Oblicon 1-20 Additional Cases

# 1 - antonio – DONE5. GAITE vs FONACIER (2 SCRA 830)GAITE vs FONACIER (2 SCRA 830)FACTS:

Isabelo Fonacier was the owner and/or holder of 11 iron lode mineral claims (Dawahan Group), situated in Jose Panganiban, Camarines Norte. By a “Deed of Assignment” dated 29 September 1952, Fonacier constituted and appointed Fernando A. Gaite as his true and lawful attorney-in-fact to enter into a contract with any individual or juridical person for the exploration and development of the mining claims on a royalty basis of not less than P0.50 per ton of ore that might be extracted therefrom.

On 19 March 1954, Gaite in turn executed a general assignment conveying the development and exploitation of said mining claims unto the Larap Iron Mines, owned solely by him. Thereafter Gaite embarked upon the development and exploitation of the mining claims, opening and paving roads within and outside their boundaries, making other improvements and installing facilities therein for use in the development of the mines, and in time extracted therefrom what he claimed and estimated to be approximately 24,000 metric tons of iron ore.

For some reason or another, Isabelo Fonacier decided to revoke the authority granted by him to Gaite, and Gaite assented thereto subject to certain conditions.

As a result, a document entitled “Revocation of Power of Attorney and Contract” was executed on 8 December 1954, wherein Gaite transferred to Fonacier, for the consideration of P20,000, plus 10% of the royalties that Fonacier would receive from the mining claims, all his rights and interests on all the roads, improvements, and facilities in or outside said claims, the right to use the business name “Larap Iron Mines” and its goodwill, and all the records and documents relative to the mines.

In the same document, Gaite transferred to Fonacier all his rights and interests of which was paid upon the signing of the agreement, and the balance to be paid out of the first letter of credit covering the first shipment of iron ores or the first amount derived from the local sale of iron ore made by the Larap Mines & Smelting Co.

To secure the payment of the balance, Fonacier promised to execute in favor of Gaite a surety bond; delivered on 8 December 1954 with Fonacier as principal and the Larap Mines and Smelting Co. and its stockholders as sureties.

On 8 December 1955, the bond with respect to the Far Eastern Surety and Insurance Company expired with no sale of the approximately 24,000 tons of iron ore, nor had the 65,000 balance of the price of said ore been paid to Gaite by Fonacier and his sureties.

Whereupon, Gaite demanded from Fonacier and his sureties payment of said amount.When Fonacier and his sureties failed to pay as demanded by Gaite, the latter filed a complaint against them in the CFI Manila for the payment of the P65,000 balance of the price of the ore, consequential damages, and attorney’s fees.

ISSUES:(1) Whether the sale is conditional or one with a period(2) Whether there were insufficient tons of ores

HELD:(1) The shipment or local sale of the iron ore is not a condition precedent (or suspensive) to the payment of the balance of P65,000.00, but was only a suspensive period or term. What characterizes a conditional obligation is the fact that its efficacy or obligatory force (as

distinguished from its demandability) is subordinated to the happening of a future and uncertain event; so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price),but each party anticipates performance by the other from the very start. While in a sale the obligation of one party can be lawfully subordinated to an uncertain event, so that the other understands that he assumes the risk of receiving nothing for what he gives (as in the case of a sale of hopes or expectations, emptio spei), it is not in the usual course of business to do so; hence, the contingent character of the obligation must clearly appear. The appellant have forfeited the right court below that the appellants have forfeited the right to compel Gaite to wait for the sale of the ore before receiving payment of the balance of P65,000.00, because of their failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent guarantee (2) The sale between the parties is a sale of a specific mass or iron ore because no provision was made in their contract for the measuring or weighing of the ore sold in order to complete or perfect the sale, nor was the price of P75,000,00 agreed upon by the parties based upon any such measurement.(see Art. 1480, second par., New Civil Code). The subject matter of the sale is, therefore, a determinate object, the mass, and not the actual number of units or tons contained therein, so that all that was requiredof the seller Gaite was to deliver in good faith to his buyer all of the ore foundin the mass, notwithstanding that the quantity delivered is less than the amount estimated by them. The Supreme Court affirmed the decision appealed from, with costs against appellants.

#2 - santillana – DONEGonzales vs. Heirs of Thomas and Paula CruzFacts:On December 1, 1983, Paula Ao Cruz together with the plaintiffs heirs of Thomas and Paula Cruz, Elena C. Talens, entered into a Contract of Lease/Purchase with the defendant, Felix L. Gonzales of a half-portion of a parcel of land situated in Rodriguez Town, Province of Rizal The contract of Lease/Purchase contains the following provisions:1. The terms of this Contract states that for a period of one year upon the signing thereof. the LESSEE shall purchase the property on the agreeable price of One Million Pesos (P1,000,000.00) payable within Two (2) Years period with an interest of 12% per annum subject according to the following schedule of payment:Upon the execution of the Deed of Sale 50% - and thereafter 25% every six (6) months thereafter, payable within the first ten (10) days of the beginning of each period of six (6) months.2. The LESSEE shall pay by way of annual rental an amount equivalent to Two Thousand Five Hundred (P2,500.00) Pesos per hectare, upon the signing of this contract on Dec. 1, 1983.9. The LESSORS hereby commit themselves and shall undertake to obtain a separate and distinct T.C.T. over the herein leased portion to the LESSEE within a reasonable period of time which shall not in any case exceed four (4) years, after which a new Contract shall be executed by the herein parties which shall be the same in all respects with this Contract of Lease/Purchase insofar as the terms and conditions are concerned.

The defendant Gonzales paid the P2,500.00 per hectare or P15,000.00 annual rental on the half-portion of the property in accordance with the second provision of the Contract of

Lease/Purchase and thereafter took possession of the property with defendant Jesus Sambrano as his caretaker. Gonzales did not, however, exercise his option to purchase the property immediately after the expiration of the one-year lease on November 30, 1984. He remained in possession of the property without paying the purchase price provided for in the Contract of Lease/Purchase and without paying any further rentals.

A letter was sent by one of the plaintiffs-heirs Ricardo Cruz to the defendant Gonzales informing him of the lessors decision to rescind the Contract of Lease/Purchase due to a breach, it also demanded Gonzales to vacate the premises within 10 days from receipt of said letter, but Gonzales refused to vacate the property and continued possession thereof. The lessor, Paula Ao Cruz died the following day

The property subject of the Contract of Lease/Purchase is currently the subject of an Extra-Judicial Partition. Title to the property remains in the name of the plaintiffs predecessors-in-interest, Bernardina Calixto and Severo Cruz.

Alleging breach of the provisions of the Contract of Lease/Purchase namely paragraph 9 and payment of only P50,000.00 of the P500,000.00 agreed down payment on the purchase price of P1,000,000.00, the plaintiffs filed a complaint for recovery of possession of the property.

ISSUES:WON PAR 9 is a condition precedent before the defendant is to pay the down payment;WON CRUZ can rescind/terminate the Contract of Lease/Purchase because of breach of par. 9

The Trial Court ruled that par. 9 of the contract is a condition precedent which must be complied first before a deed of sale can be entered. It was appealed to the CA. The CA on the other hand ruled that par.9 of the contract cannot be interpreted as a condition precedent to the payment of the agreed purchase price. The terms of the contract [are] explicit and require no interpretation. Upon the expiration of the lease, the lessee shall purchase the property. Besides, the normal course of things anent the sale of real properties dictates that there must first be payment of the agreed purchase price before transfer of title to the vendees name can be made.

Ruling:The SC reinstated the ruling of the trial court and considered it correct.

Paragraph 9 of the contract clearly indicates that the lessors-plaintiffs shall obtain a Transfer Certificate of Title in the name of the lessee within 4 years before a new contract is to be entered into under the same terms and conditions as the original Contract of Lease/Purchase. Thus, before a deed of Sale can be entered into between the plaintiffs and the defendant, the plaintiffs have to obtain the Transfer Certificate of Title in favor of the defendant. Article 1181 of the New Civil Code states that: In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. When the obligation assumed by a party to a contract is expressly subjected to a condition, the obligation cannot be enforced against him unless the condition is complied with

Basic is the rule in the interpretation of contracts that if some stipulation therein should admit of several meanings, it shall be understood as bearing that import most adequate to render it effectual. Considering the antecedents of the ownership of the disputed lot, it appears that petitioners interpretation renders clause nine most effectual.

The record shows that at the time the contract was executed, the land in question was still registered in the name of Bernardina Calixto and Severo Cruz, respondents predecessors-in-interest.Thus, the clear intent of the ninth paragraph was for respondents to obtain a separate and distinct TCT in their names. This was necessary to enable them to show their ownership of the stipulated portion of the land and their concomitant right to dispose of it. Absent any title in their names, they could not have sold the disputed parcel of land.

In the same vein, respondents cannot rescind the contract, because they have not caused the transfer of the TCT to their names, which is a condition precedent to petitioners obligation. This Court has held that there can be no rescission (or more properly, resolution) of an obligation as yet non-existent, because the suspensive condition has not happened.[

#3 - castro – DONERomulo vs. CAFacts:Petitioners sold a parcel of land, which they inherited through succession by the death of their father, to the private respondent. The “Receipt of Down payment” was then executed by the petitioners in favor of private respondent. Part of the said receipt is the statement that they bind themselves to effect the transfer in their names from their deceased father the transfer certificate of title immediately upon receipt of the down payment above stated. A month thereafter the transaction, the title of the property was transferred under their name. Instead of delivering the title to private respondent to consummate their transaction, the petitioners sold the property to a third party. With this, petitioners unilaterally cancelled and rescinded the contract between them and the private respondents on the ground of physical absence of the private respondent since she was abroad.

Issue:Whether or not the physical absence of the private respondent rendered her in default insofar as her obligation to pay the full purchase price is concerned.

Ruling: NO. Article 1169 provides that in reciprocal obligations, neither party incurs in delay if the other does not comply or not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfill his obligation, delay by the other begins. In the case at bar, the obligation of the private respondent to pay the full amount depends on the obligation of the petitioners to present the new transfer certificate of title and execute the deed of absolute sale. The petitioners, however, failed to comply with their agreement. Hence, private respondent’s obligation never became due and demandable and therefore she cannot be deemed to have been in default.

#4 - anarna – DONEPARKS VS PROVINCE OF TARLACGR# 24190, JULY 31, 192649 PHIL 142

FACTS:

On 18 October 1910, Concepcion Cirer and James Hill, donated the parcel of land no. 2 to the municipilatity of Tarlac, Province of Tarlac, under certain conditions specified in the public document in which they made the donation. The donation was accepted by Mr. Santiago on behalf of the municipal council of Tarlac since he was the municipal president.

On 15 January 1921, Concepcion Cirer and James Hill sold the lot to Geroge L. Parks but on 24 August 1923, the municpilaty of Tarlac transferred the parcel to the Province of Tarlac, obtaining registration and title certificate.

George Parks contends that the conditions of the donation had not been complied and invoking the sale by then parcel in his favor.

The lower court dismissed the complaint

ISSUE: Whether or not the contention of the petitioner is valid based on the condition in the donation. (No)

HELD: No, the contention of the petitioner is not valid based on the condition in the donation..

The characteristic of condition precedent is that the acquisition of the right is not effected while said condition is not complied with. Meanwhile nothing is acquired and there is only an expectancy of right. Consequently, when a condition is imposed, the compliance of which cannot be effected except when the right is deemed acquired, such condition cannot be a condition precedent.

On the other hand, the action for the revocation of a donation is not excluded from the statute limitations – prescription of revocation in cases of donations (Art. 646 & 647). The action for revocation of the donation for this cause arose or April 19, 1911, that is, six months after the ratification of the instrument of donation of October 18, 1910. The complaint in this action was presented July 5, 1924, more than 10 years after this cause accrued.

#5 - dinglasan – DONE#5 Central Philippine University vs Court of Appeals 246 scra 511Facts:

Sometime in 1939, the late Don Ramon Lopez, Sr., who was then a member of the Board of Trustees of the Central Philippine College (now Central Philippine University [CPU]), executed a deed of donation in favor of the latter of a parcel of land, for which Transfer Certificate of Title No. T-3910-A was issued in the name of the donee CPU with the following annotations copied from the deed of donation—

1. The land described shall be utilized by the CPU exclusively for the establishment and use of a medical college with all its buildings as part of the curriculum; 2. The said college shall not sell, transfer or convey to any third party nor in any way encumber said land; 3. The said land shall be called “RAMON LOPEZ CAMPUS,” and the said college shall be under obligation to erect a cornerstone bearing that name. Any net income from the land or any of its parks shall be put in a fund to be known as the “RAMON LOPEZ CAMPUS FUND” to be used for improvements of said campus and erection of a building thereon.”

On 31 May 1989, private respondents, who are the heirs of Don Ramon Lopez, Sr., filed an action for annulment of donation, reconveyance and damages against CPU alleging that since 1939 up to the time the action was filed the latter had not complied with the conditions of the donation.

Issue:WON the Deed of Donation may be reconveyed to the heirs by reason of non-compliance of the conditions by the done?

Held: Under Art. 1181 of the Civil Code, on conditional obligations, the acquisition of rights, as

well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. Thus, when a person donates land to another on the condition that the latter would build upon the land a school, the condition imposed was not a condition precedent or a suspensive condition but a resolutory one.4 It is not correct to say that the schoolhouse had to be constructed before the donation became effective, that is, before the donee could become the owner of the land, otherwise, it would be invading the property rights of the donor. The donation had to be valid before the fulfillment of the condition. If there was no fulfillment or compliance with the condition, such as what obtains in the instant case, the donation may now be revoked and all rights which the donee may have acquired under it shall be deemed lost and extinguished.

CPU was directed to reconvey the property back to the heirs of Don Ramon Lopez within 30 days from the finality of judgement.

#6 – belenFrancisco Lao Lim Vs CA

Facts: The private respondent entered into a contract of lease with petitioner for a period of three (3) years, that is, from 1976 to 1979. After the stipulated term expired, private respondent refused to vacate the premises; hence, petitioner filed an ejectment suit against the respondent Benito Dy. The case was terminated by a judicially approved compromise agreement of the parties providing in part:On 1985 respondent, informed petitioner of his intention to renew the lease up to 1988, the petitioner did not agree to the renewal. In 1987 another ejectment suit was files by the petitioner after the failure of respondent to vacate the premises. It was dismissed by the RTC and late affirmed by the CA for reason that the stitpulation in the compromise agreement which allows the lessee to stay on the premises as long as he needs it and can pay rents is valid, being a resolutory condition. ISSUE: Whether or not the stipulation in the compromise agreement which allows the lessee to stay in the premises as long as he needs it and can pay rents is valid

HELD No. the stipulation “for as long as the defendant needed the premises and can meet and pay said increases’ is a purely potestative condition because it leaves the effectivity and enjoyment of leasehold rights to the sole and exclusive will of lessee. Mutuality does not obtain in such contract of lease and no equality exists between the lessor and lessee.

The fulfillment of a contract of lease cannot be made to depend exclusively upon the free and uncontrolled choice of lessee between continuing payments of the rentals or not, it completely depriving the lessor of any says in the matter. It is likewise a suspensive condition because the renewal of the lease, which gives rise to a new lease, depends upon said condition. It should be noted that a renewal constitutes a new contract of lease although with the same terms and conditions as those in the expired lease. It should also not be overlooked that said condition is not resolutory in nature because it is not a condition that terminates the lease contract. The lease contract is for a definite period of three (3) years upon the expiration of which the lease automatically terminates.

#7 - unas – DONENAGA TELEPHONE CO., INC. (NATELCO) AND LUCIANO M. MAGGAY, petitioners, vs.THE COURT OF APPEALS AND CAMARINES SUR II ELECTRIC COOPERATIVE, INC. (CASURECO II)FACTS:

The petitioner, Naga Telephone Co., Inc. (NATELCO) and the private respondent, Camarines Sur II Electric Cooperative, Inc (CASURECO II) entered into a contract wherein the petitioner can use the electric light posts of the private respondent in the operation of its telephone services. In consideration, petitioner agreed to install ten, free of charge telephone connections for the use of the private respondent.

The term or period of the contract shall be as long as the party of the first part has need for the electric light posts of the party of the second part it being understood that this contract shall terminate when for any reason whatsoever, the party of the second part is forced to stop, abandoned its operation as a public service and it becomes necessary to remove the electric light post.

After 10 years, private respondent filed a case with the RTC of Naga against petitioners for reformation of the contract with damages, on the ground that the telephone cables strung by the petitioner thereon have become much heavier, that the petitioners have used 319 posts in the different towns outside Naga City, without any contract with it and that despite of their demands, the petitioner refused to pay them and of the poor service by the petitioners with their ten telephone units.

The petitioner's averred that it should be dismissed because the deterioration of the posts is due to its 11 years of being in use. They also claimed that private respondent had asked for telephone lines in areas outside Naga City for which its posts were used by them; and that if petitioners had refused to comply with private respondent's demands for payment it was because what is due to them from private respondent is more than its claim against them. Moreover, they stated that their telephone service had been categorized by the National Telecommunication Corporation (NTC) as "very high" and of "superior quality."

The trial court rendered a decision ordering the reformation of the agreement and ordered NATELCO to pay CASURECO's electric posts.

Petitioners appealed to respondent Court of Appeals who affirmed the decision of the trial court, but based on the ground that the contract was subject to a potestative condition which rendered said condition void.

Petitioners allege that there is nothing purely potestative about the prestations of either party because petitioner's permission for free use of telephones is not made to depend purely on

their will, neither is private respondent's permission for free use of its posts dependent purely on its will.

ISSUE:WON the period of the contract is purely potestative?

HELD:No, the period of the contract is not purely potestative. A potestative condition is a

condition in which the fulfillment of which depends upon the sole will of the debtor, in which case, the conditional obligation is void. Based on this definition, respondent court's finding that the provision in the contract, to wit: “That the term or period of this contract shall be as long as the party of the first part (petitioner) has need for the electric light posts of the party of the second part (private respondent)”Is a potestative condition, is correct. However, it must have overlooked the other conditions in the same provision, to wit:“..it being understood that this contract shall terminate when for any reason whatsoever, the party of the second part (private respondent) is forced to stop, abandoned its operation as a public service and it becomes necessary to remove the electric light post’’Which are casual conditions since they depend on chance, hazard, or the will of a third person. In sum, the contract is subject to mixed conditions, that is, they depend partly on the will of the debtor and partly on chance, hazard or the will of a third person, which do not invalidate the aforementioned provision. The petition was DENIED. The decision of the Court of Appeals is AFFIRMED.

#8 - palileo – DONEHeirs of Moreno vs. MACTANGR- 156273        October 15, 2003

FACTS:Heirs of Moreno, petitioners are successors of 2 parcels of land. Mactan wanted to acquire land. The Government assured landowners that they could repurchase their lands once Lahug Airport was closed or its operations transferred to Mactan Airport but Moreno refused the offer. The Civil Aeronautics Administration as the successor agency of the National Airport Corporation filed a complaint with the Court of First Instance of Cebu, for the expropriation of land. Trial court promulgated public use upon payment of just compensation. MORENO were paid; no appeal. Certificates of title were issued.LAHUG AIRPORT CEASED OPERATIONS, but the said lands are not utilized.Moreno plead for repurchase of land. They filed complaint for reconveyance and damages. Averred that they have been convinced not to oppose since they could repurchase. MCIAA did not object.ENCHUAN FILED FOR MOTION OF TRANSFER Acquired through deeds of assignment the rights of land. DPWH claimed it leased in good faith from MCIAA to Regional Equipment Services and Region 7 Office. TRIAL COURT GRANTED RIGHT TO REPURCHASE but subject to the alleged property rights of Richard E. Enchuan and the leasehold of DPWH. CA reversed the rights gained by MCIAA were indicative of ownership in fee simple

ISSUE:Do they have right to repurchase? Or right to reversion?

HELD: (YES) PETITION GRANTED. CA DECISION REVERSED AND SET ASIDE.

1. Return or repurchase of the condemned properties of petitioners could be readily justified as the manifest legal effect or consequence of the trial court’s underlying presumption that “Lahug Airport will continue to be in operation” when it granted the complaint for eminent domain and the airport discontinued its activities.2. ARTICLE 1454: “If an absolute conveyance of property is made in order to secure the performance of an obligation of the grantor toward the grantee, a trust by virtue of law is established. If the fulfillment of the obligation is offered by the grantor when it becomes due, he may demand the reconveyance of the property to him.” a.    In the case at bar, government obliged itself to use of land for the expansion of Lahug Airport                                                   i.     Failure to keep its bargain: can be compelled to reconvey, otherwise, petitioners would be denied the use of their properties upon a state of affairs that was not conceived nor contemplated when the expropriation was authorized.#9 – viloriaHerrera v. Leviste 15 October 2003 G. R. No. 156273FACTS:

1. 10 June 1969 - Leviste obtained a loan from GSIS in the amount of (P1,854,311.50) and mortgaged its Paranaque and Buendia properties.

2. 3 November 1971 – Herrera bought the Buendia property for P3,750,000.00. The contract to sell stipulated:

a. pay Leviste P11,895,688.50; b. assume Leviste's indebtedness of P1854,311.50 to the GSIS; and c. substitute the Paranaque property with his own within a period of six (6) months. d. Leviste undertook to arrange for the conformity of the GSIS to petitioner's

assumption of the obligation.e. "failure to comply with any of the conditions contained therein, particularly the

payment of the scheduled amortizations on the dates herein specified shall render this contract automatically cancelled and any and all payments made shall be forfeited in favor of the vendor and deemed as rental and/or liquidated damages."

3. Herrera took possession of the Buendia property, received rentals of P21,000.00 monthly, and collected approximately P800,000.00 from December, 1971, up to March, 1975. He remitted a total of only P300,000.00 to the GSIS.

4. Herrera requested that GSIS to restructure the mortgage restructuring of the mortgage obligation because of his own arrearages in the payment of the amortizations.

a. GSIS replied that as a matter of policy, it could not act on his request unless he first made proper substitution of property, updated the account, and paid 20%

thereof to the GSIS. There was no requirement by the GSIS for the execution of a final deed of sale by Leviste in favor of petitioner.

5. 2 June 1974 – GSIS sent notice to Leviste of its intention to foreclose the mortgaged properties by reason of default in the payment of amortizations. A Certificate of Sale was issued in favor of the GSIS, as the highest bidder.

6. 3 March 1975 –Leviste assigned its right to redeem both foreclosed properties Jose Marcelo, Jr. (Marcelo for brevity).

7. 20 November 1975, Marcelo redeemed the properties from the GSIS by paying it the sum of P3,232,766.94 for which he was issued a certificate of redemption.

8. The Paranaque property was turned over by Marcelo to Leviste upon payment by the latter of approximately P250,000.00 as disclosed at the hearing. Leviste needed the Parañque Property as it had sold the same and suit had been filed against it for its recovery.

9. 6 May 1975 Herrera wrote the GSIS informing the latter of his right to redeem the foreclosed properties and asking that he be allowed to do so in installments. Apparently, the GSIS had not favorably acted thereon.

ISSUE:

Whether or not Herrera has a better right to the foreclosed properties.

HELD: YES

RATIO:

1. Petitioner seeks reconsideration on the grounds that it would result in patent injustice as he would not only forfeit the Buendia Property to Marcelo, but would also lose the amount of P1,895,688.50 and P300,000.00, which he paid to Leviste and the GSIS, respectively; that it would result in the unjust enrichment of Leviste; and that Leviste as well the GSIS and Marcelo would be benefiting at petitioner's expense.

2. Considering the grounds of petitioner's Motion for Reconsideration, the arguments adduced during the oral argument and in the parties' respective Memoranda, we resolve to deny reconsideration upon the following considerations:

a. The GSIS has not benefited in any way at the expense of petitioner. What it received, by way of redemption from respondent Marcelo, was the mortgage loan it had extended plus interest and sundry charges.

b. Neither has Marcelo benefited at the expense of petitioner. Said respondent had paid to GSIS the amount P 3,232,766.94, which is not far below the sum of P 3,750,000.00, which was the consideration petitioner would have paid to Leviste had his contract been consummated.

c. Leviste had neither profited at the expense of petitioner, for losing his Buendia Property, all he had received was P 1,854,311.50 from GSIS less amounts he had

paid, plus P 1,895,688.00 paid to him by petitioner, the total of which is substantially a reasonable value of the Buendia Property.

3. It is quite true that petitioner had lost the P 1,895,688.00 he had paid to Leviste, plus P 300,000.00 he had paid to GSIS, less the rentals he had received when in possession of the Buendia Property. That loss is attributable to his fault in:

a. Not having been able to submit collateral to GSIS in substitution of the Paranaque Property;

b. Not paying off the mortgage debt when GSIS decided to foreclose; and c. Not making an earnest effort to redeem the property as a possible redemptioner.

4. It cannot be validly said that petitioner had fully complied with all the conditions of his contract with Leviste.

a. He was not able to substitute the Parañaque Property with another collateral for the GSIS loan.

b. Nowhere in the letter (of the GSIS) was mentioned that a final deed of sale must first be executed and presented before the assumption may be considered. For if it was really the intention of GSIS, the requirement of Deed of Sale should have been stated in its letter.

#10 – VallejoFACTS: On May 5, 1944 Ponce de Leon obtained a loan from Santiago Syjuco, Inc. in the amount of P200,000 in Japanese Military Notes, payable within one (1) year from May 5, 1948. It was also provided in said promissory note that the promisor (Ponce de Leon) could not pay, and the payee (Syjuco) could not demand, the payment of said note except within the aforementioned period. A deed of mortgage was executed by Ponce de Leon in favor of Syjuco. Later, de Leon obtain an additional loan P16,000 in Japanese Military notes and executed in the latter's favor of promissory note of the same tenor as the one had previously executed. On several occasions, Ponce de Leon tendered to Syjuco the amount of P254,880 in Japanese military notes in full payment including all the interest, however Syjuco's refuse to accept the payment. Plaintiff filed an action to compel syjuco to accept the payment. The records of the case were destroyedduring the war, but they were duly reconstituted after the liberation.

The trial court sentenced the plaintiff to pay Syjuco the defendant the sum of P18,000 as principal and the further sum of P5,130 as interest thereon from August 6, 1944, to May 5,1949, or total sum of P23,130, representing the whole indebtedness plus all the interest from August 6, 1944, to May 5, 1949, computed according to the Ballantyne scale of values, withinterest thereon at the rate of 6% per annum from May 6, 1949, until said amount is paid infull, with costs against the plaintiff. From this judgment Syjuco has appealed, claiming hisright to be paid the sum of P216,000, actual Philippine currency, plus P200,000, as penaltyagreed upon in the contract.

ISSUE: Whether or not the consignation made by the plaintiff valid in the light of the law and the stipulations agreed upon in the two promissory notes signed by the plaintiff?HELD: no. In order that consignation may be effective,the debtor must first comply with certain requirements prescribed by law. The debtor mustshow (1) that there was a debt due;

(2) that the consignation of the obligation had been made because the creditor to whom tender of payment was made refused to accept it, or because hewas absent for incapacitated, or because several persons claimed to be entitled to receive theamount due (Art. 1176, Civil Code); (3) that previous notice of the consignation have beengiven to the person interested in the performance of the obligation (Art. 1177, Civil Code); (4)that the amount due was placed at the disposal of the court (Art 1178, Civil Code); and (5) thatafter the consignation had been made the person interested was notified thereof (Art. 1178,Civil Code).

While it is admitted a debt existed, that the consignation was made because of the refusal of the creditor to accept it, and the filing of the complaint to compel its acceptance on the part of the creditor can be considered sufficient notice of the consignation to the creditor,nevertheless, it appears that at least two of the above requirements have not been compliedwith. Thus, it appears that plaintiff, before making the consignation with the clerk of the court,failed to give previous notice thereof to the person interested in the performance of theobligation. It also appears that the obligation was not yet due and demandable when themoney was consigned, because, as already stated, by the very express provisions of thedocument evidencing the same, the obligation was to be paid within one year after May 5,1948, and the consignation was made before this period matured. 

SC: to pay the defendant Syjuco the sum of P216,000 with interest thereon at the rate of 6% per annum May 6, 1949, until said amount is paid in full, said amount, together with the

#11 – titoAraneta vs. Phil. Sugar Estate Devt., Inc20 SCRA 330/GR L-22558Art. 1197ScopeArt. 1197

FactsPetitoner Gregorio Araneta and Respondent Phil Sugar Estates Development Co., Ltd entered into a contract of purchase and sale with mortgage whereas Petitioner sold a big tract of land to Respondent subject to following conditions: 1) that buyer will build on said land the Sto. Domingo Church and Convent and 2) that seller will construct streets surrounding the land which shall be named “Sto. Domingo Avenue”Respondent finished the construction of the church but Petioner was unable to finish the construction of the streets because a third party, occupying the middle part thereof, refuse to vacate the sameRespondent filed a complaint seeking Petitoner to comply with the obligation and/or pay damages in case of failure/refusalRTC and CA decided in favor of Respondent and gave Petitioner 2 years to comply with its obligation

Issue:Whether or not Petitioner was given a reasonable time to perform his part.

Held

NO. Art. 1197 involves two step processes: 1) the Court must first determine that the obligation does not fix period (or that the period is made to depend upon the will of the debtor), but from the nature and the circumstances it can be inferred that a period was intended (Art 1197 1&2) and 2) the Court must proceed to second step and decide what period was probably contemplated by parties. Even on the assumption that the court should have found out that no reasonable time or period at all had been fixed, the COMPLAINT NOT HAVING SOUGHT THE COURT SHOULD SET A PERIOD, the court could not proceed to do so unless the complaint is amended. No basis to support the conclusion that period should be set at two years after finality of judgment, considering that the land was occupied by squatters. Parties must comply with legal processes in evicting the squatters. Reasonable time: at the date all the squatters on affected areas are finally evicted

#12 – zorillaAlba vs. Yupangco, GR No. 188233, June 29, 2010

Facts:Petitioner Maniar Rice Mill, Inc. (Maniar), organized and existing under Philippine laws, is engaged in the business of rice milling and selling of grains. Respondent Lourdes L. Deyto (Deyto) does business under the trade name "JD Grains Center" and is likewise engaged in the business of milling and selling of grains. Respondent Jennelita Deyto Ang or Janet Ang (Ang) is Deyto’s daughter and, prior to her alleged absconding, operated her own rice trading business through her own store, "Janet Commercial Store".

On November 24, 2000, Manlar filed a Complaint for sum of money against Deyto and Ang before the Regional Trial Court (RTC) of Quezon City. The case was docketed as Civil Case No. Q-00-42527 and assigned to Branch 215. The Complaint essentially sought to hold Deyto and Ang solidarily liable on the rice supply contract. Manlar prayed for actual damages in the total amount of P3,843,220.00, with interest; P300,000.00 attorney’s fees, with charges for appearance fees; and attachment bond and attachment expenses.In a July 31, 2001 Resolution, the trial court resolved to deny Deyto’s special/affirmative defenses contained in her answer. Regarding her objection to Pua’s authority to prosecute the case for lack of the proper board resolution to such effect, the trial court held that the issue had been rendered moot by Manlar’s submission on June 7, 2001 of the notarized board resolution.

Issues:

1. The CA that all-encompassing phrase in the board resolution that Mr. Pablo Pua is authorized to sign any document, papers, for and in behalf of the company, and to represent the company in any such case or cases is allegedly not sufficient authority to sign the verification and certificate against forum shopping is grossly erroneous and manifestly mistaken because it is directly negated and disproved by the express terms of his authority.2. The contracts of sale of rice were perfected by the delivery of rice to respondent mother and daughter and their issuance of nine (9) postdated checks (P3,843,220.00) as payment thereof by respondents, but that the nine(9) postdated checks of respondents were lateer dishonored.

3. The sweeping statement of the court of appeals that allegedly the partic8pation of appellant (Lourdes L. Deyto) to whatever business transactions her daughter (co-respondent Jennelita Deyto Ang) had with Manlar Rice Mill Inc. was not duly proven is not only a pure speculation but is squarely negated and disproved by the overwhelming evidence of the conspiracy and collaborative efforts of both mother and daughter in knowingly defrauding petitioner.

Held:The Court denies the Petition.It is a basic rule in evidence that he who alleges must prove his case or claim by the degree of evidence required. Court sees is an attempt to implicate Deyto in a transaction between Manlar and Ang so that the former may recover its losses, since it could no longer recover them from Ang as a result of her absconding; this conclusion is indeed consistent with what the totality of the evidence on record appears to show. This, however, may not be allowed. As a general rule, a contract affects only the parties to it, and cannot be enforced by or against a person who is not a party thereto. "It is a basic principle in law that contracts can bind only the parties who had entered into it; it cannot favor or prejudice a third person." Under Article 1311 of the Civil Code, contracts take effect only between the parties, their assigns and heirs. Thus, Manlar may sue Ang, but not Deyto, who the Court finds to be not a party to the rice supply contract. The Court finds no need to resolve the other issues raised by the parties. Petition is Denied. The Court of Appeals are affirmed.

NEW:Alba vs. Yupangco G.R. No. 188233, June 29, 2010Facts:Querubin Alba and Rizalinda D. Guzman(petitioners) filed separate complainsts for illegal dismissal and payment of retirement benefits against Y.L land Corporation and Ultra Motors Corp. respectively Robert L. Yupangco (respondent) was pleaded in his capacity as president of both corporations. The complaints was so consolidated before labor arbiter Patricio L. Liboon October 25, 1999, the labor arbiter rendered judgement in favor of petitioners:QUERUBIN L. ALBA 1.      To immediately reinstate complainant to his former position with full backwages computed in the amount of Three Hundred Eighty Thousand (P380,000.00) Pesos [from March 25, 1999 up to the date of this decision); 2.      And if complainant opts not to be reinstated, in which case, in lieu of reinstatement respondent [sic] is ordered to pay complainant separation pay equivalent to one-half (1/2) month salary for every year of service; 3.      To pay complainant his earned commission in the amount of Five Hundred Thousand (P500,000.00) Pesos. RIZALINDA D. DE GUZMAN 1.      To pay her retirement pay equivalent to seventy-five (75%) percent of her basic monthly salary, or in the amount of Six Hundred Thousand (P600,000.00) Pesos;

 2.      Pay her unpaid commission of Four Hundred Forty Eight Thousand Six Hundred Eighty One and 52/100 (P448,681.52) Pesos; and3.      Pay the balance of her unused vacation and sick leave benefits in the amount of Eighty One Thousand Eight Hundred Forty Two and 33/100 (P81,842.33) [P50,000.00/26 days = P1,923.9769 x 155.5 = P299,038.45 P217,196.12 = P81,842.33] All other claims are denied for lack of merit.Issue:Won is the liability solidarily or joint? Held:Yes. Solidarily liability of employers, proof of bad faith. Obligations incurred by them, acting as such corporate agents are not theirs but the direct accountabilities of the corporation they represent. True solidary liabilities may at times be incurred but only when exceptional circumstances warrant such as, generally, in the following cases:1.      When directors and trustees or, in appropriate cases, the officers of a corporation:(a)      vote for or assent to patently unlawful acts of the corporation;(b)      act in bad faith or with gross negligence in directing the corporate affairs;For corporate officers to be held solidarily liable in labor disputes there must be evidence of bad faith or malice. The judgment of the labor procedure; amendment of final order, solidarily liability.  The labor arbiter cannot modify a final and executory judgement, even if the modification is meant to correct erroneous conclusions of fact and law. The Labor Arbiters modification of the final and executory judgment being a nullity. Court decision,  petition denied.

#13 – lucinarioInchausti vs. Yulo [No. 7721. March 25, 1914.]Syllabi Class : CONJOINT AND SOLIDARY OBLIGATIONS / NOVATIONFacts: This suit is brought for the recovery of a certain sum of money, the balance of a current account opened by the firm of Inchausti & Company with Teodor Yulo and after his death continued by Gregorio Yulo as principal representative of his children. On Aug.12, 1909, Gregorio Yulo, in representation of his 3 siblings, executed a notarial instrument, ratifying all the contents of the prior document of Jan.26, 1908, severally and joint acknowledged their indebtedness for P253,445.42, 10 % per annum, 5 installments. Plaintiff brought an action againsta Gregorio for the payment of the said balance due. But on May 12, 1911, 3 siblings executed another instrument in recognition of the debt, reduced to P225,000, interest reduced to 6% per annum, installments increased to 8.

Issue(s): Whether or not the contract of May 12, 1911 constitute a novation (NO)         Whether or not the obligation being solidary, may constitute partial remission of debt (YES)                

Held: NOVATION.—A new instrument, in which a former one containing an obligation to pay a certain sum of money is ratified, is not renewed by merely altering the period for payment and

adding other obligations not incompatible with the one already covenanted in the old instrument. (Decisions of the supreme court of Spain of June 28, 1904 and July 8, 1909.)

The contract of May 12, 1911 does not constitute a novation of the former one of Aug.12, 1909, with respect to the other debtors who executed this contract. First, “in order that an obligation may be extinguished by another which substitutes it, it is necessary that it should be so expressly declared or that the old and the new be incompatible in all points(art. 1292). It is always necessary to state that it is the intention of the contracting parties to extinguish the former obligation by the new one.” The obligation to pay a sum of money is not replaced in a new instrument wherein the old is ratified, by changing only the term of payment and adding other obligations not incompatible with the old one.

The obligation being solidary, the remission of any part of the debt made by a creditor in favor of one or more of the solidary debtors necessarily benefits the others, and therefore there can be no doubt that, in accordance with the provision of Art. 1215, 1222, the defendant has the right to enjoy the benefits of the partial remission. At present judgment can be rendered only as to P112,500.

The defendant Gregorio Yulo was ordered to pay the plaintiff Inchausti & Company P112,500, with the interest stipulated in the instrument of May 12, 1911, from March 15, 1911, and the legal interest on this interest due, from the time that it was claimed judicially in accordance with article 1109 of the Civil Code, without any special finding as to costs. The judgment appealed from is reversed.

#14 - delos reyesBALDOMERO INCIONG VS. COURT OF APPEALS

FACTS: In February 1983, Rene Naybe took out a loan from Philippine Bank of Communications (PBC) in the amount of P50k. For that he executed a promissory note in the same amount. Naybe was able to convince Baldomero Inciong, Jr. and Gregorio Pantanosas to co-sign with him as co-makers. The promissory note went due and it was left unpaid. PBC demanded payment from the three but still no payment was made. PBC then sue the three but PBC later released Pantanosas from its obligations. Naybe left for Saudi Arabia hence can’t be issued summons and the complaint against him was subsequently dropped. Inciong was left to face the suit. He argued that that since the complaint against Naybe was dropped, and that Pantanosas was released from his obligations, he too should have been released.

ISSUE: Whether or not Inciong should be held liable.HELD: Yes. Inciong is considering himself as a guarantor in the promissory note. And he was basing his argument based on Article 2080 of the Civil Code which provides that guarantors are released from their obligations if the creditors shall release their debtors. It is to be noted however that Inciong did not sign the promissory note as a guarantor. He signed it as a solidary co-maker.A guarantor who binds himself in solidum with the principal debtor does not become a solidary co-debtor to all intents and purposes. There is a difference between a solidary co-debtor and a fiador in solidum (surety). The latter, outside of the liability he assumes to pay the debt before

the property of the principal debtor has been exhausted, retains all the other rights, actions and benefits which pertain to him by reason of the fiansa; while a solidary co-debtor has no other rights than those bestowed upon him.Because the promissory note involved in this case expressly states that the three signatories therein are jointly and severally liable, any one, some or all of them may be proceeded against for the entire obligation.  The choice is left to the solidary creditor (PBC) to determine against whom he will enforce collection.  Consequently, the dismissal of the case against Pontanosas may not be deemed as having discharged Inciong from liability as well. As regards Naybe, suffice it to say that the court never acquired jurisdiction over him. Inciong, therefore, may only have recourse against his co-makers, as provided by law

#15 - sidlacan – DONE# 15. RCBC vs. CA G.R No. 85396Facts:

On 4 May 1979, Alfredo Ching signed a 'Comprehensive Surety Agreement' with Rizal Commercial Banking Corporation (RCBC), binding himself to jointly and severally guarantee the prompt payment of all PBM obligations owing RCBC in the aggregate sum of Forty Million (P40,000,000.00) Pesos. PBM filed several applications for letters of credit with RCBC. Through said applications, PBM obligated itself, among other things, to pay on demand for all draft(s) drawn under or purporting to be drawn under the credits. All in all, PBM's obligations stood at P7,982,649.08Less than a year later, or on 7 August 1981, RCBC filed a Complaint for collection of said sum against respondents PBM and Alfredo Ching with the then Court of First Instance of Pasig, docketed as CV-42333. By way of special and affirmative defenses respondents alleged that "although the trust receipts stipulate due dates, the true intent and agreement of the parties was that the maturity dates of the trust receipts were to be extended at the end of the stipulated dates, as had been the customary practice of RCBC with PBM." Meanwhile, on 1 April 1982, PBM filed a Petition for Suspension of Payments with the Securities and Exchange Commission, docketed as SEC Case No. 2250, seeking at the same time its rehabilitation. The CFI rendered a decision in favor of the petitioner RCBC. On appeal the appellate court set aside the lower courts decision and denied the motion for reconsideration of the petitioner. The petitioner avers that SEC injunctive orders only pertains to PBM. The respondents contends that the liabilities incurred by PBM were corporate in character hence, as a corporate officer, Alfredo Ching cannot be held liable.

Issue:WON respondent Ching can be held liable under Article 1193 of the Civil Code.

Held:Yes, respondent Ching should be liable under Article 1193 of the CIvil Code. To further

avoid payment of their obligation, PBM and Ching allege a customary extension given by petitioner in PBM's favor, which, it is averred, must necessarily benefit the Surety. Suffice it to say that the summary judgment made by the lower Court offers an acceptable explanation finding respondents' obligation as matured and demandable. Thus: The trust receipts from No. 2042 to 2100 in the schedule shows that the maturity dates thereof vary from May 12, 1981 at the latest and February 19, 1981 at the earliest. The alleged agreement to extend, granting its existence, obviously would have had a much earlier date than the maturity dates of the trust receipts and considering that the instant case was brought on August 7, 1981, there should have

been, to say the least, representation made prior to the maturity dates or at least on the dates of maturity thereof. But it has not even been alleged by defendants that such representations were made by defendants. It is too far fetched to rule that the Court will grant an extension of time to pay, when no such extension has ever been requested by defendants. The obligation, therefore, is covered by Article 1193 of the Civil Code and hence, demandable when the day comes .The lower Court correctly found the case to be without any genuine issue of fact and ripe for summary judgment. Respondents' bare allegation of customary extensions is not corroborated by any documentary evidence but remains plain self-serving assertions.

#16 – galicinaoSubject: Kinds of Obligation – Joint and Solidary# 16LAFARGE CEMENT PHILIPPINES, INC., LUZON CONTINENTAL LAND CORPORATION, CONTINENTAL OPERATING CORPORATION and PHILIP ROSEBERG, petitioners, vs.CONTINENTAL CEMENT CORPORATION, GREGORY T. LIM and ANTHONY A. MARIANO, respondents.

Facts Both parties executed a Letter of Intent (LOI) where petitioner Lafarge Cement

Philippines (Lafarge) agreed to purchase the cement business of Respondent Continental Cement Corporation (CCC) and both parties entered into a Sale and Purchase Agreement (SPA).

At the time of the transactions, petitioners were aware that CCC had a case pending with the Supreme Court (Asset Privatization Trust (APT) v. Court of Appeals and Continental Cement Corporation). In anticipation of the liability that the High Tribunal might adjudge against CCC, the parties, under Clause 2 (c) of the SPA, allegedly agreed to retain from the purchase price a portion of the contract price for payment to APT.

However, Lafarge refused to apply the sum to the payment to APT, despite the subsequent finality of the Decision in favor of the latter and the repeated instructions of Respondent CCC. CCC filed a complaint before the RTC of Quezon City against petitioners. The complaint prayed, among others, that petitioners be directed to pay the "APT Retained Amount" referred to in Clause 2 (c) of the SPA.

Petitioners moved to dismiss the Complaint on the ground that it violated the prohibition on forum-shopping.

In the meantime, to avoid being in default and without prejudice to the outcome of their appeal, petitioners filed their Answer and Compulsory Counterclaims ad Cautelam before the RTC. In their Answer, they denied the allegations in the Complaint. They prayed -- by way of compulsory counterclaims against Respondent CCC, its majority stockholder and president Gregory T. Lim, and its corporate secretary Anthony A. Mariano -- for the sums of (a) P2,700,000 each as actual damages, (b) P100,000,000 each as exemplary

damages, (c) P100,000,000 each as moral damages, and (d) P5,000,000 each as attorney's fees plus costs of suit.

Petitioners alleged that CCC, through Lim and Mariano, had filed the "baseless" Complaint and procured the Writ of Attachment in bad faith. Petitioners prayed that both Lim and Mariano be held "jointly and solidarily" liable with Respondent CCC.

CCC moved to dismiss petitioners' compulsory counterclaims on grounds that essentially constituted the very issues for resolution in the instant Petition.

Issue Whether or not respondents should be held jointly and solidarily liable

Held Yes. Obligations may be classified as either joint or solidary. "Joint" or "jointly" or

"conjoint" means mancum or mancomunada or pro rata obligation; on the other hand, "solidary obligations" may be used interchangeably with "joint and several" or "several." Thus, petitioners' usage of the term "joint and solidary" is confusing and ambiguous.

The ambiguity in petitioners' counterclaims notwithstanding, respondents' liability, if proven, is solidary.

Article 1207 of the Civil Code provides that obligations are generally considered joint, except when otherwise expressly stated or when the law or the nature of the obligation requires solidarity. However, obligations arising from tort are, by their nature, always solidary.

In a "joint" obligation, each obligor answers only for a part of the whole liability; in a "solidary" or "joint and several" obligation, the relationship between the active and the passive subjects is so close that each of them must comply with or demand the fulfillment of the whole obligation. The fact that the liability sought against the CCC is for specific performance and tort, while that sought against the individual respondents is based solely on tort does not negate the solidary nature of their liability for tortuous acts alleged in the counterclaims.

Article 1211 of the Civil Code provides that "Solidarity may exist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions."

#17 – perlasQuiombing vs Court of Appeals

Facts: 

Spouses Saligo contracted Quiombing and his co-creditor Bischoco to construct a house for them. The Construction and Service Agreement between the parties stated that the creditors Quiombing (P) and Bischoco "jointly and severally" bound themselves to construct a house for the debtors. Upon completion, Quiombing was paid partially, but was unable to collect the balance after repeated demands. Quiombing alone filed for recovery of the balance plus charges and interests.

Issues:  May one of the two solidary creditors sue by himself alone for the recovery of amounts due to both of them without joining the other creditor as a co-plaintiff?

Ruling: Yes. The question of who should sue the private respondents was a personal issue between creditors Quiombing and Biscocho. It did not matter who as between them filed the complaint because the private respondents were liable to either of the two as a solidary creditor for the full amount of the debt. Full satisfaction of a judgment obtained against them by Quiombing would discharge their obligation to Biscocho, and vice versa; hence, it was not necessary for both creditors Quiombing and Biscocho to file the complaint. Inclusion of Biscocho as a co-plaintiff when Quiombing was competent to sue by himself alone, would be a useless formality.

#18 – vallejos Inciong vs CA

Facts:

In February 1983, Rene Naybe took out a loan from Philippine Bank of Communications (PBC) in the amount of P50k. For that he executed a promissory note in the same amount. Naybe was able to convince Baldomero Inciong, Jr. and Gregorio Pantanosas to co-sign with him as co-makers. The promissory note went due and it was left unpaid. PBC demanded payment from the three but still no payment was made. PBC then sue the three but PBC later released Pantanosas from its obligations. Naybe left for Saudi Arabia hence can’t be issued summons and the complaint against him was subsequently dropped. Inciong was left to face the suit. He argued that that since the complaint against Naybe was dropped, and that Pantanosas was released from his obligations, he too should have been released.

Issue:

Whether or not Inciong should be held liable

Held:

Yes, Yes. Inciong is considering himself as a guarantor in the promissory note. And he was basing his argument based on Article 2080 of the Civil Code which provides that guarantors are released from their obligations if the creditors shall release their debtors. It is to be noted however that Inciong did not sign the promissory note as a guarantor. He signed it as a solidary co-maker.

A guarantor who binds himself in solidum with the principal debtor does not become a solidary co-debtor to all intents and purposes. There is a difference between a solidary co-debtor and a fiador in solidum (surety). The latter, outside of the liability he assumes to pay the debt before the property of the principal debtor has been exhausted, retains all the other rights, actions and

benefits which pertain to him by reason of the fiansa; while a solidary co-debtor has no other rights than those bestowed upon him.

Because the promissory note involved in this case expressly states that the three signatories therein are jointly and severally liable, any one, some or all of them may be proceeded against for the entire obligation. The choice is left to the solidary creditor (PBC) to determine against whom he will enforce collection. Consequently, the dismissal of the case against Pontanosas may not be deemed as having discharged Inciong from liability as well. As regards Naybe, suffice it to say that the court never acquired jurisdiction over him. Inciong, therefore, may only have recourse against his co-makers, as provided by law.

#19 – dalafu

MAKATI DEVELOPMENT CORP. VS. EMPIRE INSURANCE CO.G. R. NO. 21780 JUNE 30, 1967

FACTS:            On March 31, 1959, Makati Development Corporation sold a lot to Rodolfo P. Andal, in Urdaneta Village, Makati, Rizal, for P55,615. A so-called "special condition" contained in the deed of sale provides that the vendee shall construct and complete at least 50% of its residence on the property within two (2) years from March 31, 1959 to the satisfaction of the vendor and, in the event of its failure to do so, the bond which the vendee has delivered to the vendor in the sum of P11,123.00 to insure faithful compliance with the above special condition will be forfeited. Andal gave a surety bond on April 10, 1959 wherein he, as principal, and the Empire Insurance Company, as surety, jointly and severally, undertook to pay the Makati Development Corporation the sum of P12,000 in case Andal failed to comply with his obligation under the deed of sale.

Andal sold the lot to Juan Carlos on January 18, 1960. As neither Andal nor Juan Carlos built a house on the lot within the stipulated period, the Makati Development Corporation, on April 3, 1961, after the lapse of the two-year period, sent a notice of claim to the Empire Insurance Co. advising it of Andal's failure to comply with his undertaking. Demand for the payment of P12,000 was refused, whereupon the Makati Development Corporation filed a complaint in the Court of First Instance against the Empire Insurance Co. to recover on the bond in the full amount, plus attorney's fees.            In his answer, Andal admitted the execution of the bond but alleged that the "special condition" in the deed of sale was contrary to law, morals and public policy. He averred that, at any rate, Juan Carlos had started construction of a house on the lot. The court directed that in case the amount of the judgment was paid by the Empire Insurance Co., Andal should in turn pay the former the sum of P1,500 with interest at 12% from the time of the filing of the complaint to the time of payment and to pay attorney's fees in the sum of P500 and proportionate part of the costs.            The appellant argues that Andal became liable for the full amount of his bond upon his failure to build a house within the two-year period which expired on March 31, 1961 and that the trial court was without authority to reduce Andal's liability on the basis of Carlos' construction of a house a month after the stipulated period because there was no privity of contract between Carlos and the Makati Development Corporation.

ISSUE: Whether or not is Andal liable for the full amount of his bond upon his failure to comply with the special condition stipulated

RULING:             No. While it is true that in obligations with a penal sanction the penalty takes the place of damages and the payment of interest in case of non-compliance and that the obligee is entitled to recover upon the breach of the obligation without the need of proving damages, it is nonetheless true that in certain instances a mitigation of the obligor's liability is allowed. Thus article 1229 of the Civil Code states:

The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable.

Trial court found that Juan Carlos had finished more than 50 per cent of his house by April, 1961, or barely a month after the expiration on March 31, 1961 of the stipulated period. There was therefore a partial performance of the obligation within the meaning and intendment of article 1229. The penal clause in this case was inserted not to indemnify the Makati Development Corporation for any damage it might suffer as a result of a breach of the contract but rather to compel performance of the so-called "special condition" and thus encourage home building among lot owners in the Urdaneta Village. Considering that a house had been built shortly after the period stipulated, the substantial, if tardy, performance of the obligation, having in view the purpose of the penal clause, fully justified the trial court in reducing the penalty.

#20 – riego20 – ANTONIO TAN VS COURT OF APPEALS

FACTS:

A loan was obtained by the petitioner from the private respondent which remains unpaid for almost 21 years. Partial payments are made [by the debtor] and demands [by the creditor] are sent but to the extent of the efforts by the creditor, the debtor still fails to pay.

A case was filed against herein-appellant in RTC Manila which rendered favorable decision to private respondent. On appeal for reduction of awards, the Court of Appeals reduced the awards but affirmed in all other aspect the decision of the lower court. A motion for reconsideration was filed which was denied, thus this petition.

One of the issues assailed by the petitioner is the suspension of the interest and surcharges for the unpaid debt due to letter sent by the creditor of assistance in applying for relief of liability through the Commission on Audit and Office of the President.

ISSUE: Whether or not the petitioner’s assailed suspension of an obligation valid due to the promise assistance by the creditor. (NO)

HELD:

No, the running of the interest and surcharge was not suspended by the private respondent’s promise to assist the petitioners in applying for relief therefrom through the Commission on Audit and the Office of the President.

o It was the primary responsibility of petitioner to inform the Commission on Audit and the Office of the President of his application for condonation of interest and surcharge. It was incumbent upon the petitioner to bring his administrative appeal for condonation of interest and penalty charges to the attention of the said government offices.

o The letter is not formally offered as evidence by either party.

First line of the case – full story of the loan:

On May 14, 1978 and July 6, 1978, petitioner Antonio Tan obtained two (2) loans each in the principal amount of Two Million Pesos (P2,000,000.00), or in the total principal amount of Four Million Pesos (P4,000,000.00) from respondent Cultural Center of the Philippines (CCP, for brevity) evidenced by two (2) promissory notes with maturity dates on May 14, 1979 and July 6, 1979, respectively. Petitioner defaulted but after a few partial payments he had the loans restructured by respondent CCP, and petitioner accordingly executed a promissory note (Exhibit "A") on August 31, 1979 in the amount of Three Million Four Hundred Eleven Thousand Four Hundred Twenty-One Pesos and Thirty-Two Centavos (P3,411,421.32) payable in five (5) installments. Petitioner Tan failed to pay any installment on the said restructured loan of Three Million Four Hundred Eleven Thousand Four Hundred Twenty-One Pesos and Thirty-Two Centavos (P3,411,421.32), the last installment falling due on December 31, 1980. In a letter dated January 26, 1982, petitioner requested and proposed to respondent CCP a mode of paying the restructured loan, i.e., (a) twenty percent (20%) of the principal amount of the loan upon the respondent giving its conformity to his proposal; and (b) the balance on the principal obligation payable in thirty-six (36) equal monthly installments until fully paid. On October 20, 1983, petitioner again sent a letter to respondent CCP requesting for a moratorium on his loan obligation until the following year allegedly due to a substantial deduction in the volume of his business and on account of the peso devaluation. No favorable response was made to said letters. Instead, respondent CCP, through counsel, wrote a letter dated May 30, 1984 to the petitioner demanding full payment, within ten (10) days from receipt of said letter, of the petitioner’s restructured loan which as of April 30, 1984 amounted to Six Million Eighty-Eight Thousand Seven Hundred Thirty-Five Pesos and Three Centavos (P6,088,735.03)