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I. DEFINITION AND CONCEPT A. Definition Art. 115 in relation to Art. 2236 B. Distinguished from natural obligation Art. 1156 in relation to 1423 C. Elements D. Sources of Obligation Sagrada Orden Vs Nacoco –Kinuha ng Hapon ang lupa. Action to recover parcel of land owned by P, and then because of Japanese war was acquired by other parties, then possessed by the US govt thru its custodian then possessed by the defendant without agreement with the US or with the plaintiff, and def then leased a part of the land. Issue: WON defendant is liable to Sagrada and must pay the rentals. Held: No. If liable at all must arise from any of the four sources of obligations. APA was a trustee of the US and if def liable, not to plaintiff but to US govt. But defendant not liable for rentals bec no express agreement bet the APA and Nacoco. Existence of implied agreement is contrary to the circumstances. Source: Contract. But there was none. Pelayo vs. Lauron –husband vs. in-laws 1906-Pelayo complained against Lauron and Abella. Pelayo a doctor, rendered service to daughter-in-law then demanded P500 from def. Issue: WON Lauron is liable.

Held: No. Husband liable. Art. 142 and 143 or Family Code. Rendering medical assistance, mutual oblig. Oblig not presumed. Those expressly determined in the Code or in special laws are the only demandable ones. Source: Laws. Family Code. Leung Ben vs. O’Brien - Gambling O’ Brien filed an action in the court of CFGI of Manila to recover from Leung Ben the sum of P15,000 alleged to have been lost by O’Brien to Leung Ben in a series of gambling, banking and percentage games: Issue: WON O’Brien can recover the money from Leung Ben. Held: Yes. Upon general principles, recognized both in the civil and common law, money lost in gambling and voluntary paid by the loser to the winner cannot, in the absence of statute, be recovered in a civil action. But Act. No. 1757 of the Phil. Comm, which defines and penalized different forms of gambling contains numerous provisions recognizing the right to recover money lost in gambling. It must therefore be assumed that the action of plaintiff was based upon the right to recovery given by section 7 of said Act, which declares that an action may be brought against the banker by any person losing money at a banking or percentage game. Source: Law. Phil Comm and Civil Code. People’s Car Inc. vs. Commando Security Service Agency. –Sekyu nangarap magdrive ng kotseng hindi kanya, naaksidente. P and D entered into a contract where D was hired to render security services to P and safeguard and protect business premise. One of the guards of D took one of the cars under custody of P and drove it and lost control. The owner demands damages from P but P claims D should be liable, solely.

Issue: WON P is liable to owner. Held: Yes. Owner has no privy or contract with D only with P. Owner can demand from P and P can demand from D liabilities. Source: Contract. Pichel vs Alonzo – coconut fruits. Board of Liquidators filed annulment of Deed of Sale of Alonzo to Pichel. Accdg to the law which awarded the land to Alonzo, RA 477, the land cannot be encumbered to anybody. Alonzo sold the coconut fruits of the coconut land. Issue: WON there was a violation of the law which gave the land to Alonzo. Held. No. It was not the land that was encumbered but the coconut fruits. Possession of the coconut trees cannot be said to be the possession and enjoyment of the land itself. Accessory vs. Principal=transfer of accessory not transfer of principal. Accessory follows principal and not the other way around. Law does not prohibit the disposition of industrial or natural fruits. Source: Law **What are the essential elements of a contract to make it valid? Del Rio vs. Palanca – Hindi naman ikaw ang tatay, bakit ka nagbibigay. Del Rio wanted to recover money which he furnished to the family of defendant for the support and subsistence of the def’s 5 children. Issue: WON P can recover money. Held: No. There are qualifications: a) support given to dependent of one who is bound to give

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support but fails to do so b) support supplied by a stranger c) support was given without the knowledge of the person charged with the duty. 3rd req lacking. Def knew about support and even disagrees with it. Source: Law. Article 1894 of CC which gives qualifications. People vs. Ritter –Rape! Rape of a 12-yr-old girl allegedly by Appellant who inserted a foreign into her vagina causing her death. Criminal case and civil case was filed against the defendant. Issue: WON def liable on both cases. Held: No. Only with regard to the civil case. Crim case requires evidence beyond reasonable doubt. While civil cases require only preponderance of evidence. Source: Criminal offenses. Acts or omission punished by the law. **Institution of Civil Case while pending criminal case, is reservation to the right to file the former necessary or can file anytime within the pendency of the criminal case? Andamo vs IAC – Water Overflow P owner of parcel of land adjacent to the land of Missionaries of our Lady of Lasalletta. Latter constructed waterpaths and contrivances which eroded petitioner’s land and damaged crops, plans. Criminal action was instituted and then filed a civil action. Issue: WON filing of the civil case was proper. Held: Yes. Art. 2176, by fault or negligence. Separate civil action lies against the offender in a criminal act whether or not he is criminally prosecuted and found guilty or not. Only that the

offended party not allowed to recover damages on both scores. Source: Quasi-Delict, Law. ** Distinguish civil liability arising from crime and that from quasi-delict. Federation of Free Farmers vs. CA—Palay Increase There are 4 parties in this case: a. FFF (union representing the farmers) b. Planters (the group which harvests the lands where the farmers work) c. Santos and Tikol (individual planters) d. Central or Victorias (milling corp, Planters bring their harvest here to be milled). The law, Sugar Act of 1952 - RA 809 stipulates that any increase in the share of proceeds of milled sugarcane and derivatives obtained by planters from the Central, 60% of said increase should be paid by planters to their respective laborers. 1. FFF alleged that they have not been paid from 1952-53 despite the 10% increase and from 1953-1974 with the 4% increase. CA ruled planters and Victorias jointly and severally liable. FFF claimed too that Planters and Victorias entered into an agreement when they have no legal right bec the law has already provided the ratio of division. 2. Victorias claimed that they should not be held jointly and severally liable. The action filed was not founded on torts but on either an obligation created by a contract or by law, and even if on torts, the action has prescribed. They have paid the Planters so the Planters should only be the one sued. 3. Planters claim they have freedom to stipulate ration as they might agree. And that they have paid the laborers.

Issue: a. WON Planters and Victorias should be severally liable b. WON agreement bet Planters and Victorias were permissible under RA 809 Held: a. NO. Legal basis is that arising from law which does not impose upon Centrals any liability, whether expressly or impliedly, any joint and several liability. No contract bet sugar mill and the laborers. Principal liability on Planters and secondarily on Dept or Labor. b. YES. RA 809 applicable only in the absence of a written milling agreement or in the absence of any stipulation on the benefits which the laborers are entitled. Source: Law and Contract **Brinas vs. People –Maling Sigaw ng Konduktor Brinas convicted for double homicide thru reckless imprudence but acquitted Bunecamino (asst conductor) and Millan (engineman), Brinas was the conductor. Brinas told the passengers that they are near the town but before the victims were able to alight, train already caught up speed. During the pendency of the criminal action, the heirs of deceased filed separate civil action against Manila Railroad Company. Issue: WON the civil action can be pursued on the pendency of the civil action. Held: Yes. Source of obligation is that of a culpacontractual and not an act or omission punishable by law. Two different sources of oblig. Institution of criminal action on the case does not interrupt the separate civil action for damages based on quasi-delict for the same accident. Reckless Imprudence vs. Quasi-Delict. Reckless imprudent—Principal, Art. 2176 person who caused the crime liable, Art. 2180 solidary liability of employer. Source: Culpa-Contractual.

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**Tan vs. Nifatan –Isa-isa na silang namamatay, na-acquit pa. Lim of a wealthy family was shot dead by the Tan brothers. But the Tan brothers one by one died before the instant petition could be filed. The wife of Lim with the children instituted an action for damages against charged 10 years from the happening of the crime. Tan’s filed motion to dismiss because of acquittal. ISSUE: a. WON the action has prescribed. b. WON civil action would still prosper even when the accused were acquitted. Held: a. No. Action for prescription for liabilities and charges of crimes is 20 years. b. Yes. The reason for acquittal was not stated or explained and Art. 33 allows independent civil action in case of physical injuries including death. (ROC?). 10 years prescription for actions when source is created by law. 5 years when not fixed by the Code or other laws. 20 years for crimes or delicts as source of obligations. Source: Delict or Crimes. People vs Abungan – namatay yung kriminal Abungan convicted of murder sentenced to RP and ordered to pay indemnity of P50,000. Abungan died. Issue: WON death of Abungan extinguishes his criminal and civil liability Held: Yes. Extinguised based on delicts. Art. 89(1) of RPC, death of convict occurs before final judgment, extinguished. But only criminal liability is extinguished and also the civil liability directly arising from and based solely on offense. Claim for Civil liability survives if the same may

also be predicated on a source of oblig other than delict. Source: Crimes or Delicts. Acts or omission. DBP vs CA –Restructuring of Debt DBP granted PHUMACO and PHILICO an industrial loan for P2.5M, 2M in bonds and 500k in cash. Promissory note executed and a mortgage over their present and future properties. DBP granted another loan of 1.7M reflected in the amended mortgage contract. After 7 yrs the outstanding balance was restructured bec Resp failed to pay. Resp still failed to pay under the restructured payment. DBP refinanced the matured obligation and granted 3 foreign currency denominated loans. Apart from interest, there are additional charges and penalties in case of default. After 10 years, DBP initiated for forclosure of mortgaged prop and the balance shoot up to P63M. Resp claim that reason for non-payment is because financial rehabilitation from a contract with the military didn’t push thru. Issue: WON the resp can claim without fault in default of the non-happening of the contract with the military. Held: NO. DBP is no party to resp and AFP’s contract. Resp can claim from AFP but without prejudice to its contract with DBP. DBP has given Resp all the possible options for payment. Source: Contract II. NATURE AND EFFECTS OF OBLIGATION A. Obligation to give 1. Determinate Thing Equatorial vs. Mayfair—Right of First Refusal Carmelo owned a parcel of land with 2-storey building and leased said portions to Mayfair. On their contract, stipulation that Mayfair has 30-

day exclusive option to purchase the same should the lessor decide to sell the leased premises. But Carmelo wanted to sell the whole property. He sold entire prop to Equatorial. Mayfair filed for annulment of sale bec of lack of consideration. Mayfair claimed that he told Carmelo that it is willing to purchase the same and that it has the right of first refusal. Issue: WON the sale can be nullified because of Mayfair’s action Held: The contract is deemed rescinded. Rescission a relief allowed for protection of one of the contracting parties and even 3rd persons from injury or to protect some incompatible and preferred right by the contract. Mayfair has the opportunity to negotiate. Determinate Thing: There is a problem because determination cannot be made bec prop is indivisible. You cannot pinpoint which is the 25% of the property. Determination of the exact portion of the building. De Leon vs. Soriano—bigyan ng palay si nanay. Natural children of Soriano agreed that they are to deliver certain number of cavanes of palay each year to Soriano and shall only cease upon death of mother. But deliveries were of 3,400 cavanes and children claimed that due to Huk troubles in Central Luzon. Issue: WON inability to deliver was permissible due to force majeure Held: No. The object to be delivered was generic and set no bounds or limits to the palay to be paid. Any palay of the same quality can replace. Impossibility must consist in the nature of the thing to be done and not the inability of the party to do it.

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Norkis vs. CA—Ako ang bumili ng motor iba ang gumamit. Nepales bought a motorcycle from Norkis and issued a chattel mortgage in favor of DBP. Invoice was issued and motorcycle was registered by Norkis evidenced by receipts of registration. Motor was delivered to a certain Julian Nepales and an accident happened while being driven by a certain Payba. Norkis claims it cannot be held liable since ownership was already transferred to Nepales evidenced by the receipts and the invoice. Issue: WON Nepales. ownership was transferred to

sufficient certainty. Court held that it is capable of being determined w/o need for new contract and the receipts showed that payment was to the lot adjoining the prev paid lot on three sides thereof. The land is determinate or determinable. Ownership transferred by constructive delivery which is the execution of public document. Determinate Thing: The lot. 2. Generic Thing Norkis vs. CA Generic thing: motorcycle PLDT vs. Jeturian—Pension bago gera. PLDT adopted in 1923 a Plan for Emloyees Pension. In 1945 the BOD adopted a resolution discontinuing the pension plan. Hence this action of Resp. Issue: WON the pre-war employees are entitled to the pension. Held: Yes. But with the exception of those who died or left before the outbreak of the war. The pension plan was not a gratuity but an inducement for employees to continue indefinitely in service. The plan ripened into a binding contract upon its implied acceptance of the employees. Acceptance is inferred from their entering the employ of the company and staying after the plan was made known. PLDT argues that it can only be held liable under the conditions expressly set in the pension plan. But the Court held that the Company that violated the contract with its employees, by discontinuing the plan without their consent, is not in the position to insist upon the terms of the very contract they have breached.

CO vs. CA—pinagawa kong kotse, na-carnap. Pet entrusted his car to Resp to make same job repair services and supply of parts which was to be returned after 3 days as per the contract. Pet paid in full. After 3 days the vehicle can’t still be released due to failed battery so pet bought battery. When Pet was about to get it, resp said the car was carnapped while being road-tested. Resp claims force majeure. Issue: WON carnapping. Resp will be liable for the

Held: No. No actually delivery nor constructive one. The receipts of reg fees and the invoice is nothing but a detailed statement of the nature and quantity sold and not a bill of sale. Intent considered. Intent was not to transfer ownership but to facilitate execution of chattel mortgage. Determinate Thing: The motorcycle generic thing. (?) was a

Held: Yes. It was due to negligence premised on delay which is the basis of the complaint. Carnapping cannot be considered as fortuitous. It must be proved and established that it is an act of God. No other evidence but the police report. Even when Pet agreed to resked repair, can’t be taken as waiver bec he really has no other choice but to leave it since he can’t have it run. 3. Effect of Loss Bunge vs. Camenforte—Copra ko sa’yo binenta ko. Plaintiffs filed to recover certain damages from the def bec of the latter’s failure to deliver Phil copra they agreed to deliver. A contract was entered into where the VPC sold 500 tons of Phil Copra to BC. The vendor would ship the copra to USA but even with demands, failed to do so. The vendee however believed in good faith that it shall be delivered so it sold the expected copra to EDOW. Bec vendor failed, vendee suffered damages. VPC denies contract and said that Vicente, the manager who contracted had no authority to do so. Force majeure is also claimed since a storm destroyed the bodega. Issue: WON VPC is held liable. Held: Yes. Subject matter is Phil Copra, does not refer to any particular or specific copra. Since

Heirs of Juan San Andres vs. Rodriguez—Binili ko na ang nakapaligid na lupa. JSA sold 345 sqm lot to Rodriguez. There was a deed of sale. JSA died and Rodriguez appointed administrator. The heirs engaged services of a geodetic engg and found out that resp has encroached the lot by 509 sqm. They sent letter to vacate. Resp claimed they bought the said portion of the lot the ff day when they first bought the 345 sqm lot. Proof of sale was attached and that payable in 5 years. Resp deposited the balance in court. Issue: WON there was a contract of sale. Held: Yes. There was a contract of sale which transferred the ownership to resp. Pet claimed that the object cannot be determined with

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generic, obligation can’t be deemed extinguished by the destruction/disappearance. Obligation subsists as long as commodity is available. Pet can also sell the copra which they expect to acquire in the future for purposes of speculation. Effect: Subsistence of obligation since generic object. Ocena vs. Jabson—subdivision na kontrata, maling akala. Resp filed a complaint for modification of the terms and conditions of its subdivision contract with petitioners. Allegations are that price in oil and derivatives have increased, not within the control of the plaintiff. It will cause unjust enrichment to the pet. In the contract, the pet are guaranteed as landowners and that they will receive 40% of all cash receipts from the sale of the subdivision lots. Resp hinged their argument on 1267 when the service has become so difficult beyond contemplation, release from obligation. Issue: WON there is a sufficient cause of action for modification of the subdivision contract. Held: No. Cited article does not grant the courts this authority to remake, modify or revise the contract. Their contract has a force of law and should there be substitution or modification, it should be amongst the parties themselves. A showing of mere inconvenience, unexpected impediments or increased expenses is not enough. Equity cannot relieve from bad bargains simply bec they are such. Effect: The contract has the force of law.

Hahn vs. CA—I want these diamond rings. Santos received 2 diamond rings with a total amount of 47K. She issued separate receipts therefore in which she acknowledged that they have been delivered by Letty Hahn for sale on commission and that they would be returned upon demand if unsold. The rings were not sold nor returned after demand. Thus this action. Issue: WON the contract was of sale or agency. Held: Of agency. There is no evidence that would tell that is was of sale. Their contract’s stipulation does not show it was of sale. Although resp was willing to give a different object, the debtor cannot compel the creditor to receive a diff object. To do: Deliver the rings, the specific rings. Chavez vs. Gonzales—Dahil sa typewriter. P delivered to D a typewriter for D to repair. D was not able to repair the typewriter and asked for P6 for spare parts. P went to D and demanded the typewriter which D gave in a wrapped package. When P opened it at home, he saw that the typewriter had missing parts and found it in shambles. P demanded missing parts, interior cover and P6. P brought it to a diff repair shop and spent P89.95. P filed for payment of P90 and damages. Issue: WON D is liable for damages. Held: Yes. 1167 states that when a person is obliged to do something and fails to do the same, it shall be executed at his cost. What is poorly done be undone. D claims no period but Court held that fixing a period would only be a mere formality and would serve no purpose than to delay. Liable under 1170. To do: Specific performance – repair typewriter.

Oceana vs Jabson—subdivision kontrata, maling akala. To do: To give 40% of the cash receipts from sale of subdivision lots. **Woodhouse vs. Halili—Mission Softdrinks P and D entered into an agreement that they will form a partnership for the bottling and distribution of Mission softdrinks, P as manager and D as capitalist. When the bottling plant was in operation P wants to execute the partnership papers but D refuses. D claims that he was made to believe that P has the exclusive ownership of the bottling franchise. Issue: WON the misrepresentation of P can vitiate the contract. Held: No. Although P was guilty of misrepresentation, it was not the causal consideration or the principal inducement that led defendant to enter into the partnership. D may not be compelled to carry out the agreement which is to execute the partnership papers. The defendant has obligation to do and not to give. The D reduced the percentage of P from 30% to 15% bec of his misrepresentation. Obligation to do: Execute partnership contract. Ong vs. Bognalbal—She wants her Kenzo Tiles, now na. Bognalbal was an architect hired by Ong who was a businesswoman to construct her boutique. Bog agrees to furnish labor within 45 days and owner to pay every 2 weeks based on the accomplishment of work value. 4th billing came and Ong refused to pay but reason was not clear on the record. She wanted to change Vinyl tiles to Kenzo flooring. Ong claimed Bog abandoned job. Issue: WON Bog be liable for abandoning job.

B. Obligation to do

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Held: No. He is not liable but is not justified for doing so. 1191, it was a reciprocal obligation and there is power to rescind it in case one doesn’t comply with what is incumbent upon him. But this article should be judicially invoked. Novation is not presumed. There must be an express stipulation. Novation a. change of obj or principal conditions, b. substituting person of debtor c. subrogating 3rd person in the rights of creditor. Liability is on the first infractor, 1192. There has been no contract novation that required Bog to finish the Kenzo flooring before the 4th billing shall be paid. 1186. Condition shall be deemed fulfilled when the obligor voluntarily prevents the fulfillment. To do: Pay 4th billing. (Reciprocal-di mo ginawa di ko rin gagawin-pero sabi nga ng court hindi pa rin yun justification, but only the first infractor shall be liable). C. Obligation not to do Fajardo vs. Freedom to Build—Wag dagdagan kung hindi bawasan! FTB, owner-developer and seller of low-cost housing, sold to petitioner-spouses a house and lot. Restrictive covenant was contained in the contract, easement. No upward and front expansion which is contained in their Transfer Certificate. Pet’s children are to wed so extended their house thus contravening the terms of contract. Pet filed, demolish the unauth structures. Issue: WON resp has the auth to ask for demolition since ownership already transferred to the prop owners or homeowners association. Held: Yes. Restrictive covenant should still be followed. Although courts generally view restrictive covenant with disfavor but sustain them if reasonable, not contrary to public policy, law etc. Intent of developer was to provide

safety, aesthetic and decent living conditions and prevent overcrowding. Art. 1168, when ob consists in not doing, obligor does what was forbidden, shall be undone at his expense. Not to do: Expand structures of house. D. Effect of Breach 1. Delay in Performance Villaruel vs. Manila Motors—Kasalanan lawyer, naningil ng renta nung may gera. ng

Lopez vs. Tan Tioco—Ibenta mo ang asukal pag sinabi kong ibenta mo. Lopez and Tan Tioco entered into a verbal contract that she’ll deliver certain sugar to Tan Tioco which he obligated himself to store until he receives instructions from her to sell them. She delivered the piculs of sugar and instructed to sell in on Sept 1904 but def did not do so. Pet filed action. Def denies allegations. Issue: WON the defendant was in default. Held: Yes. He was in default from the time the Pet demanded to deliver or do something, or the fulfillment of the obligation. Neither the contract nor the law demands to make judicial demand than extrajudicial. The price of the sugar should be from the time she instructed the def to sell them. Delay in Performance: Delay in selling the sugar upon instructions. Dela Rosa vs. BPI—Atat sa announcement ng winners ng design contest. BPI held this contest of designs and plans for the construction of a building. Prizes would be awarded not later than Nov. 30, 1921. Plaintiff took part in the said contest and after the date stipulated, the bank didn’t award prize nor made any announcement. Plaintiff filed. Issue: WON BPI was in default when it did not release the announcement on the date stipulated. Held: The bank cannot be held in default through the mere lapse of time. Plaintiff never demanded from bank and just filed the case in Court. A binding obligation may originate from advertisements addressed to the general public. Demand will not be necessary only in certain conditions, but demand is indispensable as a general rule. Plaintiff has no cause of action bec

Manila Motors and Villaruel entered into a contract whereby the former agreed to convey by lease to the latter some premises. The term of lease is 5 years. The premises were invaded by the Japanese and then the American occupied the same building. The occupants paid the same rate as the defendants after which they have vacated the premises. Def renewed contract for addtl 5 yrs. Pet, as per his lawyer’s advise, demanded for rental from the Def for the period when the Jap and the Americans occupied the premises. The premises was set on fire and the reason was unknown. Issue: WON Pet has power to demand rentals and recover the same due to default. Held: No. Art. 1554 of CC of Spain states the duties of a lessor. A. deliver to the lessee the subject matter b. make thereon, during the lease, all repairs necessary and maintain serviceable condition c. maintain lessee in peaceful enjoyment of lease. 1560, lessor shall not be liable for any act of mere disturbance of 3rd person but lessee would have direct action against trespassers. No lessee would agree to pay rent for premises he could not enjoy. Delay in performance: It was the creditor who was in default or delay when it refused to get the payment given by the resp.

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he alleges that the contest didn’t push thru but in consideration of the evidence, the materials are on their way to New York and were sent to a technical committee. Delay: Bank was not in default. No demand. Lizares vs. Hernaez—Camarin was burned and lessee won’t pay. Lizares and Hernaez entered into a contract, the former became the lessee of the two haciendas. Pet used one of the improvements there which was a roofed camarin used in manufacture of sugar. A fire occurred and destroyed the camarin. Pet demanded from Def that he reconstruct camarin. Def refused. Pet did not pay the rentals bec of non-construction of the camarin. Def claims Pet should be liable for the fire since he is the lessee when the fire occurred. Issue: WON plaintiff has responsibility to the damages caused by fire. Held. No. And so is the def. Force Majeure. But the plaintiff is in default with regard to the nonpayment of rentals due to non-construction of camarin. Although there is presumption against lessee when loss in the leased prop occurs, proof is necessary to prove he is not responsible. 1183. When a thing is lost while in the possession of the debtor, it is presumed that it loss occurred by his fault and not by fortuitous even in the absence of the contrary. Delay: Not in the Def for non-construction but in Plaintiff in non-payment of rentals.

Def executed and delivered to the plaintiff a promissory note payable in installments which represents the balance of one white chasses purchased by def from pet. The truck was delivered to the def. After the outbreak of war, the truck was one of the trucks that were commandeered by the USAFEE. Neither the plaintiff not def filed an official claim from the US govt. Issue: WON the commandeering of the truck exempts the def from payment of the obligation represented by the prom note. Held: No. There is no principle of law by which the obligation was extinguished. The interest was not reduced due to suspension since the pet was generous enough to compute only from 1948, the truck was commandeered in 1941. Def could have filed a claim from the US govt and he would have been paid but he failed to do so. Delay: Non-payment of the prom note. Lawyers Coop Pub vs. Tabora—bumili ng law books, nasunog. Tabora bought books from Pet and made partial payment. It was delivered to his law office. On the same date, a fire broke out in the office and destroyed the building including the books. Def doesn’t want to pay balance since the books were loss due to force majeure and the ownership has not been transferred to him yet. Issue: WON force majeure can be claimed by defendant from his non-fulfillment of obligation. Held: No. Ownership was already transferred to the buyer. Although there has been an agreement that the ownership shall remain with the seller until the price has been fully paid, it was only for the security of payment but in the very contract in was expressly agreed that the loss or damage after delivery to the buyer shall be borne by the buyer. Exemptions from liability

due to fortuitous event: 1. determinate thing (in the present case, pecuniary in nature) 2. No stipulation holding him liable even in case of fortuitous Delay: Non-payment of balance. Equatorial vs. Mayfair—right of first refusal Delay: ***By not giving to Mayfair the 30-day period of which it is entitled to exercise right of first refusal upon communication of Carmelo that he would sell the property. Co vs. CA--carnap Delay: Delay in delivering the car to Co after demand which is the premise of negligence of resp. Aerospace vs. CA—Sulfuric Acid na ayaw pang kunin. Pet purchased from resp Philphos 500 MT of Sulfuric Acid. In their contract it was pet’s responsibility to get the acid from resp. Philphos demanded that pet get the acid and pet chartered a vessel MT Sultan but the vessel was not able to get the whole volume bec it tilted. Resp sent a demand letter that the acid should be emptied or else petitioner will be liable for the storage and other incremental expenses if pet fails to do so. Pet chartered MT Sultan again but it tilted so never gotten the whole volume. Chartered another vessel Don Victor and asked Resp to deliver additional orders. Resp did not do so unless the remaining acid be emptied and that pet pay the maintenance and storage. Pet filed and contended Resp is in default. Issue: WON the Resp is in default. Held: No. The obligation to withdrew the 500MT of H2SO4 before Aug. 1989 and the resp was already ready to deliver the same but it was

Bachrach Motor vs. Lee Tay—Kinuha ng Kano ang truck niya, ayaw na niyang magbayad.

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Plaintiff’s fault for not chartering another vessel which has the capacity to withdraw the volume. It has the duty of emptying the acid. Pet claim that it was due to a storm that’s why it can’t empty the storage but evidence proved that it was of the incapability of the vessels. There was an obligation on the pet to empty the storage. They were the ones in delay. Delay: Pet for not emptying the storage. Selegna vs. ballooned. UCPB—credit facility which

Delay: Non-payment accommodation. 2. Non-fulfillment Chavez vs. Gonzales




Issue: a. WON agreement to construct windmill included in the installation of a deep well. b. WON the pet is under the obligation to reconstruct the windmill. Held: a. No. It was not included in the agreement. Intention of the parties must be accorded primordial consideration and in case of doubt, contemporaneous and subsequent acts shall be principally considered. b. Yes. Pet claimed there is a strong wind but this is actually necessary for the windmill to turn. It was just newly constructed, it should have not collapsed. Non-fulfillment: Payment of last installment. Perez vs. CA—niloko yung businessman at pinaalaga ang fishpond. Juan Perez usufructuary of a parcel of land called Papaya Fishpond with other usufructuaries. The usufructuaries entered into a contract leasing the fishpond to Luis Keh for a period of 5 years. The contract states that the lessee cannot sublease the fishpond nor assign his rights to anyone. But Crisostomo was persuaded by the pet Keh to take over the Papaya fishpond bec Cris is a businessman. Executed a written agreement. Cris even paid the rentals until 1985, 10 years of taking care of the fishpond. In 1979 however, pet with armed men went to fishpond and showed that Keh surrendered the fishpond to the usufructuaries. Issue: WON the resp is a sublessee of Keh which is barred by the lease contract. Held: Yes. He was a sublessee. But Perez and his counsel knew and acquiesced to that arrangement by their act of receiving from the resp rentals evidenced by the receipts which puts the pet in estoppel—which arises when one by his acts and representations and admission or by his own silence when he is obliged to speak out, intentionally or thru culpable negligence

Non-fulfillment: The typewriter was not fixed. Telefast vs. Castro—dahil sa telegrama, mag-isa lang nang ilibing ang mama. Consolacion Bravo-Castro died in Pangasinan and on the same day the daughter sent a telegram to the US to inform the other siblings and dad about death of Mom. The Mom was interred by daughter alone. When she came back to the states, she found out that the telegram never reached her siblings. Telefast claimed force majeure bec of technical and atmospheric factors but no evidence to support. Issue: WON force majeure applies. Held: No. No evidence to support. And even so, def should have informed the plaintiff that it cannot transmit the telegram. 1170 and 2176, guilty of fraud, negligence or delay. 2217 for moral damages. Non-fulfillment: Sending of telegram. Tanguiling vs. CA—windmill na nasira sa wind. A case involving proper interpretation of contract. JMI Engr and GM proposed to resp Vicente to construct windmilling system for him. They agreed on the construction for P60K. P30K DP and P15K installment. Vincente didn’t pay the remaining P15K bec he paid it to SPGMI who constructed the deep well to which the windmill would be attached. And even assuming that he owes pet P15K, it should have been offset by the collapse after a strong wind.

Selegna, rep by spouses Edgardo and Zenaida Angeles were granted a credit facility for P70M by UCPB. As a security, pet executed real estate mortgages over several parcels of land. Pet also executed prom note every time they avail of credit facility. In their credit agreement, it was stipulated that failure to pay any availment of the accommodation or interest or any sum due shall constitute an event of default which shall allow resp bank to declare as immediate and payable all outstanding availments together with accrued interest. Pet increased credit facility and they agreed to 21.75% interest per annum. Demand letters were sent upon failure to pay. Pet paid 10M as partial payment of accrued interest. UCPB applied for extra-judicial foreclosure of petitioners mortgaged properties. The obligation has ballooned to 132M and pet alleged that 10M as payment had the effect of updating and thereby averting the maturity of the obligation. Issue: WON the Pet were in default. Held: Yes. The contract is the law and the resp is justified in invoking the acceleration clause declaring the entire oblig due and payable. The resp had the right to foreclose the mortgages extra-judicially. Failure to furnish a detailed statement of account doesn’t ipso facto result in unliquidated obligation. Pet was in default.

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induces another to believe certain facts to exist and such other rightfully relies and acts on such beliefs so that he will be prejudiced if the former is permitted to deny the existence of such facts. 1168: Oblig is in not doing and obligor has done what is forbidden, shall be done at his expense. Non-fulfillment: of the obligation not to do which is to sublease the fishpond. 3. Fraud Board of Liquidators vs. Heirs of Maximo Kalaw —Copra Trading, hindi na kelangan ng pirma ng Board of Directors. Nacoco is for the protection, preservation and development of the coconut industry. Kalaw is the manager and board chairman. Nacoco embarked on copra trading activities, thus entering into contracts. For 3 years, profited 3M but after 4 typhoons, left the coconut lands devastated throughout the country. It was not able to fulfill the contracts it has engaged in. Nacoco paid damages to one of the parties. Nacoco now sues Kalaw for having approved the contracts. Issue: WON Kalaw is guilty of negligence for entering into contracts without prior approval of the Board of Directors. Held: No. Consideration of practice. Corporate officer entrusted with the gen management and control of business has implied authority to make any contract or do other act wichi is necessary or appropriate to the conduct of the ordinary business of the corporation. But there is a citation on the Nacoco’s by-laws requiring prior directorate approval of Nacoco contracts. Court considered practice of trade of short-sellling or forward sales. Prev contracts without prior auth from Board. And evidence showed that Kalaw actually handled the corp well for it to profit. Force majeure reason.

Fraud: There is no fraud because Kalaw didn’t need the Board’s approval due to practice of trade. No negligence too on his part. ICB vs. Gueco—Joint Motion to Dismiss for the car. Gueco spouses obtained a loan from UPC to purchase car and executed prom note which were payable in mnthly installments and chattel mortgage over car to serve as security over the notes. Spouses defaulted in payment. The payment was lowered but still no payment. Car was detained inside the bank’s compound. Gueco went to bank and negotiated and issued a manager’s check. But car was not released bec Gueco doesn’t want to sign Joint Motion to Dismiss claiming not in the contract that they have to sign. Issue: WON the bank in not informing the spouses to sign motion to dismiss liable for damages for not releasing car. Held: No. Joint Motion to Dismiss for the spouses’ benefit and not for the bank. It would only state that the case would be dropped and that the spouses had fully settled his obligation thus the dismissal of the case. There is no fraud —no intentional and deliberate evasion of the normal fulfillment of obligations. Fraud: In not stating that they have to sign Joint Motion to Dismiss but this is not considered Fraud. No intent and for the benefit of the Plaintiff.

Necessito vs. passengers.




Action against owners and operators of the commom carrier known as the Phil Rabbit Bus Lines filed by one passenger and the heirs of another who were injured as a result of the fall into a river in which they were riding. The mother of the pet drowned and the son Necessito was injured. Issue: WON the carrier is liable for damages. Held: Yes. Although resp claims that force majeure since knuckles were the reason for the accident and they have inspected the knuckles, does exercised diligence. Carrier claims liability of manufacturer. Court said that the inspection done was merely visual and not meeting the requirement of expected due diligence. Negligence: In not diligence required. exercising the proper

5. Contravention of the tenor of the obligation Arrieta vs. Naric—Burmese Rice, di naman pala kayang mag-open ng Letter of Credit. Pet participated in the public bidding by Naric for the supply of 20K MT of Burmese rice. Her bidding being the highest, she was awarded the contract. In 1952, entered into contract, Naric and Pet, sale of rice. Pet obligated herself to deliver to the latter the tons os Burmese rice and in turn corp has to pay for the imported rice by means of an irrevocable, confirmed and assignable letter of credit in US currency. It was only In July that def took first step to open letter of credit. Pet already made a tender to her supplier a 5% and this will be confiscated if L/C will not be received before Aug. 4. PNB informed Naric that L?C approved but has a condition that the 50% marginal cash deposit be paid. Naric was not in any financial position to meet the condition and wrote the pet about it.

4. Negligence

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L/C was opened in Sept thus 5% deposit was forfeited. When appellee failed to restore cancelled Burmese rice she offered a sub but Naric rejected. Issue: WON Naric should be liable for damages. Held: Yes. Failure of the letter of credit to be opened in the contemplated period. Immediate cause of damages. No necessary data but pet would not win bid had she not furnish them with it. Waiver bec Pet suggested to sub it Thai rice. Waiver are not presumed. Express stipulation. Contravention: That Burmese Rice should be delivered and should not deliver another thing. Chavez vs. Gonzales Contravention: That they agree that after 3 days, typewriter would be usable. E. Effect of fortuitous event Necessito vs. Paras Effect: Not fortuitous since knuckles should have been inspected more than the visual inspection done. Ampang vs. Guinco—the bus that skidded. Held: The accident was caused by an accident which was unforeseen and beyond the control of the company on its driver. Victoria Planters vs. Victorias Milling—30 years contract suspended due to Japanese Invasion. Held: 1174 relieves obligor from fulfilling a contractual obligation (fortuitous event). The stipulation in the contract that in the event of force majeure, the contract shall be deemed suspended during the said period does not mean that the happening of those events stops the running of the period agreed upon. It only

relieves the parties from fulfilling their obligation that time. To require the pet to deliver the sugarcane during the 6 yrs of suspension was impossible of being performed. 6 yrs can’t be deducted from 30 yrs. La Mallorca vs. De Jesus—tire blow-out. Held: Cause of the blow-out was known. It was a mechanical defect of the conveyance or a fault in its equipment which was easily discoverable if the bus had been subjected to a more thorough or rigid check-up before it took the road that day. The bus was driving fast as was evidenced in the trial. Nakpil vs. CA—Engr/Archi pati Contractors liable sa pagguho ng bldg. Phil Bar Assoc decided to construct its building in INtramuros Manila. Construction was undertaken by UCCI on administration basis and the plans and specifications of the building were prepared by another party Nakpil. It was completed in June 1966. In 1968, a strong earthquake hit Manila and building sustained major damages. As temporary remedy UCCI shoved up the building at its own expense. PBA commenced action against UCCI for the partial collapse of the building. Allegations were that there was a failure of the contractors to follow plans and specifications and violations by the defendants of the terms of the contract. Def then filed against 3rd party-architects who prepared plans and specifications alleging collapse was due to the defect of it. Issue: WON UCCI and Nakpil be held liable. Held: Yes. The case was referred to the Commissioner and found out that there were defects in plans and specifications and that contractors failed to observe requisite of workmanship and even the owners failed to observe requisite degree of supervision in the construction. Fortuitous even will not be applied

bec there is negligence. 1723 will apply. Engineer/ arch who drew up plans and spec liable for damages. Contractor liable if edifice falls within the same period on acct of defects in the construction or the use of materials of inferior quality. Engr/archi will be held solidary liable if supervises construction. Fortuitous Event: Will not apply bec there is negligence. Austria vs. CA—Naglakad mag-isa sa gabi, nanakawan ng diamond pendant. Abad acknowledged receiving from Austria one pendant with diamonds valued at P4,500 to be sold on commission basis or to be returned on demand. While walking home, Abad was robbed and her things were taken including pendant. Estafa. RTC ruled negligence. CA held that robbery was established, fortuitous event. Issue: WON Abad is liable for the loss of the pendant. Held: No. It was undisputed that Abad was a victim of robbery. Even when she walked alone at night knowing that she had with her the pendant and a large amount of money, the crimes then were not as prevalent as the present time. Fortuitous event: Robbery was unforeseen and evidence established that it happened. Vasquez vs. CA—sinabi na sa captain na may bagyo, tumuloy pa rin. Lumubog. Pioneer Cebu left the port of Manila. The vessel encountered a typhoon and struck a reef and subsequently sank. Plaintiffs seek the recovery of damages due to the loss of children and other people due to voyage. There was a storm as def claims but it was established that the captain knew about it but still proceeded.

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Issue: WON fortuitous event shall be considered and exempt def from liability. Held: No. They already knew the risk they were taking. They already receive report of the typhoon but proceeded anyway. Def claim Art. 587 Code of Commerce, loss of vessel exempt liability. But it is cited there that the liability of the owner is limited to the value of the vessel or to the insurance thereon. It was held that the insurance of the vessel would be liable for the damages that the shipowner or agent be liable for the death of the passengers. Fortuitous Event: Will not apply bec captain had knowledge of the event thus making it not unforeseen. F. Usurious transactions Angel Jose Warehousing Co vs. Chelda—Loans with usurious interest, principal still enforced but interest not. (P20K+) Angel Jose filed against Chelda, its capitalist partner for the recovery of the unpaid loans with legal interest and atty’s fees (P20K+). Def paid bal of P5.6K. Plaintiff charged and deducted from the loan usurious interest at the rate of 2% and 2.5% PER MONTH and consequently, as claimed by def should not be permitted to recover under the law. RTC-P1048.15 usurious interest which the payment was deducted from the interest and def claims that it should have been deducted from the principal obligation. Issue: a. WON in loans with usurious interest, the plaintiff may still recover the principal of the loan. b. WON the illegal terms as to the payment of interest renders nullity as to the payment of the principal debt. Held: a. Yes. Creditor may still recover principal of the loan. Loans with usurious interest are not totally void but only as to the interest.

Renunciation of the principal would extinguish accessory but waiver of the accessory would not extinguish the principal. b. Yes. Divisible contract, that which is illegal can be separated from legal ones and the latter may be enforced. Interest which would be allowed is the interest bec of delay and default due to the general provisions of the law. Usurious obligation: Principal interest not enforced. only, usurious

Briones vs. Cammayo—P1500 lang utang pero interest P300 per year-usurious. Briones filed against Cammayo to recover P1500. They executed a real mortgage as security for the loan of P1200 given by Cammayo upon usurious agreement and reserved to himself P300 payment of interest for a year. Plaintiff paid total sum of P330 but Cammayo refused to acknowledge it as payment for principal but for interest of loan for a year. Issue: WON creditor entitled to collect the principal obligation and interest. Held: Yes. But only as to the principal. Ruling of Angel vs. Chelda. Usurious obligation: Principal interest not enforced. only, usurious

action, and then obtain therefrom the satisfaction of his own credit. Double function: conserving the patrimony of the debtor by bringing into it property abandoned or neglected by him AND of making execution on such property effective thereafter. “Debtor’s debtor is my own debtor”. Debtor who is sued may set up against the plaintiff the same defense he could set up against his own creditor. If the action succeeds, the plaintiff is entitled only to so much as is needed to satisfy his credit; if there is any balance, it shall pertain to his debtor. Goldstar Minig vs. Lim Jimena—mining claims pinondohan, hindi na siya binayaran sa usapan. Jimena lent to Lincallo money to purchase mining claims and they agreed that ½ f the proceeds shall be given to Jimena. Mining rights over part of the claim were assigned to Gold Star before WWII and copr paid Lincallo P5000 royalties. Lincallo entered contracts without the knowledge of Jimeana. Marquez contracted with Gold Mining and 45% should go to Lincallo. Another company contracted and stipulated 43% would go to Lincallo. Jimena demanded part but he was not paid. Issue: WON Jimena has a cause of action against Gold Mine when it contracted only with Lincallo. Held: Yes. Art. 1177 provides that creditors after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and bring all the actions of the latter (debtor) for the same purpose, save which are inherent in his person. 1883: the principal may sue the person with whom the agent dealt with in his own name, when the transaction involves things belonging to the principal. AS: File against debtor of his debtor.

G. Presumption of interest and installments ***Hill vs. Veloso ***Vda De Ongsiako vs. Cabatuando H. Action Subrogation Accion Subrogatoria: action which the creditor may exercise in the place of his negligent debtor in order to preserve or recover for the patrimony of the debtor the product of such

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Estate of Hernandez vs. Luzon Surety— namatay yung guarantor, namana rin yung utang niya. Luzon Surety filed against estate of Hemady based on 20 different indemnity agreements and couterbounds by the deceased in consideration of guaranteeing various principals in favor of different creditors. Hemady died and estate claim not liable bec of death. Issue: WON death extinguishes obligation of the estate. Held: No. Obligations extinguished by death are: a. support b. parental auth c. usufruct d. contracts for a piece of work d. partnership e. agency. Articles that regulate guaranty or suretyship contain no provision that the guaranty is extinguished upon the death of guarantor. Art. 774 and 776 (succession and inheritance) state that heir succeed no only to the rights but also to the obligations. AS: Obligation was subrogated to the heirs of the dead person. III. KINDS OF OBLIGATION A. PURE AND CONDITIONAL OBLIGATIONS 1. Pure Obligations Pay vs. Palanca—naningil ng utang after 15 yrs, nagprescribe. Held: Every obligation whose performance does not depend upon a future or uncertain event or upon a past unknown to the parties, it is demandable at once. 2. Conditional Obligations a. with suspensive/resolutory conditions

Lichauco vs. Figueras-Hermanos—Lorchas, emergency and regular use. Held: The amendment to the contract bet the plaintiff and def was expressly conditioned on the defs being the successful bidders at the letting and they were not the winners. Second contract has no force but the first one. No showing that they have given new life to the agreement. Wise & Co vs. Kelly—hindi naman sinabi na ibenta yung goods sa ganitong halaga. Held: No proof that Kelly has not turned over all the money received from the sale of the merchandize so that Lim, the surety, has no liability. The condition is that Lim will pay if Kelly has not turned over all the sales of the merchandise but not that he shall pay if all the sales has not amounted to the original amount of obligation. There is no stipulation that the goods were to be sold at a certain price, or not less than what it should be. Santiago vs. Millar—nanalo sa sweepstakes pero nawala ang ticket. Held: The ticket sold has a notation that prize will be paid upon the surrender of the ticket. The surrender or presentation of the ticket is a condition precedent of payment. Parks vs. Prov of Tarlac—nagdonate ng land for school and public park in 6 mos pero hindi ginawa. Cirer and Hill were owners of parcels of land and donated it to the municipality of Tarlac on the condition that erection of a public school and a public park shall be commenced within the period of 6 months. Tarlac failed. Cicer and Hill sold land to Parks. Parks pray for annulment of donation.

Issue: WON Parks is the owner of the land bec of non-performance of the condition of the mun of tarlac. Held: No. The action for revocation of a donation is 10 yrs. They have filed case after 14 yrs. Although condition was not complied with, revocation should have been made before the sale of the land. Req: 1. consent of the donee of the revocation 2. judicially decreed. Onerous donations, 10 yrs prescription. CPU vs. CA—nagdonate ng land for medical school pero hindi ginawa. No period but 50 yrs na nakalipas di pa rin ginawa. Don Lopez donated land to CPU on the condition that it would be used for the establishment of a medical school and that CPU cannot sell or convey the land to any party. CPU failed to do so and even exchanged land with another with the NHA. Heirs filed for annulment of donation. Issue: WON donation annulled. Held: No. Although there is a need to fix a period bec the contract did not stipulate period when to commence condition. However, in consideration of the facts, 50 years have lapsed for the condition to be complied with and CPU was not able to perform. SC ruled to reconvey to heirs the land. Aguilar vs. Cititrust—yung hindi ko maintindihang kaso or baka hindi lang siya talaga relevant under this title. b. Potestative Mixed Conditions Shotwell vs. Manila Motor—Banks chartered to accept liability. were

Held: The banks will not be liable since they didn’t accept that they will should liability. The lease was extinguished by the fire that occurred

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and the chartered banks being a sublessee of the Manila Motor which contracted lease also from Shotwell, will not be liable for the construction of the destroyed buildings. No potestative condition. Lease for the enjoyment of the premises. No fault on part of anyone. Smith Bell vs. Sotello Matti—i-deliver yung equipment pero depende sa gobyerno. Held: The conditions did not depend upon the will of the debtor alone. There is no delay since there existed rigid restrictions during the that time of world war. It is a mixed one because dependent also of the will of the third person or the US govt whether to allow the delivery or not.

absolute acknowledgement of the obligation and was sufficient to prevent the statute of limitations from barring the action upon the original contract. Hermosa vs. Longara—as soon as I receive funds derived from the sale of my property in Spain. Held: The condition implies that the obligor has already decided to sell his house or at least that he had made his creditors to pay his indebtedness demandable is that the sale be consummated and the price thereof remitted to the islands. Not a purely potestative one, depending upon the will of the obligor, but partly upon chance, i.e. presence of the buyer of the property for the price and under conditions desired by the obligor. c. Impossible and Illicit conditions Luneta Motor Co. vs. Abad—if I recovered judgment in the action but he died during the trial. Held: The obligation is subject to the condition that when the plaintiff recovered judgment, they shall deliver the property so released to the officer of the court for the payment of said judgment of in default, pay its full value. Since Abad died, it has become a legal impossibility since no judgment shall be rendered. Galang vs. CA—you pay 25% within 3 months or upon the removal of the encargado. Held: The removal of the encargado was not a condition precedent to the fulfillment of the contract. What we have is a contract to sell wherein the ownership is retained or title until the fulfillment of a positive condition, normally the payment of the purchase price in the manner agreed upon. It was just an alternative period for the payment of the second installment.

d. positive and negative conditions 3. Constructive Fulfillment Taylor vs. Uy Tieng—dapat may trabaho siya pero binawi ni Uy Tieng dahil di maganda sitwasyon. “FOR ANY REASON” Held: “Should the machinery to be installed in the said factory fail, for ANY REASON, 6 months from the date hereof, this contract may be cancelled”. The def can rescind the contract bec their reason falls under “any reason”. But there is no constructive fulfillment on this case. Constructive fulfillment: condition shall be deemed fulfilled if the obligor intentionally impedes its fulfillment, has no application to the cases of the resolutory provision giving to the obligor a right to cancel contract upon contingency within the control of the obligor. Herrera vs. Leviste—GSIS and Leviste Case. Teehankee’s Dissent. Tehankees Dissent: Leviste was guilty of bad faith and violated the terms of the contract thus there is constructive fulfillment. Herrera was required by GSIS to submit papers to support his assumption but could not be approved until Herrera could submit a final deed of sale and Leviste did not execute this deed. He prevented the assumption of Herrera of the mortgage. Not only that, Leviste is in arrears for 14 months in its amortization and Herrera did not know that. 1186 and 1169 (reciprocal obligations). Tayag vs. CA—estopped bec receipt payments and knowledge of irregularities. of

Trillana vs. Quezon Colleges—if I harvested fish. The stipulation in this case was that the obligor would pay the full value of a subscription for shares in the Quezon College after she had harvested fish. Held: This condition is obviously depended upon the sole will of the obligor, and the conditional obligation is void, because it would have served to create an obligation to pay, the whole obligation is void. **When conditional obligation is void, then it would convert the obligation to a pure obligation which would be demandable at once. Osmena vs. Rama—If the house of strong materials is sold, I will pay my debt. Held: If the statement found in the acknowledgement should be regarded as a condition, it was a condition dependent upon the exclusive will of the debtor, and is, therefore, void. The acknowledgement, therefore, was an

Held: The acceptance of the petitioners of the various payments even beyond the periods agreed upon, was perceibved by the lower court as tantamount to faithful performance of the obligation. 1186 applies to both obligees and obligors in reciprocal obligations even when the

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proviso only speaks of the obligor. Pet accepted the performance knowing its incompleteness and irregularity and without expressing any protest or objection, the obligation is deemed to be complied with. Coronel vs. CA—Receipt of Downpayment Held: Intent of the parties has to be considered. It was a contract of sale and not a contract to sell. Contract of sale—ownership already transferred upon fulfillment of the suspensive condition. Absolute sale. Contract to sellalthough suspensive condition was complied with, ownership will not automatically transfer. There is still a need to convey title to the prospective buyer by entering into a contract of absolute sale. 4. Retroactivity of Obligation Padilla vs. Paterno-his mom is the universal heir and not his wife-paraphernal. Held: The ownership of the land is retained by the wife until she is paid the value of the lot, as a result of the liquidation of the conjugal partnership. There mere construction of the building from common funds does not automatically convey the ownership of the wife’s land to the conjugal partnership. The properties’ conversion from paraphernal to conjugal assets would be deemed to retroact to the time the conjugal buildings were first constructed thereon or at the very latest, the time before the death of Narcisso Padilla that ended the partnership. The acquisition by the partnership of theses properties was subject to the suspensive condition that their values would be reimbursed to the widow at the liquidation of the conjugal partnership; once paid, the effects of the fulfillment of the condition should be deemed to retroact to the date the obligation was constituted.

Coronel vs. CA—Downpayment Retroactive: From the moment the obligation was constituted, upon payment of full balance, retroact to that date. 5.Preservation of Creditor’s Rights Art. 1188: The creditor may, before the fulfillment of the condition, bring the appropriate actions for the preservation of his right. The debtor may recover what during the same time he has paid by mistake in case of a suspensive condition. 6. Rescission in Reciprocal Obligations Ocejo vs. Interbank—maswerteng assignee. Yung asukal na nasa ibang warehouse na kinuha ng banko. Held: The thing sold not subject to condition that the buyer was the pay the price before the delivery. On demandability: No term having been stipulated on payment, it should be demandable at the time and place of the delivery of the thing sold. Demandable at once and failure to do so would entitle obligor either performance or rescission. But rescission should be applied to the court for a decree for the rescission of the contract. No rescission was made before the insolvency of plaintiff, the assignee standing on the shoes of the buyer has a better right. Albert vs. University Publishing—publishing the Revised Penal Code. Held: It was the defendant corporation who had breached the contract. The plaintiff has written letters reminding the corp that the contract will be deemed rescinded if the corp would not fulfill its obligation. Accg to Tolentiono: Rescission must be judicially invoked. Unless there is a stipulation of period

when the contract would be deemed rescinded. If one party is willing to perform and the other is not extra-judicial rescission would suffice if there is stipulation. However, if there has been a performance already by one of the parties, rescission should already be judicially invoked regardless whether there is a stipulation or none, especially if the other party rejects rescission. UP vs. Delos Angeles—award of logging rights; rescission without need of judicial suit. Held: In the agreement, there is a stipulation that UP has “the right and power to consider the Logging Agreement date Dec 2 1960 rescinded without the necessity of a judicial suit. 1191’s consideration: There is nothing in the law that prohibits that parties from entering into agreement that violation of the terms of contract would cause cancellation thereof even without court intervention. BUT PROCEEDS AT ITS RISK. Extra-judicial resolution will remain contestable and subject to judicial invalidation, unless attack thereon should become barred by acquiescence, estoppel or prescription. Roque vs. Lapuz—10 yrs to pay, I can pay anytime within the 10 years. Held: Qualification for rescission: so substantial and fundamental to defeat the object of the parties. Absence of a formal deed of conveyance is a very strong indication that the parties did not intend immediate transfer of ownership and title, but only a transfer after full payment of the price. Intent of the parties was to have the obligation be paid in monthly installment. Herrera vs. Leviste Tehankee’s dissent: Upon Leviste’s refusal to execute the deed of sale, Herrera has the option of specific performance or the rescission of the contract.

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Zulueta vs. Mariano—Avellana a movie director made movies for Zulueta for his political campaign, automatic rescission clause. Held: There is an automatic rescission clause in the contract and the fact that pet has cancelled contract, resp has no right to remain in the premises. Extra-judicial rescission shall only take legal effect where the other party does not oppose it. Delta Motor Corp vs. Genuino—delivery of black iron pipes for iceplant and storage. Held: Power to rescind under 1191 is not absolute. The act of a part in treating a contract as canceled or resolved on account of infractions by the other contracting party must be made known to the other and is always provisional subject to the scrutiny and review by the proper court. Delta –no manifestation that it had opted to rescind contract, it has possession of the two irons and the downpayment and has waived the performance of conditions of the contract when they opted to go on with the contract only with a much higher price. Ong vs. Bognalbal Rescission: Upon the infraction of Ong, Bognalbal could have filed rescission of the contract or the performance of it. Carrascoso vs. CA—notice of lis pendence but continued with the sale of the land. 1972-El Dorado sold to Carrascoso the parcel of land July 1975- Buy and Sell bet Carrasco and PLDT April 1977- Carrasco to PLDT May 30, 1977 PLDT to PLDTAC May 15, 1977-notice of lis pendens Held: Notice of Lis pendens, but still PLDT conveyed land to PLDTAC. Where a contract is

rescinded it is the duty of the Court to require both parties to surrender that which they may have respectively received and to place each other as far as practicable in his original situation. The exercise of the power to rescind extinguished the obligatory relation as if it had never been created, the extinction having a retroactive effect. B. OBLIGATIONS WITH A PERIOD PNB vs. Lopez Vito—loan of spouses when there is a condition and a period stipulated. Held: The non-fulfillment of the conditions of the contract renders the period ineffective, and makes the obligation demandable at the will of the creditor. Failure to pay would make the entire obligation due and demandable, so regardless of the period of other installments, def has to pay the entire obligation. Smith Bell vs. Matti Held: There also was a stipulated period however there is also a condition which states that delivery would depend upon the US govt. Upon the lapse of the period and the condition bars the performance, def will not be liable. Gaite vs. Fonacier—expiration of the surety, debtor loses the benefit of the period. Mining claim case. Held: 1198 states when debtor loses the benefit of the period. The surety contract expired and Fonacier didn’t renew or replaced the surety. Sale of the ore was not a suspensive condition but a suspensive period, fixing the future date of the payment. Qui vs. CA—factory was razed to the ground and failure of lease to rebuild the building of the lessee. (the building to be constructed shall belong to the resp lessor after 20 yrs).

Held: 1197. If obligation does not fix a period but from its nature and circumstance it can be inferred that a period was intended , the courts may fix the duration thereof. Will also fix period when it depends upon will of the debtor. In determining period, courts will have to consider the circumstances and see if period was contemplate. The contract doesn’t stipulate a period, thus the court held that resp has to institute a judicial action to fix the period. (this case is an ejectment case so fixing a period was not alleged in the case). Sarmiento vs. Villasenor—loan with a pledge of a medal with a diamond in the center with 10 diamonds surrounding it, pair of diamond earrings, comb with 22 diamds, and two diamond rings! Daming diamonds!!! Held: In a contract of loan with interest wherein a term was fixed for the payment thereof, it is presumed that said terms was established for the benefit of the creditor as well as that of the debtor, unless from its tenor or other circumstances it appears to have been stipulated for the benefit of one only. In such a case the debtor has no right to pay the debt before the lapse of said period, without the consent of the creditor, and demand the devolution of the goods that were pledged to secure the payment. Only after the expiration of said period may the debtor make payment, and, therefore, the action for the recovery of the goods pledged arises only after the lapse of said for the purpose of the computation for he period of prescription of said actions. Daguhoy Enterprises vs. Ponce—nagsecure ng mortgage as guaraty sa loan sa isang corp tapos after ibigay yung loan, withdrew mortgaged properties then mortgage them again sa ibang corp for another loan. Madaya. Held: Although the contract stipulates that loan payable in 6 years, but because of the failure to

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give and register the security agreed upon in the form of two deeds of mortgage, the obligation becomes pure and without condition thus due and immediately demandable. 1198, lost the benefit of the period. Victorias Planter, supra De Leon vs. Syjuco—gusto ng magbayad ng debtor pero ayaw pang tanggapin ng creditor. Held: Consignation was not valid. Req: a. debt due b. consignation has been made bec creditor to whom payment is made refused to accept, or was absent or incapacitated c. prev notice of consignation to the person interested in the performance d. amount due placed at the disposal of the court 3. after consignation had been made, the person interested was notified thereof. Reasons why creditor can’t be forced to accept payment a. may want to keep his money invested safely instead of having it in his hands. B. to protect himself of sudden decline on the purchasing power of the currency loaned. Unless creditor consents, debtor cannot accelerate payment. Millare vs. Hernando—yung bahay niya gusting gawing resto e ayaw niya nga. Held: On the contract, it is stipulated that the lease may be renewed after a period of 5 years under the terms and conditions as will be mutually agreed upon by the parties at the time of the renewal. 1197 and 1670 of the CC (fixing of period, and after 15 days of occupying the leased property and without any notice from lessor, contract shall be renewed). It is understood that there is an implied new lease, not for the period of the original contract, but for the time established by 1682 and 1687. The other terms of the contract shall be revived. After the expiration of the contract, the implied new lease could not possibly have the period of 5 years, but rather would have been a month-to-

month lease since the rentals were payable on a monthly basis. Pacific Banking Corp vs. CA—negosyo sa cultivation of fish and saltmaking bumagsak. Held: An agreement to extend the time of payment in order to be valid must be for a definite time. The cause of action was for the fixing of the period. Song Fo vs. Oria—launch was sold but was shipwrecked, Song Fo did not insure and Oria did not secure. Held: The launch was with Oria already and knowing that the launch has not been insured yet, sent it from Manila to Samar and on the trip it was shipwrecked. The contract stipulates quarterly installments. Since the vessel is lost, Oria doesn’t want to pay. That unpaid installments of the purchase price of the launch, which under the express terms of the contract had not become due and payable at the time of the loss of the vessel, became due and payable under the provisions of article 1129 of the Civil Code, upon the failure of the purchaser, within a reasonable time after the loss of the launch, to offer either satisfactory security or to give bond to secure the payment of the unpaid installment of the purchase price. C. ALTERNATIVE OBLIGATIONS AND FACULTATIVE

of the house and lot is likewise barred as the agreement to make such conveyance was not an independent principal undertaking, but merely a subsidiary alternative pact relating to the method by which the debt might be paid. Ong Guan Can vs. Century—the insurance company doesn’t want to rebuild with the same materials. Held: On the contract the insurance company obligated itself to either pay the amount to which the house was insured or rebuild it. The debtor must notify the creditor of his election, stating which prestation he is disposed to fulfill. The effect of notice is to give the creditor, that is, the plaintiff in the instant case, opportunity to express his consent, or to impugn the election made by the debtor, and only after said notice shall the election take legal effect when consented by the creditor, or impugned by the latter, when declared improper by the competent court. D. JOINT AND SOLIDARY Jaucian vs. Queroi—surety was solidarily liable, then surety died. Held: The right of a guarantor or surety to insist on the exhaustion of the property of the principal debtor, before his own shall be taken in execution does not exist where the guarantor or surety is jointly and severally bound with the principal debtor. Ramos vs. Gibbon—Mining Claims, Possessory Rights of a Qualified Locator. Held: The concurrence of two or more creditors or of two or more debtors with respect to the same obligation does not imply that each of the former is entitled to demand the performance of the obligation in its entirety or that each of the latter is bound to perform it. This shall be the

Agoncillo vs. Javier—Anastacio Alano mortgaging his property to pay the debt. Held: Anastacio was only a rep of his children, and his partial payment does not affect prescription not for the benefit of the other debtors. The mortgage was never recorded therefore invalid. Action to recover has prescribed, the action to compel a conveyance

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case only when the expressly so provided by the terms of the obligation, and the parties are bound in solido. The presumption, in the absence of the stipulation as to how certain debtors are bound, is that they are bound jointly. Versoza vs. Lim—Collision of Perla and Ban Yek. Held: Where a collision occurs between tow seagoing vessels, caused exclusively by the carelessness of the navigating officers in charge of one of the vessels, both the owner and the operating company directly in charge of the offending vessel are liable for the damage done. The rule that joint obligations are apportionable unless otherwise specially provided has no application to obligations arising from tort. Persons who cooperate in the tortuous infliction of damage are jointly and severally liable. Contractual Obligations-joint Tortuous act-joint and severally liable Ronquillo vs. CA—foodstuff, individually and jointly, auction of furnitures on same day of hearing for reconsideration. Held: Clearly then, by the express term of the compromise agreement and the decision based upon it, the defendants obligated themselves to pay their obligation, “individually and jointly”. The term “individually” has the same meaning as “collectively”, “separately”, “distinctively”, respectively, and severally. An agreement to be individually liable undoubtedly creates a several obligation and a several obligation is one by which one individual binds himself to perform the whole obligation. Oritz vs. Cayanon—Bartolome Ortiz, ayaw umalis sa premises dahil sa mga improvements na ginawa niya at hindi siya nakasama sa bidding. Nangolekta pa ng toll. Held: Presumption when two persons are liable under a contract or judgment and no mention of the specific liability of each for the entire

obligation. With respect to the amount of reimbursement to be paid by Comintan, it appears that the dispositive portion of the decision was lacking in specificity, as it merely provided Zamora and Comintan jointly liable therefore. When two persons are liable under a contract or under a judgment, no words appear in the contract or judgment to make each liable for the entire obligation, the presumption is that their obligation is mancommunada, and each debtor is liable only for a proportionate part of the obligation. The judgment debt of 13K should be pro-rated in equal shares to Comintan and Zamora. Imperial Insurance vs. David—spouses bound themselves to be solidary and jointly liable, husband died. Held: If husband and wife bound themselves jointly and severally, in case of his death her liability is still solidary and may be sued for the whole debt. The Rules of Court provide the procedure should the creditor desire to go against the deceased debtor, but there is nothing in the said provision making compliance with such procedure a condition precedent before an ordinary action against the surviving solidary debtors, should the creditor choose to demand payment from the latter, could be entertained to the extent that failure to observe the same would deprive the court jurisdiction to take cognizance of the action against the surviving debtors. CIVIL Code allows the creditor to proceed against any of the solidary debtors or some or all of them simultaneously. Hence, there is nothing improper in the creditor’s filing of an action against the surviving solidary debtors alone, instead of instituting a proceeding for the settlement of the estate of the deceased debtor wherein his claim could be filed. Inchausti vs. Yulo—magkakapatid na hindi pa nagkasundo sa remission na binigay.

Held: The remission of any part of the debt, made by the creditor in favor of one or more his solidary debtors, inures to the benefit of the rest of them, and these latter may utilize in their favor the defense of remission. The solidary debtor unconditionally obligated or whose period for payment has expired, may not, with respect to the part of the debt he is liable, plead the defense of prematurity of the action, which is personal to his co-debtors. BPI vs. McCoy—McCoy paid all the debts and was subrogated with the rights to contribution from his co-debtors. Held: Where one of the several persons who are sued upon a joint and several liability elects to pay the whole, such person is subrogated to the rights of the common creditor and may properly substituted in the same action as plaintiff for the purpose of enforcing contribution from his former associates under art. 1145. **But Ma’am said, this is not the same meaning of real subrogation of rights. Chinese Chamber of Commerce vs. Pua Te Ching—Surety was jointly ans severally liable, principal died. Held: The surety may use against the creditors all the defenses which the principal debtor is entitled and that are inherent in the debt, but not those purely personal to the debtor, to wit, those which may contribute to weaken or destroy the juridical bond existing between the creditor and the principal debtor, not any means of defense which may invalidate the original contract from which the tight or the action of the creditor against the security arises in this class of actins is not included the means of defense as to how the trial may be continued and the writ of execution issued in case of the death of the principal debtor which can not affect the original contract nor destroy the bond existing bet the creditor and the principal

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debtor, it being, therefore, an exception or means of defense no inherent in the debt, but at the most, a purely personal one of the debtor or the successors-in-interest of the debtor. Int’l Finance vs. Imperial Textile—guarantee vs. surety Held: Although it states “Guarantee”, the stipulations of the contract make it clear that “jointly and severally” phrase is the one used in the contract. Surety: person binds himself solidary with the principal debtor, primary liability Guaranty: contract whereby a person binds himself to the creditor to fulfill the obligation of the principal in case the latter should fail to do so, secondary liability. Construction Dev. Vs. Estrella—Bus was rammed and their knees are pinned to the seats in front of them. Held: The bus company, its driver, the operator of the other vehicle and the driver of the vehicle were jointly and severally liable to the injured passenger or the latter’s heirs. Nor should it make any difference that the liability of pet (bus owner) springs from contract while that of respondents (owner and driver of other vehicle) arises from quasi-delict. Bus owner-contract, owner and owner of other vehicle-quasi-delict : both jointly and severally liable. E. DIVISIBLE AND INDIVISIBLE OBLIGATION Art. 1223-1225 F. OBLIGATION WITH A PENAL CAUSE Manila Racing vs. Manila Jockey—forfeiture of what was partially paid.

Held: The clause of the contract referring to the forfeiture of the P100,00 already paid, should the purchases C fail to pay the subsequent installments, is valid, It is in the nature of a penal clause which be legally established by the parties. In its double purpose of insuring compliance with the contract and of otherwise measuring beforehand the damages which may result from non-compliance, it is not contrary to law, morals or public order bec it was voluntarily and knowingly agreed upon by the parties. Viewing concretely the true effects thereof in the present case, the amount forfeited constitutes only 8% of the stipulated price, which is not excessive if considered as the profit which would have been obtained had the contract been complied with. There is, moreover, evidence that the defendants, because of this contract with C, had to reject other propositions to buy the same property. At any rate, the penal clause does away with the duty to prove the existence and measure of the damages caused by the breach. Caridad Est. vs. Santero—loan to be paid in 60 days and failure to do so, those already paid shall be forfeited. Antichresis: a contract whereby the creditor acquires the right to receive the fuirts of an immovable of his debtor with the obligation to apply them to the payment of interest if owing and thereafter to the principal of his credit. Penal ClauseL generally intended to substitute the indemnity for damages and the payment of interests in case of non-compliance of the obligation. Held: The provisions in which the parties have indicated in the contract is a penal clause which carries the express waiver of the vendee to any all sums he had paid when the vendor, upon his inability to comply with his duty, seeks to recover passions of the property, a conclusive recognition of the right of the vendor to the said

sums, and avoid unnecessary litigation designed to enforce fulfillment of the terms and conditions agreed upon. Said provisions are not unjust or inequitable and does not, as appellant contends, make the vendor unduly rich at his cost and expense. Bachrach Motors vs. Espiritu—obligation partly performed, 25% penalty, reduced. WHITE TRUCKS. Held: Interest and penalty are not the same. When the obligation has been partly performed, the CC authorizes the court to reduce the penalty thereon. Cabbarroguis vs. Vicente—jeep accident. Held: The refusal of the defendant to pay when the demand was made by plaintiff entitles the latter to interest on the penalty. 2210 provides that in the discretion of the court, interest may be allowed upon damages warded for breach of contract. This interest is recoverable from the time of delay, that is to say, from the date of demand, either judicial or extrajudicial. And if there is no showing as to when demand for payment was made, plaintiff must be considered to have made such demand only from the filing of the complaint. Hodges vs. Javellana--iceplant softdrint, ice drop and fixture. machinery,

Held: The provisions in the contract between the parties relative to the compounding of interest partake the nature of a penal clause and under 1229, may be reduced by court if iniquitous or unconscionable. Pamintuan vs. CA—plastic sheetings Held: The theory that penal and liquidated damages are the same cannot be sustained where the obligor is guilty of fraud in the

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fulfillment of his obligation. The penalty clause is strictly penal or cumulative in character and does not partake the nature of liquidated damages when the parties agree. Concurring Antonio: A creditor in case of fraud by the obligor is entitled only to the stipulated penalty plus the difference bet the proven damages and such stipulated penalty. Robes-Francisco Realty vs. CFJ – Held: A contract of sale which stipulate payment of interest at 4% per annum in case vendor fails to issue a certificate of title to vendee is not a penal clause because even without it vendee would be entitled to interest at the legal rate of 6% per annum. It is therefore inconceivable that the aforecited provision in the deed of sale is a penal clause which will preclude an award of damages to the vendee Millan. Makati Devt Corp vs. Empire Insurance Co.— you should build a house on the lot or else. Held: Mitigation of the penalty is allowed where there is partial payment of the obligation, the reduction of the penalty is justified. This is true where the indemnity provided for is essentially a mere penalty , having for its object to compel compliance with the contract. Umali vs. Miclat—creation of an advertisement LAGRIMAS Held: Under the law, a penalty takes the place of interests only if there is no stipulation to the contrary, and even then, damages may still be collected if the obligor refuses to pay the penalty.

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