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No. 207348, August 20, 2014 VELASCO, The ownership of the improvements did not
J. Doctrine: pass to the government and F.F. Cruz remained to be
If the period in the contract is merely an estimate, then the owner of the improvements, notwithstanding that
the lapse of the said period will not make the project had not been completed. The COA concluded
obligation immediately demandable because it cannot that after the six (6)-year period, F.F. Cruz was
be deemed a day certain in the context of Article automatically deemed to be in delay, the contract
1193, the first paragraph of which provides that considered as completed, and the ownership of the
Obligations for whose fulfillment a day certain has structures built in accordance with the MOA
been fixed, shall be demandable only when that day transferred to the City of Mandaue. But this position
comes. was erroneous, because a reading of the contract of
reclation showed that the period of six (6) years was an
Facts: estimate and not a day certain in the context of
Article 1193, the first paragraph of which provides that
In 1989, the City of Mandaue (the City) and Obligations for whose fulfillment a day certain has
F.F. Cruz and Co., Inc. (F.F. Cruz) entered into a been fixed, shall be demandable only when that day
Contract of Reclamation in which F.F. Cruz, in comes. Thus, the lapse of six (6) years from the
consideration of a defined land sharing formula thus perfection of the contract did not, by itself, make the
stipulated, agreed to undertake, at its own expense, the obligation to finish the reclamation project
reclamation of foreshore and submerged lands from demandable, such as to put the obligor in a state of
the Cabahug Causeway in that city. The project was to actionable delay for its inability to finish. Thus, F.F.
be completed in six (6) years or until 1995. In Cruz was not in delay. The lapse of six (6) years from
connection with the reclamation project, the parties the perfection of the subject reclamation contract,
also agreed, by way of a Memorandum of Agreement, without more, could not have automatically vested
on the use of a parcel of land belonging to the city Mandaue City, under the MOA, with ownership of the
where, as a compensation for its use for building structures. Even if the allotted six (6) years within
housing facilities for F.F. Cruzs employees, the which F.F. Cruz was the completion date of the
improvements introduced thereto by F.F. Cruz shall be reclamation project, the lapse thereof does not
owned by the City. The project was not completed by automatically mean that F.F. Cruz was in delay. As
that date. Thereafter, in 1997, the Department of may be noted, the City never made a demand for the
Public Works and Highways entered into an agreement fulfillment of its obligation under the Contract of
with F.F. Cruz to demolish the said housing facilities Reclamation. The first paragraph of Article 1169
because these improvements stand in the way of the provides: Those obliged to deliver or to do something
Metro Cebu Development Project II (MCDP II), which incur in delay from the time the obligee judicially or
included the widening of the Plaridel Extension extrajudicially demands from them the fulfillment of
Mandaue Causeway. Petitioner Rowena Solante, then their obligation. Here, the records were bereft of any
the Human Resources Management Officer III, document whence to deduce that the City of Mandaue
prepared disbursement vouchers in favor of F.F. Cruz exacted from F.F. Cruz the fulfillment of its obligation
in the amount of PHP 1,084,836.42 for the cost of the under the reclamation contract. As it were, the
housing facilities. This was done with approval of Mandaue-F.F.Cruz MOA states that the structures built
Samuel Darza, Project Director of the MCDP II, who by F.F. Cruz on the property of the city will belong to
addressed the said disbursement through a Letter- the latter only upon the completion of the project.
Complaint, alleging that F.F. Cruz was no longer the Clearly, the completion of the project is a suspensive
owner of the property as the ownership thereof has condition that has yet to be fulfilled. Until the
passed to the City pursuant to the Contract of condition arises, ownership of the structures properly
Reclamation. The Commission on Audit (COA) pertains to F.F. Cruz
disallowed the disbursement, ruling that the fact that
the project was not completed in 1995 did not negate
the governments ownership of the improvements.
Also, it was the intention of the parties that the
government be compensated for the use of the land for
the housing facilities, and making the government pay
for the use of the land would render such intention of
the parties inutile.


Whether or not the ownership of the

improvements built by F.F. Cruz on the land owned by
the City already passed to the government.

Whether the obligation between the parties was
[G.R. No. 206806. June 25, 2014.] an alternative obligation.


CANDIDA A. SANTOS, petitioners, vs. DAN T.
LIM, doing business under the name and style of Yes. The obligation between the parties was an
QUALITY PAPERS & PLASTIC PRODUCTS alternative obligation. The rule on alternative
ENTERPRISES, respondent. obligation is governed by Article 1199 of the Civil
In an alternative obligation, there is more than one
FACTS: object, and the fulfillment of one is sufficient,
1. Dan T. Lim (Lim) works in the business of determined by the choice of debtor who generally has
supplying scrap papers, cartons, and other raw the right of election. The right of election is
materials, under the name and Quality Paper extinguished when the party who may exercise that
and Plastic Products, Enterprises, to factories option categorically and unequivocally makes his or
engaged in the paper mill business. He her choice known. The choice of the debtor must also
delivered scrap papers to Arco Pulp and Paper be communicated to the creditor who must receive
Company, Inc. (Arco Pulp and Paper) through notice of it since the object of this notice is to give the
its CEO and President, Candida A. Santos. The creditor opportunity to express his consent, or to
parties allegedly agreed that Arco Pulp and impugn the election made by the debtor, and only after
Paper would either pay Lim the value of the said notice shall the election take legal effect when
raw materials or deliver to him their finish consented by the creditor, or if impugned by the latter,
products of equivalent value. when declared proper by a competent court.
2. Lim alleged that when he delivered the raw
materials, Arco Pulp and Paper issued a post- According to the factual findings of the trial court and
dated check, with the assurance that the check appellate court, the original contract between the
would not bounce. When he deposited the parties was for respondent to deliver scrap papers
check, it was dishonored for being drawn worth Php7,220,968.31 to petitioner Arco Pulp and
against a closed account. Paper. The payment for this delivery became petitioner
3. On the same day, Arco Pulp and Paper, and a Arco Pulp and Papers obligation. By agreement,
certain Eric Sy executed a memorandum of petitioner Arco Pulp and Paper, as the debtor, had the
agreement where Arco Pulp and Paper bound option to either (1) pay the price or (2) deliver the
themselves to deliver their finished products to finished products of equivalent value of respondent.
Megapack Container Corp., owned by Eric Sy.
According to the memorandum, the raw The appellate court, therefore, correctly identified the
materials would be supplied by Lim, through obligation between the parties as an alternative
his company, Quality Paper and Plastic obligation, whereby petitioner, Arco Pulp and Paper,
Products. after receiving the raw materials from respondent,
4. Lim sent a demand letter to Arco Pulp and would either pay him the price of the raw materials or
Paper but no payment was made to him. Hence, in the alternative, deliver to him the finished products
he filed a complaint for collection of sum of of equivalent value.
5. The RTC rendered a judgment in favor of Arco When petitioner Arco Pulp and Paper tendered a check
Pulp and Paper and dismissed the complained, to respondent in partial payment for the scrap papers,
holding that when Arco Pulp and Paper and they exercised their options to pay the price.
Eric Sy and entered into the memorandum of Respondents receipt of the check and his subsequent
agreement, novation took place, which act of depositing it constituted his notice of petitioner
extinguished Arco Pulp and Paper;s obligation Arco Pulp and Papers option to pay.
to Lim.
6. On appeal, Lim argued that novation did not This choice was also shown by the terms of the
take place since the memorandum of agreement memorandum of agreement, which was executed on
between Arco Pulp and Paper and Eric Sy was the same day. The memorandum declared in clear
an exclusive and private agreement between terms that the delivery of petitioner Arco Pulp and
them. Papers finished products would be to a third person,
7. The CA reversed the RTC decision and ruled thereby extinguishing the option to deliver the finished
that the facts and circumstances in this case product of equivalent value to respondent.
clearly showed the existence of an alternative

F.S. Divinagracia Agro Commercial, Inc. vs. Court
of Appeals Under the Public Land Act (CA 141, as amended),
reclaimed lands are classified as alienable and
FACTS: disposable lands of the public domain Section 3 of the
Constitution: Alienable lands of the public domain
Dona Josefa leased her property as early as shall be limited to agricultural lands. Private
1899 to respondents father. Its montly rental was corporations or associations may not hold such
P1,250.00 In 1974, the leased premises was sold to
alienable lands of the public domain except by lease
F.S. Divinagracia. After the sale of the property, the
The 157.84 hectares of reclaimed lands comprising
montly rental was increased to P2,000.00. In October
1975, F.S. Divinagracia notified the lessee that the the Freedom Islands, now covered by certificates of
lease will be terminated by November 1975 and did title in the name of PEA, are alienable lands of the
not accept rental payments thereafter. The lessee public domain. PEA may lease these lands to private
refused to vacate, so F.S. Divinagracia filed an corporations but may not sell or transfer ownership of
unlawful detainer action against the lessee. The trial these lands to private corporations. PEA may only sell
court decided in favor of F.S. Divinagracia. However, these lands to Philippine
on appeal, the Court of Appeals modified the judgment citizens, subject to the ownership limitations in the
and it extended the lease for another 5 years. Is this 1987 Constitution and existing laws. Clearly, the
correct? Amended JVA violates glaringly Sections 2 and 3,
Article XII of the 1987 Constitution. Under Article
HELD: 1409 of the Civil Code, contracts whose object or
purpose is contrary to law, or whose object is
Yes, the Court is accorded the power to fix a outside the commerce of men, are inexistent and
longer term for the lease, which power is protestative void from the beginning. The Court must perform its
or discretionary in nature, The prerogative is addressed
duty to defend and uphold the Constitution, and
to the courts sound judgment and is controlled by
therefore declares the Amended JVA null and void ab
equitable considerations. The court may fix a longer
term where equites come into play demand an initio

(Friend, from book of Mauricio Ulep to!Di ako

makakita sa net e. )



From the time of Marcos until Estrada,

portions of Manila Bay were being reclaimed. A law
was passed creating the Public Estate Authority which
was granted with the power to transfer reclaimed
lands. Now in this case, PEA entered into a Joint
Venture Agreement with AMARI, a private
corporation. Under the Joint Venture Agreement
between AMARI and PEA, several hectares of
reclaimed lands comprising the Freedom Islands and
several portions of submerged areas of Manila Bay
were going to be transferred to AMARI .

Whether or not the stipulations in the
Amended JVA for the transfer to AMARI of lands,
reclaimed or to be reclaimed, violate the Constitution