnCť
?esŦ lL ls sufflclenL Lo relLeraLe LhaL Lhe source of Lhe
defendanL's legal llablllLy ls Lhe conLracL of carrlageŤ LhaL by
enLerlng lnLo LhaL conLracL he bound hlmself Lo carry Lhe
plalnLlffs safely and securely Lo Lhelr desLlnaLlonŤ 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 Codeţ whlch
readsť
ºno one shall be llable for evenLs whlch could noL be
foreseen or whlchţ even lf foreseenţ were lnevlLableţ wlLh
Lhe excepLlon of Lhe cases ln whlch Lhe law expressly
provldes oLherwlse and Lhose ln whlch Lhe obllgaLlon lLself
lmposes such llablllLyŦ"

As wlll be seenţ some exLraordlnary clrcumsLances
lndependenL of Lhe wlll of Lhe obllgorţ or of hls employeesţ
ls an essenLlal elemenL of a caso forLulLoŦ ln Lhe presenL
caseţ Lhls elemenL ls lacklngŦ 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 foreseenŦ As far as
Lhe record showsţ Lhe accldenL was caused elLher by defecLs
ln Lhe auLomoblle or else Lhrough Lhe negllgence of lLs
drlverŦ 1haL ls noL a caso forLulLoŦ
VIC1CkIAS ÞLAN1LkS ASSŦţ INCŦţ L1 ALŦ VSŦ
VIC1CkIAS MILLING CCŦţ INCŦ
GŦkŦ NoŦ LŴ6648 Iu|y 2Sţ 19SS
lAC1Sť
1he peLlLloners vlcLorlas ÞlanLers AssoclaLlonţ lncŦ
and norLh negros ÞlanLers AssoclaLlonţ lncŦ and Lhr
respondenL vlcLorlas Mllllng CoŦţ lnc enLered lnLo a mllllng
conLracL whereby Lhey sLlpulaLed a 30Ŵyear perlod wlLhln
whlch Lhe sugar cane produced by Lhe peLlLloner would be
mllled by Lhe respondenL cenLralŦ 1he parLles also
sLlpulaLed LhaL ln Lhe evenL of force ma[uereţ Lhe conLracL
shall be deemed suspended durlng Lhls perlodŦ 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
yearsŦ
lSSuLť
Can Lhe peLlLloners be compelled Lo dellver sugar
cane for slx more years afLer Lhe explraLlon of Lhe 30Ŵyear
perlod Lo make up for whaL Lhey falled Lo dellver Lo Lhe
respondenL?

8uLlnCť noŦ lorLulLous evenL relleves Lhe obllgor from
fulfllllng Lhe conLracLual obllgaLlon under ArLlcle 1174 of
Lhe Clvll CodeŦ 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 uponŦ 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 mllllngŦ ln order LhaL Lhe
respondenL cenLral may be enLlLled Lo demand from Lhe
peLlLloner Lhe fulflllmenL of Lhelr parL ln Lhe conLracLsţ 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 warŦ 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
obllgaLlonţ whlch was lmposslble of performance durlng
Lhe Llme lL became dueŦ nemo LeneLur ed lmposslblllaŦ 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 fulflllmenLŦ 1he performance of whaL Lhe law
has wrlLLen off cannoL be demanded and requlredŦ 1he
prayer LhaL Lhe peLlLloners be compelled Lo dellver sugar
cannoL for slx years more Lo make up for whaL Lhey falled
Lo dellverţ Lhe fulflllmenL of whlch was lmposslbleţ of
granLedţ would ln effecL be an exLenslon of Lhe Lerms of Lhe
conLracLs enLered lnLo by and beLween Lhe parLlesŦ
UNIVLkSI1¥ CI 1nL ÞnILIÞÞINLS VSŦ DL LCS ANGLLLS

lAC1Sť

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

Cn uecember 8ţ 1964ţ ALuMCC lncurred an unpald accounL
of Þ219ţ362Ŧ94Ŧ uesplLe repeaLed demandsţ ALuMCC sLlll
falled Lo payţ so uÞ senL a noLlce Lo resclnd Lhe logglng
agreemenLŦ Cn Lhe oLher handţ ALuMCC execuLed an
lnsLrumenL enLlLled ºAcknowledgmenL of uebL and Þroposed
Manner of ÞaymenLsŦ lL was approved by Lhe presldenL of uÞţ
whlch sLlpulaLed Lhe followlngť

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

3Ŧ ln Lhe evenL LhaL Lhe debLor falls Lo comply wlLh any of lLs
promlsesţ Lhe uebLor agrees wlLhouL reservaLlon LhaL
CredlLor shall have Lhe rlghL Lo conslder Lhe Logglng
AgreemenL resclndedţ wlLhouL Lhe necesslLy of any [udlclal
sulLŧ

ALuMCC conLlnued lLs logglng operaLlonsţ buL agaln lncurred
an unpald accounLŦ Cn !uly 19ţ1963ţ uÞ lnformed ALuMCC
LhaL lL hadţ as of LhaL daLeţ consldered resclnded and of no
furLher legal effecL Lhe logglng agreemenLţ and LhaL uÞ had
already Laken sLeps Lo have anoLher concesslonalre Lake over
Lhe logglng operaLlonŦ ALuMCC flled a peLlLlon Lo en[oln uÞ
from conducLlng Lhe blddlngŦ 1he lower courL ruled ln favor of
ALuMCCţ henceţ Lhls appealŦ

lSSuLť

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

8uLlnCť

?esŦ ln Lhe flrsL placeţ uÞ and ALuMCC had expressly
sLlpulaLed LhaL upon defaulL by Lhe debLorţ uÞ has Lhe rlghL
and Lhe power Lo conslder Lhe Logglng AgreemenL of
uecember 2ţ 1960 as resclnded wlLhouL Lhe necesslLy of any
[udlclal sulLŦ As Lo such speclal sLlpulaLlon and ln connecLlon
wlLh ArLlcle 1191 of Lhe Clvll Codeţ Lhe Supreme CourLţ sLaLed
ln lrollan vsŦ Þan CrlenLal Shlpplng Coť

º1here ls noLhlng ln Lhe law LhaL prohlblLs Lhe parLles from
enLerlng lnLo agreemenL LhaL vlolaLlon of Lhe Lerms of Lhe
conLracL would cause cancellaLlon Lhereofţ even wlLhouL
courL lnLervenLlonŦ ln oLher wordsţ lL ls noL always necessary
for Lhe ln[ured parLy Lo resorL Lo courL for resclsslon of Lhe
conLracLŦ"
ÞnILIÞÞINL AMUSLMLN1 LN1LkÞkISLS VSŦ NA1IVIDAD

lAC1Sť

Cn !anuary 6ţ 1961 Lhe plalnLlffţ Þhlllpplne AmusemenL
LnLerprlsesţ lncŦţ enLered lnLo a conLracL wlLh Lhe defendanL
Soledad naLlvldadţ whereby Lhe former leased Lo Lhe laLLer
an auLomaLlc phonographţ more popularly known as
ƍ[ukeboxƍŦ SomeLlme LhereafLerţ naLlvldad wroLe a leLLer Lo
plalnLlff requesLlng for Lhe reLurn of Lhe [ukebox Lo Lhe
companyŦ naLlvldad reasoned ouL LhaL sald [ukebox ls
defecLlveŦ 1he plalnLlff howeverţ conLended LhaL Lhe sLocklng
up of colns ls qulLe normal ln any colnŴoperaLed phonographŦ
lL Lhen rlghLfully reŴlnsLalled a new [ukebox ln replacemenL of
Lhe flrsL oneŦ

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

lSSuLť

ls defendanL enLlLled Lo resclsslon?

8uLlnCť

noŦ 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
agreemenLŦ lL wlll noL be granLed where Lhe breach ls sllghL or
casualŦ 1he defendanLs asked Lhe plalnLlff Lo reLrleve lLs
phonographţ clalmlng LhaL Lhere were Llmes when Lhe colns
dropped lnLo Lhe sloL would geL sLuckţ resulLlng ln lLs fallure
Lo play Lhe deslred muslcŦ 8uL aparL from Lhls bare sLaLemenLţ
Lhere ls noLhlng ln Lhe evldence whlch shows Lhe frequency
wlLh whlch Lhe [ukebox falled Lo funcLlon properlyŦ 1he
expresslon ƍLhere are Llmesƍ connoLes occaslonal fallure of
Lhe phonograph Lo operaLeţ noL frequenL enough Lo render lL
unsulLable and unservlceableŦ
LLGAkDA VSŦ SALDAÑA

GŦkŦ NoŦ LŴ26S78ţ Ianuary 28ţ 1974
lAC1Sť

Saldana had enLered lnLo Lwo wrlLLen conLracLs wlLh Legardaţ
a subdlvlslon ownerţ whereby Legarda agreed Lo sell Lo hlm
Lwo of hls loLs for 1ţ300 per loLţ payable over a span of 10
years on 120 monLhly lnsLallmenLs wlLh 10Ʒ lnLeresL per
annumŦ 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 represenLaLlveţ Lhe sald MrŦ CenonŦ
Saldana already pald a LoLal of Þhp3ţ382Ŧ06Ŧ 1he sLaLemenL
of accounL shows LhaL Saldana pald Þhp1ţ682Ŧ28 of Lhe
prlnclpal and Þhp1ţ889Ŧ78 for Lhe lnLeresLŦ lL dld noL
dlsLlngulsh whlch of Lhe Lwo sald loLs was paldŦ ÞeLlLlonerţ
Lhenţ 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 peLlLlonerŦ 1he lower courL ruled
susLalnlng peLlLloner's cancellaLlon of conLracLŦ 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 conveyanceŦ Pence Lhls peLlLlonŦ

lSSuLť

Was Lhe cancellaLlon of Lhe sale of conLracL valld?

8uLlnCť

noţ even Lhough lL was sLlpulaLed LhaL fallure Lo compleLe Lhe
paymenL would resulL Lo Lhe cancellaLlon of Lhe conLracLţ lL
was sLlll noL valldŦ As clearly shown ln Lhe sLaLemenL of
accounLţ Saldana was able Lo pay one of Lhe Lwo sald loLsŦ
under ArLlcle 1234 of Lhe new Clvll Codeţ ºlf Lhe obllgaLlon
has been subsLanLlally performed ln good falLhţ Lhe obllgor
may recover as Lhough Lhere had been a sLrlcL and compleLe
fulflllmenLţ less damages suffered by Lhe obllgee"Ŧ Penceţ
under Lhe auLhorlLy of ArLlcle 1234 of Lhe new Clvll Codeţ
Saladana ls enLlLled Lo one of Lhe Lwo loLs of hls cholce and
Lhe lnLeresL pald shall be forfelLed ln favor of Lhe peLlLlonersŦ

  ½ °  ¾ .

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