47. Lirag Textile, Inc. and Felix K. Lirag vs.

Court of Appeals and Cristan Alcantara,

G.R. No. L-30736, July 11, 1975

There is an express agreement between petitioner Lirag Textile Mills, Inc. and private
respondent Cristan Alcantara as to the period of the latter's employment in the former's firm, that
definite period starting from Alcantara's employment up to the time Alcantara may voluntarily
resign or when petitioner Lirag Textile Mills may remove Alcantara for a valid cause or causes.

Petitioner Lirag Textile Mills, Inc. terminated private respondent Alcantara's employment without
a valid cause because its contention of "serious reverses, both in terms of pecuniary loss and in
market opportunities" was found by both the trial and appellate courts and by us as false and
alleged in bad faith.

Issue: Whether or not Lirag textile committed a breach of contract making it liable for damages.

Ruling: Yes.

Under Article 1193 of the Civil Code, obligations for whose fulfillment a day certain has been
fixed, shall be demandable only when that day comes. Obligations with a resolutory period take
effect at once, but terminate upon arrival of the day certain.

In this case, it is clear that petitioner Lirag Textile Mills, Inc. violated the contract of employment
with private respondent Alcantara when the former terminated his services without a valid
cause. The contract of employment has a period subject only to a resolutory condition or
removal for a cause, petitioner cannot with impunity be allowed the absolute and unilateral
power to terminate without valid cause a contract of employment it voluntarily entered into
merely on the basis of its whim or caprice and under the false pretense of financial distress.
The act was attended with bad faith and deceit because said petitioner made false allegations of
a supposed valid cause knowing them to be false. Therefore, Lirag Textile Mills, Inc. committed
a breach of contract and was liable for damages.

48. Ace – Agro Development Corp. vs. Court of Apppeals, G.R. No. 119729, January
21, 1997, 78 SCAD 146

Facts:

Ace-Agro Development Corporation had been cleaning soft drink bottles and repairing wooden
shells for Cosmos Bottling Corporation within its company premises in San Fernando,
Pampanga. The parties entered into service contracts which they renewed every year. On April
25, 1990, a fire broke out in the Cosmos plant. As a result, Ace-Agro’s work stopped. On
May 15, 1990, Ace-Agro requested Cosmos to resume its services but they were advised that
on account of the fire destroying nearly all the bottles and shells, Cosmos was terminating their
contract. Ace-Agro requested Cosmos to reconsider its decision but upon receiving no reply,
they informed the employees of the termination of their employment, which led the employees to
file a complaint for illegal dismissal before the Labor Arbiter against both Ace-Agro and
Cosmos. Ace-Agro sent another letter for reconsideration to Cosmos to which they replied
that they could resume work but outside company premises. Ace-Agro refused the offer,
claiming that to work outside would incur additional transportation costs.Cosmos then advised
Ace-Agro that they could resume work inside the company premises but then Ace-Agro
unjustifiably refused because it wanted and extension of the contract to make up for the
period of inactivity.

Issue:

Whether or not the period during which work has been suspended, brought about by force
majuere, justify an extension of the term of the contract.

HELD:

No.

Under Article 1193 of the Civil Code,Obligations for whose fulfillment a day certain has been
fixed, shall be demandable only when that day comes. Obligations with a resolutory period take
effect at once, but terminate upon arrival of the day certain.

In this case, the suspension of work due to fire does not merit an automatic extension. The
stipulation that in the event of a fortuitous event or force majeure the contract shall be deemed
suspended during the said period does not mean that it stops the running of the period the
contract has been agreed upon to run. The fact that the contract is subject to a resolutory
period, which relieves the parties of their respective obligations, does not stop the running of the
period of their contract.

49. Nicolas, et. al. vs. Matias, et. al., 89 Phil 126
G.R. No. L-1743 May 29, 1951

DOMINADOR NICOLAS and OLIMPIA MATIAS, petitioners,

vs.
VICENTA MATIAS and AMADO CORNEJO Jr., respondents.

Facts:
This review by certiorari a decision of the Court of Appeals, which found the following material
facts briefly stated:

On June 29, 1944 Vicenta Matias, widow, and her son Amado Cornejo, Jr., executed favor of
Dominador Nicolas and his wife Olimpia Matias a promissory note for P30,000, payable "within
the sixth year" from that date with 6 per cent interest due annually in advance

On July 15, 1944 the debtors having come by sufficient funds, offered to liquidate the
indebtedness with interest for five years, but the creditors refused to receive the money.
Wherefore in August 1944 said debtors deposited the amount of P39,000 in court (principal and
interest) and filed this action to compel the defendants to accept the money and to discharge
the mortgage.

The foremost defense was that the loan could not be repaid until the sixth year from the date of
the mortgage. Thus, the Court of Appeals declared the consignation valid and the debt totally
discharged.

It is stated that, a debtor has no right, without the consent of the creditor, to anticipate to
payment of a debt payable at a future day, and bearing interest; nor may a creditor be
compelled by statute to accept such payment.

The court a quo declined to apply the above principles reasoning out that the only benefit
accruing to the creditors from the period was the stipulated interest; and inasmuch as interest
for the whole period had been tendered they had no excuse for declining to receive the money.

Issue: Whether or not the creditors had no excuse for declining to receive the money.

Ruling:
No.

Under Art. 1196 of the New Civil Code, Whenever in an obligation a period is designated, it is
presumed to have been established for the benefit of both the creditor and the debtor, unless
from the tenor of the same or other circumstances it should appear that the period has been
established in favor of one or of the other.

In this case, the creditors evidently stipulated that repayment could not be made within five
years because they wanted to derive some advantage from the change of currency which they
foresaw or awaited. Hence we must of necessity declare that the offer and consignation were
not valid, except for the satisfaction of the interest for the year 1944 which was then due.
Although the defendants have asked for judgment against the plaintiffs "in the sixth year from
1944" for the amount of the note plus interest, we must decline to render such judgment now,
firstly because at the time the case was instituted the mortgage was not yet payable, and
secondly because there is a moratorium law. Anyway they will be at liberty to collect the
mortgage plus interest when the moratorium is lifted, and in that foreclosure proceedings the
amount of recovery shall be determined.

50. Modesto Soriano vs. Carolina Abalos, et. al., 84 Phil 206
G.R. No. L-1525 July 27, 1949

MODESTO SORIANO, petitioner,

vs.
CAROLINA ABALOS, MERCEDES ABALOS, ENCARNACION ABALOS, PABLO MANUEL,
on his behalf and as guardian ad-litem of Romulo and Florencio, both surnamed Manuel,
respondents.

Facts:
This is an appeal by certiorari from a decision of the Court of Appeals. The facts are as follows:
On March 17, 1938, respondent Juliana Abalos and Carolina Abalos sold the parcel of the land
described in the complaint to Felipe Maneclang and Modesto Soriano at the price of P750, with
option to repurchase the same "at anytime they have the money." Offer to repurchase was
made in December, 1941, which could not be carried out because of the war. In May, 1944, offer
to repurchase was again made, but Modesto Soriano rejected the offer. Wherefore, vendors
consigned the price of P750 with the court and filed a complaint for repurchase.

The Court of First Instance of Pangasinan rendered judgment ordering Modesto Soriano to
execute a deed of reconveyance in favor, not only of Carolina Abalos and the heirs of Juliana
Abalos, but also of the intervenors Mercedes and Encarnacion Abalos; authorizing Modesto
Soriano to collect and receive as price for the reconveyance the sum of P750 consigned with
the court; and sentencing Modesto Soriano to pay the respondent the sum of P3,200 as the
value of the fruits of the land in 1944 obtained by Modesto Soriano. This judgment was affirmed
in toto by the Court of Appeals.

Petitioner Modesto Soriano now maintains in this Court that respondent no longer had any right
to repurchase the property because, there being no express agreement as to the time within
which the repurchase could be made, that time should be, under the first paragraph, article
1508 of the Civil Code, four years which in this case expired on March 17, 1942.

Issue:
Whether or not the phrase “at any time they have money” expressly stipulate a time.

Ruing:
Yes.

The stipulation, however, is that the vendors may repurchase the property "at any time they
have the money." There is, therefore, a time expressly stipulated, which is "any time." Hence,
the four years mentioned in the Civil code is not applicable. Instead, even admitting that it was
stipulated that the right to repurchase or redeem should last for an indefinite time, such period is
restricted to ten years, under paragraph 2 of article 1508 of the Civil Code. Therefore, that in the
instant case, the vendors had ten years within which to repurchase the property and that the
period did not expire until March 17, 1948. The offer to repurchase was made in May, 1944.

a. Alternative Obligations (Art. 1199 – Art. 1206)

51. Agoncillo vs. Javier, 30 Phil. 124

FACTS:

On February 27 1904, Anastasio Alano, Jose Alano and Florencio Alano, executed in favor of
the plaintiff, Dra. Marcela Marino a document stipulating that the Alanos as testamentary heirs
of deceased Rev. Anastacio Cruz, would pay the sum of P2, 730.50 within one (1) year with
interest of 12 percent per annum representing the amount of debt incurred by Cruz. Moreover,
the agreement provided that the Alanos are to convey the house and lot bequeathed to them by
Cruz in the event of failure to pay the debt in money at its maturity. No part of interest or
principal due has been paid except the sum of P200 paid in 1908 byAnastacio Alano. In 1912,
Anastasio died intestate. On August 8, 1914, CFI of Batangas appointed Crisanto Javier as
administrator of Anastasios estate. On March 17, 1916, the plaintiffs filed the complaint against
Florencio, Jose and Crisanto praying that unless defendants pay the debt for the recovery of
which the action was brought, they be required to convey to plaintiffs the house and lot
described in the agreement, that the property be appraised and if its value is found to be less
than the amount of the debt, with accrued interest at the stipulation rate, judgment rendered in
favor of the plaintiffs for the balance. The trial court ruled in favor of the plaintiff and from that
judgment the defendants have appealed to his court upon the law and the facts.

ISSUE: Whether or not the agreement that the defendant-appellant, at the maturity of the debt,
will pay the sum of the money lent by the appellees or will transfer the rights to the ownership
and possession of the house and lot bequeathed to the former by the testator in favor of the
appellees, is valid.

RULING:

Yes. Article 1200 of the NCC provides that the right of choice belongs to the debtor, unless it
has been expressly granted to the creditor. The debtor shall have no right to choose those
prestations which are impossible, unlawful or which could not have been the object of the
obligation.

In this case, the stipulation is valid because it is simply an alternative obligation, which is
expressly allowed by law. The agreement to convey the house and lot at an appraised valuation
in the event of failure to pay the debt in money at its maturity is valid as it is simply an
undertaking that if the debt is not paid in money, it will be paid in another way. As we read the
contract, the agreement is not open to the objection that the stipulation is a pacto comisorio. It is
not an attempt to permit the creditor to declare a forfeiture of the security upon the failure of the
debtor to pay the debt at maturity. It is simply provided that if the debt is not paid in money it
shall be paid in another specific was by the transfer of property at a valuation. Of course, such
an agreement, unrecorded, creates no right in rem; but as between the parties it is perfectly
valid, and specific performance of its terms may be enforced, unless prevented by the creation
of superior rights in favor of third persons.

The contract is not susceptible of the interpretation that the title to the house and lot in question
was to be transferred to the creditor ipso facto upon the mere failure of the debtors to pay the
debt at its maturity. The obligations assumed by the debtors were alternative, and they had the
right to elect which they would perform. Under the terms of the contract, the liability of the
defendants as to the conveyance of the house and lot is subsidiary and conditional, being
dependent upon their failure to pay the debt in money. It must follow, therefore, that if the action
to recover the debt has prescribed, the action to compel a conveyance 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.
52. Quizana vs. Redugerio and Postrado, 94 Phil. 218

G.R. No. L-6220 May 7, 1954

MARTINA QUIZANA, plaintiff-appellee,

vs.
GAUDENCIO REDUGERIO and JOSEFA POSTRADO, defendants-appellants.

FACTS:

The action was instituted in the justice of the peace court of Sta. Cruz, Marinduque based on an
actionable document attached to the complaint, signed by the defendants-appellants on October
4, 1948, and containing that; (1) because of necessity, defendants borrowed from the plaintiff
550 to be paid at the end of January 1949. (2) However, in the event that they cannot pay said
amount on the set date, they will mortgage their coconut plantation property at Cororocho,
Santa Cruz, Marinduque.

The defendants-appellants admit the execution of the document, but claim as defense, that
since the 31st of January, 1949, they offered to pledge the land specified in the agreement and
transfer possession thereof to the plaintiff-appellee, but that the latter refused said offer.
Judgement having been rendered by the justice of the peace court of Sta. Cruz, the
defendants-appellants appealed to the Court of First Instance which was denied.
Defendants-appellants filed a motion for reconsideration, but it was likewise denied. Hence, this
present case.

The trial court ignored the second part of the defendants-appellants' written obligation and
enforced its last first part, which fixed payment on January 31, 1949. The plaintiff-appellee
claims that this part of the written obligation is not binding because he did not sign the
agreement. The defendants-appellants wanted to allege that they had offered to execute the
document of mortgage, but the plaintiff-appellee refused to have it executed unless an additional
security was furnished.

ISSUE: Whether the second part of the written obligation is valid, binding and effective upon the
creditor.

RULING:

Yes.

The second part of the obligation in question is what is known in law as a facultative obligation,
defined in article 1206 of Civil Code which states that when only one prestation has been
agreed upon, but the obligor may render another in substitution, the obligation is called
facultative.

In this case, there is nothing in the agreement which would argue against its enforcement. it is
not contrary to law or public morals or public policy, and notwithstanding the absence of any
legal provision at the time it was entered into government it, as the parties had freely and
voluntarily entered into it, there is no ground or reason why it should not be given effect. Further,
when plaintiff-appellee received the document, without any objection on his part to the
paragraph thereof in which the obligors offered to deliver a mortgage on a property of theirs in
case they failed to pay the debt on the day stipulated, he thereby accepted the said condition of
the agreement. The acceptance by him of the written obligation without objection and protest,
and the fact that he kept it and based his action thereon, are concrete and positive proof that he
agreed and contested to all its terms, including the paragraph on the constitution of the
mortgage.