Case # 1

Bareng v CA

GR No L-12973 April 25, 1960

TOPICS

SALES – Article 1590 of the Civil Code provides that the vendee has the right to suspend payment of the price
of the thing sold in the face of any danger that he might be disturbed in its possession or ownership thereof.

PAYMENT OF INTEREST; VENDEE’S DEFAULT TO PAY THE PRICE OF THE THING SOLD – If the
vendee is in default in the payment of the price of the thing sold, under the provision of Article 2209 of the Civil
Code, he is liable to pay legal interest from the date of the filing of the complaint, unless he deposits in the Court
the amount due at the start of the action

PONENTE

Reyes, J.B.L, J

FACTS

Petitioner Bareng purchased from respondent Algeria the cinematographic equipment installed at the Pioneer
Theater for the sum of P15k, P10k of which was paid, and for the balance, Bareng signed four promissory notes.

The first promissory note was duly paid by the petitioner. Shortly before the second note fell due, the other
respondent Agustin Ruiz informed petitioner that he was a co-owner of the equipment in question, and several
days thereafter, Ruiz sent petitioner a telegram instructing him to suspend payments to Alegria of the balance of
the price as he was not agreeable to the sale. On the same day, Alegria sought to collect upon the second note,
but petitioner refused to pay on account of Ruiz’s claims. Petitioner refused to make any more payments to
Alegria until the latter had settled his dispute with Ruiz.

Eventually after Aleria and Ruiz reached a compromise, the former sued Bareng the unpaid amount and the
interest due. Petitioner Bareng claims he is not liable to pay interests to Alegria because he was justified in
suspending payment of the balance of the price.

ISSUE

Did petitioner incur default in his obligation to pay

HELD

Yes, the petitioner in this was in default on the unpaid balance of the price. While it is true that petitioner Bareng
had the right to suspend payment of the balance from the time he was informed by Ruiz of the latter’s claims of
co-ownership thereof, specially upon his receipt of Ruiz’ telegram wherein the latter asserted that he was not
agreeable to the sale, his right to suspend ceased after Ruiz and Alegria reached a compromise because in this
case there was no longer any danger of threat to Bareng’s ownership and full enjoyment of the thing bought from
Alegria. It was by virtue of the settlement that Alegria sued petitioner for the unpaid balance. Yet the petitioner
did not tender payment and instead sought to have the sale rescinded upon claims of violations of warranties by
Alegria.

Petitioner also argues that his indebtedness was unliquidated until its amount was determined by the CA and that
consequently, he cannot be made answerable for interests on the amount due. The argument is completely
untenable. The price was determined and known, hence, liquidated; and the obligation to pay unpaid balance did
not cease to be liquidated and determined simply because the vendor and vendee disagreed as to its amount.

Case # 2

F.S Divina Gracia Agro Commercial v CA

GR No-47350 April 21, 1981

TOPICS

CONTRACT OF LEASE

Article 1687 in relation to Article 1197 provides that the court is accorded the power to fix a longer term for the
lease, which power is potestative or discretionary in nature. This prerogative is addressed to the court’s sound
judgment and is controlled by equitable considerations. Under the principle of expressio unius est exclusio
alterius, the law applies to both residential and commercial lands.

Article 1676 provides: “The purchaser of a piece of land which is under a lease that is not recorded in the
Registry of Property may terminate the lease, save when there is a stipulation to the contrary in the contract of
sale, or when the purchaser knows of the existence of the lease”

PONENTE

Guerrero, J

FACTS

The private respondent’s father was the original lessee of the building and lot owned by the late Dona
Concepcion Gay de Loring and spouses Kauffman. After his father’s demise, the private respondent continued
the lease. The building and lot subject of the lease was bought by petitioner herein from the intestate-estate of the
original owners for the sum of 250k Php. Before its purchase, the private respondent was a lessee of said owners
and was paying rental of 1.25k Php per month. After the purchase, the rental corresponding to the first half of the
month was paid by private respondent to the original owners and the second half, to the new owner, the
petitioner. In continuance of the lease, it was verbally agreed by the parties that the rental for the succeeding
months would be increased to 2k Php. After two weeks the private respondent was informed by a representative
of the petitioner that his contract would terminate by the end of the month. When the private respondent refused
to vacate, the petitioner gave the private respondent a final extension to occupy the premises for more a month,
for which reason petitioner refused to accept further payment of rentals. Thereafter, a complaint for unlawful
detainer was filed by petitioner against private respondent.
From the decision of the first level court, fixing the duration of the lease for more than seven and a half years.
The petitioner appealed to the second level court which modified the previous decision extending the lease to
one year instead of seven and a half. From the latter decision, the private respondent filed a petition for review
before the Court of Appeals which modified the previous decision extending the lease for another five years.
Aggrieved, the petitioner herein appealed by certiorari to the Supreme Court, assigning a single error involving a
legal issue that the Court of Appeals committed a grave error in the application of Article 1687 by extending the
lease for another 5 years which is a grave abuse of discretion amounting to lack or in excess of its jurisdiction.
Petitioner, argued that the court of appeals practically made a contract between the parties which is contrary to
the spirit and intent of Article 1687 of the Civil Code.

ISSUE

Did Court of Appeals commit grave abuse of discretion in extending the lease for another five years applying
Article 1687 of the Civil Code

HELD

To answer the issue, Article 1687 must be correlated with Article 1197. Considering both articles together, it is at
once clear and evident that the court is accorded the power to fix a longer term for the lease, which power is
potestative or discretionary in nature. This prerogative is addressed to the court’s sound judgment and is
controlled by equitable considerations. “The court may fix a longer term where equities come into play
demanding an extension.”

It may not, therefore, be contended that the Court of Appeals in the exercise of its discretionary power made a
contract between the parties, since the very purpose of the law is not the fixing of a longer term for the lease, but
to make the indefinite period of the lease definite by fixing once and for all the remaining duration of the lease.

Case #3

Spouses Silvestre and Celia Pascual v Rodrigo Ramos

GR No 144712. July 4, 2002

PONENTE

Davide, JR., C.J.

FACTS

The case stemmed from the petition for consolidation of title or ownership filed with the trial court by Rodrigo
Ramos against herein petitioners, Spouses Silvestre and Celia Pascual. In his petition, Ramos alleged that in
consideration of 150k php, the spouses executed in his favor a Deed of Absolute Sale with Right to Repurchase
over two parcels of land. The spouses did not exercise their right to repurchase the property within the stipulated
one-year period; hence, Ramos prayed that the title of or ownership be consolidated in his favor.
In their answer, the spouses averred that what the parties had actually agreed upon was a real estate mortgage.
They further alleged that there was no agreement limiting the period within which to exercise the right to
repurchase and that they had even overpaid Ramos.

Among the documents offered in evidence by Ramos was a document denominated as Sinumpaang Salaysay
signed by the parties, but was not notarized. The trial court found that the transaction was actually a loan.
Accordingly, the trial court rendered a decision in favor of the defendants dismissing the plaintiff's petition.

The spouses appealed and pointed out that since the only prayer of Ramos was to have the title or ownership be
consolidated in his favor, he did not have any prayer for general relief, the trial court had no basis in ordering
them to pay 511k php. The Court of Appeals affirmed the trial court’s order. It ruled that while Ramos’ petition
did not include a prayer for payment of the balance, the issue of whether there was still a balance was deemed to
have been raised in the pleadings. In the course of the trial, receipts were presented by the spouses evidencing
the payments they had made. With the denial of the MR, the spouses filed a petition raising the sole issue of
whether they are liable for 5% interest per month, arguing that 5% is excessive, iniquitous, unconscionable and
exorbitant. Moreover, the respondent should not be allowed to collect interest of more than 1% per month
because he tried to hide the real transaction between the parties by imposing upon them to sign a Deed of
Absolute Sale with Right to Repurchase.

ISSUE

Should the spouses be exempt from paying the 5% interest

HELD

It is a basic principle in civil law that parties are bound by the stipulations in the contracts voluntarily entered
into by them. Parties are free to stipulate terms and conditions which they may deem convenient provided they
are not contrary to law, morals, good customs, public order, or public policy.

The interest of 7% per month was voluntary agreed upon by the parties. There is nothing from the records
showing that petitioners were victims of fraud when they entered into said agreement. It is undisputed that
simultaneous with the execution of a Deed of Absolute Sale with Right to Repurchase was the execution of the
Sinumpaang Salaysay, which set forth the true agreement between the parties.