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OBLIGATIONS AND CONTRACTS 1SBCA
DIFFERENT KINDS OF OBLIGATIONS CASES:
PURE OBLIGATIONS
1) Seone v. Franco, 24 Phil 309
24 PHIL 309
FACTS: This is an appeal from a judgment of the Court of First
Instance ofZamboanga in favor of the plaintiff, holding that the
right of action upon themortgage debt which was the basis of the
claim presented against theplaintiffs estate had already
prescribed. The mortgage in question, which isto secure the payment
of the sum of P4,876.01, the debtor agreeing to paythe sum little
by little. After 27 years, nothing has been paid either of the
principal or of the interest. The obligation seems to leave the
duration of theperiod for the payment thereof to the will of the
debtor. It appears also thatit was the intention of the instrument
to give the debtor time within which topay the obligation.
ISSUE: Whether or not the creditor may demand immediate
performance ofthe obligation, given that there is no date
stipulated by the parties as towhen it should become due and
payable.
HELD: In such cases this court has held, on several occasions,
that theobligation is not due and payable until an action has been
commenced bythe mortgagee against the mortgagor for the purpose of
having the court fixthe date on and after which the instrument
shall be payable and the date ofmaturity is fixed in pursuance
thereof. Such being the case, as action shouldhave been brought for
the purpose of having the court set a date on whichthe instrument
should become due and payable. Until such action wasprosecuted no
suit could be instrument. It is, therefore, clear that this
actionis premature. The instrument has been sued upon before it is
due. The actionmust accordingly be dismissed. Ordinarily when an
action of this sort isdismissed the plaintiff may at once begin his
action for the purpose of fixinga date upon which the instrument
shall become due. From the undisputedfacts in this case and from
the facts and conditions that very probablycannot be charged
hereafter, it is our present opinion that such action is
itself prescribed. The judgment was affirmed, with cost against
theappellant.
2) Parks v. Province of Tarlac 49 Phil 142
Pure Obligations
G.R. Nos. L-24190
July 13, 1926
Facts:
On October 18, 1910, Private defendants, owners of parcel of
land, donatesit perpetually to the municipality of Tarlac, Province
of Tarlac, undercertain conditions specified in the public
document. The parcel of land was
later registered to the name of the doness, the municipality of
Tarlac.Private defendants then sold this parcel of land to
plaintiff on January 21,1921. The municipality then conveyed the
property to the Province ofTarlac. Plaintiff filed an action to
recover property since conditions for thedonation of the parcel of
land was not met by the defendant municipality.
Issues:
Whether or not, plaintiff has the right of action to claim the
parcel of landsold by private defendant despite the fact that the
parcel of land have beenpreviously donated to defendant
municipality.
Held:
Plaintiff has no more right to action to claim the parcel of
land. The parcelof land was already donated by private defendant to
defendant municipalitybefore the said sale took place. The private
defendant can no longer sellwhat is not already theirs. Moreover,
there is no revocation of the donationsince there is no consent
from the donee or there is no judicial decree.
Another point is that the revocation of donation has already
prescribed. Theperiod of class of action is ten years. The action
for revocation of thedonation for this cause to arose on April 19,
1911, that is six months afterthe ratification of the instrument of
donation of October 18, 1910. The
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complaint in this action was presented July 5, 1924, more than
ten yearsafter his cause accrued.
CONDITIONAL OBLIGATIONS
3) Javier v. CA, March 15, 1990
FACTS:
Leonardo Tiro is a holder of an ordinary timber license issued
bythe Bureau of Forestry covering 2,535 hectares in the town of
Medina,Misamis Oriental. On February 15, 1966, he executed a Deed
ofAssignment in favour of Jose and Estrella Javier, stating that he
will assign,transfer and convey unto the spouses his shares of
stock in theTimberwealth Corporation in consideration of P120, 000:
P20, 000 of whichwill be paid by the spouses upon signing of the
contract and the balance
shall be paid P10, 000 every shipment of export logs actually
producedfrom Timberwealths concession.
At the time the said agreement was executed, private
respondenthad a pending application, dated October 21, 1965, for an
additional forestconcession covering an area of 2,000 hectares
southwest of the adjoiningarea of the concession subject to the
deed of assignment. Hence, anotheragreement was entered into by the
parties on February 28, 1966, stating thatrespondent shall
transfer, cede and convey whatever rights he may acquireto
Timberwealth over the forest concession then pending application
inconsideration of a sum of P30, 000 to be paid by the Javier
spouses, as bothdirectors and stockholders of Timberwealth, which
amount of money shall
form part of their paid up capital stock in said corporation,
subject to theapproval of the Board of Directors of the same.
On November 18, 1966, the Acting Director of Forestry wrote
theprivate respondent that his concession was renewed up to May 12,
1967 butsince the land consisted of only 2,535 hectares, Tiro was
given up to May12 to form a cooperative, partnership or corporation
with other adjoininglicensees so as to have a total land area of
not less than 20,000 hectares ofcontiguous and compact territory
and an annual cut of not less than 25,000cubic meters, otherwise
his license will not be renewed, in pursuance of apresidential
directive issued on May 13, 1966.
Petitioners, acting as timber license holders, entered into a
ForestConsolidation Agreement on April 10, 1967 with other timber
licenseholders like Vicente de Lara, Jr., Salustiano Oca and
Sanggaya Logging
Company. Under that agreement, they all agreed to pool together
theirresources and merge their respective forest concessions into
one workingunit. This consolidation was approved on May 10, 1967.
The working unitwas subsequently incorporated as the North Mindanao
Timber Corporation,with the petitioners and other signatories of
the aforesaid ForestConsolidation Agreement as incorporators.
On July 16, 1968, private respondent filed a suit against
thepetitioner spouses for failure to pay the balance due under the
two deeds ofagreement, demanding them to pay the amount of P83,
138.15 with interestat 6% per annum from April 10, 1967 until full
payment, plus P12, 000 forattorneys fees and costs. On September
23, 1968, the petitionersinterposed, along with its admittance of
executing of the contracts, a special
defense of nullity thereof since private respondent failed to
comply with hiscontractual obligations and, further, that the
conditions for the enforceabilityof the obligations of the parties
failed to materialize. As counterclaim,petitioners sought the
return of P55, 586 which private respondent hadreceived from them
pursuant to an alleged management agreement, plusattorneys fees and
costs.
On October 7, 1968, Tiro stated that what were transferred to
thedefendants were his rights and interest in a logging concession
described inthe deed of assignment; that the shares of stocks
referred to in the complaintare terms used therein merely to
designate or identify those rights andinterests in said logging
concession. The defendants actually made use of or
enjoyed not the shares of stocks but the logging concession
itself; that sincethe proposed Timberwealth was owned solely by the
defendants, thepersonalities of the former and the latter are one
and the same; and that thecounterclaim of petitioners in the amount
of P55, 586.39 is part of the sumof P69, 661.85 paid by the latter
to the former in partial satisfaction of thelatters claim.
Respondents claim was dismissed and he was ordered to payP33,
161.85 with legal interest at 6% per annum from the filing of
theanswer until complete payment.
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Ten years later, on the 28th of March, petitioners filed a
motion inthe Court of Appeals for extension of time to file a
motion forreconsideration, for the reason that they had to change
counsel. They weregiven 15 days to file said motion for
reconsideration, provided that thesubject motion was filed on time.
On April 11, 1978, petitioners filed their
motion for reconsideration with CA but it was denied for the
petitionersmerely tried to refute the rationale of the Court in
deciding to reverse theappealed judgment.
ISSUE:
Whether the deed of assignment dated February 15, 1966 and
theagreement of February 28, 1966 are null and void, the former for
totalabsence of consideration and the latter for non-fulfillment of
the conditionsstated therein.
RULING:
The true cause or consideration of said deed was the transfer of
theforest concession of private respondent to petitioners for P120,
000. Thisfinding is supported by the following considerations: (1)
both parties, at thetime of the execution of the deed of assignment
knew that TimberwealthCorporation stated therein was non-existent;
(2) in their subsequentagreement, private respondent conveyed to
petitioners his inchoate rightover a forest concession covering an
additional area for his existing forestconcession, which area he
had applied for, and his application was thenpending in the Bureau
of Forestry for approval; (3) petitioners, after theexecution of
the deed of assignment, assumed the operation of the
loggingconcessions of private respondent; (4) the statement of
advances torespondent prepared by petitioners stated: P55, 186.39
advances to L.A.
Tiro be applied to succeeding shipments. Based on the agreement,
we payP10, 000 every after (sic) shipment. We had only 2 shipments;
and (5)petitioners entered into a Forest Consolidation Agreement
with otherholders of forest concessions on the strength of the
questioned deed ofassignment.
The aforesaid contemporaneous and subsequent acts of
petitionersand private respondent reveal that the cause stated in
the questioned deed ofassignment is false. It is settled that the
previous and simultaneous andsubsequent acts of the parties are
properly cognizable indicia of their trueintention. Where the
parties to a contract have given it a practical
construction by their conduct as by acts in partial performance,
suchconstruction may be considered by the court in construing the
contract,determining its meaning and ascertaining the mutual
intention of the partiesat the time of the contracting. The parties
practical construction of theircontract has been characterized as a
clue or index to, or as evidence of, their
intention or meaning and as an important, significant,
convincing,persuasive or influential factor in determining the
proper construction of theagreement.
The deed of assignment of February 15, 1966 is a
relativelysimulated contract which states a false cause or
consideration, or one wherethe parties conceal their true
agreement. A contract with a falseconsideration is not null and
void per se. Under Article 1436 of the CivilCode, a relatively
simulated contract, when it does not prejudice a thirdperson and is
not intended for any purpose contrary to law, morals, goodcustoms,
public order or public policy binds the parties to their
realagreement. Petitioners are liable to respondent for the sale
and transfer intheir favour of the latters forest concessions. P20,
000 of the P120, 000 tobe paid to Tiro was already paid upon
signing of the contract and thebalance was to be paid at P10, 000
per shipment of logs from theconcession. Since petitioners forest
concessions were consolidated withother license holders under the
Forest Consolidation Agreement, then theunpaid balance of P49,
338.15 became due and demandable.
As to the nullity of the February 28, 1966 agreement,
thepetitioners cannot be held liable thereon. The efficacy of said
deed ofassignment is subject to the condition that the application
of privaterespondent for an additional area for forest concession
be approved by theBureau of Forestry. Since Tiro did not obtain
that approval, said deedsproduced no effect. When a contract is
subject to a suspensive condition, its
effectivity can take place only if and when the event which
constitutes thecondition happens or is fulfilled. If the suspensive
condition does not takeplace, the parties would stand as if the
conditional obligation had never
existed.
The said agreement is a bilateral contract which gave rise
toreciprocal obligations, meaning the obligation of private
respondent totransfer his rights in the forest concession over the
additional area and forthe petitioners to pay P30, 000. The
demandability of the obligation of one
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party depends upon the fulfillment of the obligation of the
other. In thiscase, the failure of Leonardo Tiro to comply with his
obligation negates hisright to demand performance from petitioners.
Delivery and payment in acontract of sale are so interrelated and
intertwined with each other that
without delivery of the goods there is no corresponding
obligation to pay.
Under par. 2, Art. 1461, the efficacy of the sale of a mere hope
orexpectancy is deemed subject to the condition that the thing will
come intoexistence. Since Tiro never acquired any right over the
additionalconcession to be approved by the Bureau, the agreement
executed therefor,which had for its object the transfer of said
right to petitioners, neverbecame effective or enforceable.
Decision of the Court of Appeals is modified, in which
theagreement dated February 28, 1966 is declared without force and
effect andthe amount of P30, 000 is hereby ordered to be deducted
from the sumawarded by respondent court to Leonardo Tiro.
4) Naga Telephone Co. Inc. et al v. CA, February 24, 1994 (Art.
1182)
G.R. No. 107112 February 24, 1994
FACTS:
Petitioner Naga Telephone Co., Inc. (NATELCO) is a telephone
companyrendering local as well as long distance telephone service
in Naga Citywhile private respondent Camarines Sur II Electric
Cooperative, Inc.(CASURECO II) is a private corporation established
for the purpose of
operating an electric power service in the same city.
In 1977, the parties entered into a contract for the use by
petitioners in theoperation of its telephone service the electric
light posts of privaterespondent in Naga City. In consideration
therefor, petitioners agreed toinstall, free of charge, ten
telephone connections for the use by privaterespondent.
After the contract had been enforced for over ten years, private
respondentfiled in 1989 against petitioners for reformation of the
contract withdamages, on the ground that it is too one-sided in
favor of NATELCO; that
it is not in conformity with the guidelines of the National
ElectrificationAdministration (NEA) which direct that the
reasonable compensation forthe use of the posts is P10.00 per post,
per month; that the telephone cablesstrung by them have become much
heavier.
As second cause of action, private respondent alleged that
starting with theyear 1981, petitioners have used 319 posts in the
towns outside Naga City,without any contract with it. And as to the
third cause of action, privaterespondent complained about the poor
servicing by petitioners of the ten
telephone units.
NATELCO, on the other hand, averred that the first cause of
action shouldbe dismissed because it does not sta te a cause of
action for reformation ofcontract and it is barred by prescription
for having been filed more than tenyears after the execution of the
contract. As to the second cause of action,petitioners claimed that
private respondent had asked for telephone lines inareas outside
Naga City for which its posts were used by them. And withrespect to
the third cause of action, petitioners claimed that their
telephone
service had been categorized as "very high" and of "superior
quality."
ISSUE:
Whether or not the continued enforcement of the contract
betweenNATELCO and CASURECO II is disadvantageous to the latter and
too
one-sided in favor of the former;
Whether or not the ruling that the prescription of the action
for reformationof the contract commenced from the time it became
disadvantageous toCASURECO II;
Whether or not the contract was subject to a potestative
condition in favorof the petitioners
HELD:
While the contract appeared to be fair to both parties when it
was enteredinto by them, it became too inequitous or
disadvantageous to CASURECOand too one-sided in favor of
NATELCO.
Petitioners assert that Article 1267 of the New Civil Code is
not applicablebecause the contract does not involve the rendition
of service or a personal
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prestation and it is not for future service with future unusual
change.However, Article 1267 speaks of "service" which should be
understood asreferring to the "performance" of the obligation. In
the present case, theobligation of CASURECO consists in allowing
NATELCO to use its postsin Naga City, which is the service
contemplated in said article. Article 1267
states the doctrine of unforeseen events. It is based on the
discredited theoryof rebus sic stantibus in public international
law; under this theory, theparties stipulate in the light of
certain prevailing conditions, and once theseconditions cease to
exist the contract also ceases to exist. Consideringpractical needs
and the demands of equity and good faith, the disappearanceof the
basis of a contract gives rise to a right to relief in favor of the
partyprejudiced.
On the issue of prescription of private respondent's action for
reformation ofcontract, what is reformed in the reformation of
contracts is not the contractitself, but the instrument embodying
the contract. It follows that whether thecontract is
disadvantageous or not is irrelevant to reformation and
therefore,cannot be an element in the determination of the period
for prescription ofthe action to reform.
Article 1144 of the New Civil Code provides that an action upon
a writtencontract must be brought within ten years from the time
the right of actionaccrues. Clearly, the ten year period is to be
reckoned from the time theright of action accrues which is not
necessarily the date of execution of thecontract. As correctly
ruled by respondent court, private respondent's rightof action
arose "sometime during the latter part of 1982 or in 1983
whenaccording to Atty. Luis General, Jr., he was asked by CASURECO
IIsBoard of Directors to study said contract as it already
appeareddisadvantageous to private respondent. Private respondent's
cause of actionto ask for reformation of said contract should thus
be considered to have
arisen only in 1982 or 1983, and from 1982 to January 2, 1989
when thecomplaint in this case was filed, therefore, ten years had
not yet elapsed."
Regarding the last issue, the prestations of either party are
not purelypotestative because petitioner's permission for free use
of telephones is notmade to depend purely on their will, neither is
private respondent'spermission for free use of its posts dependent
purely on its will.
A potestative condition is a condition, the fulfillment of which
dependsupon the sole will of the debtor, in which case, the
conditional obligation isvoid. Based on this definition, respondent
court's finding that the provision
in the contract which states that That the term or pe riod of
this contractshall be as long as the party of the first part
(petitioner) has need for theelectric light posts of the party of
the second part (private respondent) is apotestative condition, is
correct. However, it must have overlooked the otherconditions in
the same provision, particularly, it being understood that this
contract shall terminate when for any reason whatsoever, the
party of thesecond part (private respondent) is forced to stop,
abandoned its operationas a public service and it becomes necessary
to remove the electric lightpost which are casual conditions since
they depend on chance, hazard, orthe will of a third person.
In sum, the contract is subject to mixed conditions, that is,
they dependpartly 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.
POTESTATIVE CONDITION
5) Taylor v. Uy Tieng Piao & 43 Phil 83
GR # L-16109
Justice Street
FACTS:
On December 12, 1918, Taylor contracted his services to Tan
Liuan and Co.as superintendent of an oil factory to be established
in the city. The contractwas supposed to span over two years from
the execution of the contract andthe salary was said to be 600php
per month during the first year and 700phpper month during the
second year with an additional 60php per month forresidence and
utilities. Additionally, the contract stipulated that if, for
anyreason, the machinery for the factory, fail to arrive in the
city of Manilawithin a period of six months, the contract may be
cancelled by Tan Liuanand Co. It was additionally stated that such
cancellation were not to occurbefore the expiration of the six
months.
The machinery never arrived in the city of Manila within the six
monthsafter the signing of the contract. It would appear before the
courts that TanLiuan and Co. found the oil business to no longer
see large returns and
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cancelled the order of the machinery. Taylor then instituted an
action torecover the amount of 13,000php as damages for the
unfulfilled contract.The lower court found Tan Liuan and Co. liable
not liable for the periodsubsequent to the expiration of the first
six months. However, the sum of
300php was awarded to Taylor as damage for breach of
contract.
ISSUE:
Whether or not the Tan Liuan and Co. may be held liable
fordamages for the breach of contract.
HELD:
Yes. The Supreme Court held that the lower court did not err
intheir rejection damages sought by Taylor for the period
subsequent to theexpiration of the first six months. However, it
was seen that the trial judgefailed to consider the 60php specified
in the contract for residence andutilities, which Taylor is clearly
entitled to recover, in addition to the
300php awarded in the lower court. The Supreme Court ordered Tan
Liuanand Co. to pay Taylor the sum of 360php instead of 300php with
interestand costs.
6) SEBTC v. CA & Ferrer (11 Oct. 1995)
SECURITY BANK & TRUST COMPANY and ROSITO C.
MANHIT,petitioners, vs. COURT OF APPEALS and YSMAEL C. FERRER,
respondents.
G.R. No. 117009 October 11, 1995
Facts: Petitioners Security Bank and Trust Company (SBTC) and
Rosito C.Manhit contracted with respondent Ysmael C. Ferrer to
construct thebuilding of SBTC in Davao City for the price of
P1,760,000.00. In thecontract, the building must be finished within
200 working days which therespondent was able to comply with. But
there was a drastic increase inexpenses which cost P300,000 more
than the original price agreed upon.These additional expenses were
made known to the petitioner through theirVice President Fely
Sebastian and Supervising Architect Rudy de la Rama.Respondent made
this demands for payment of the increased cost as soonas possible.
Furthermore the demands were supported by receipts,
invoices,payrolls and other documents proving the additional
expenses. SBTC
affirmed Ferrers claim and was recommended to settle an
additionalP200,000 only. Nevertheless, instead of paying the
recommended additionalamount, denied ever authorizing payment of
any amount beyond theoriginal contract price. Ferrer then filed a
complaint for breach of contractwith damages. The trial court ruled
in favor for Ferrer and on appeal the
Court of Appeals affirmed the trial courts decision. In the
present petitionfor review, Petitioner SBTC contends that the
stipulated contract price willnot automatically make petitioners
liable to pay for such increased cost, asany payment above the
stipulated contract price has been made subject tothe condition
that the "appropriate adjustment" will be made "upon
mutualagreement of both parties". It is contended that since there
was no mutualagreement between the parties, petitioners' obligation
to pay amounts abovethe original contract price never
materialized.
Issue: Whether or not, SBTC should pay the entire amount of
additional
cost to respondent.
Held: The decision of the Court of Appeals is affirmed. Under
the Civil
Code, Art 22. states that Every person who through an act of
performanceby another, or any other means, acquires or comes into
possession ofsomething at the expense of the latter without just or
legal ground, shallreturn the same to him. Thus, to allow
petitioner bank to acquire theconstructed building at a price far
below its actual construction cost wouldundoubtedly constitute
unjust enrichment for the bank to the prejudice of
private respondent. Such unjust enrichment is not allowed by
law.
Lastly, Under Article 1182 of the Civil Code, a conditional
obligation shallbe void if its fulfillment depends upon the sole
will of the debtor. In thepresent case, the mutual agreement, the
absence of which petitioner bankrelies upon to support its
non-liability for the increased construction cost, is
in effect a condition dependent on petitioner bank's sole will,
since privaterespondent would naturally and logically give consent
to such an agreementwhich would allow him recovery of the increased
cost.
7) Catungal et al v. Rodriguez (23 March 2011)
Facts: Before the Court is a Petition for Review on Certiorari,
assailing thefollowing issuances of the Court of Appeals in CA-G.R.
CV No. 40627consolidated with CA-G.R. SP No. 27565: (a) the August
8, 2000 Decision,
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[1] which affirmed the Decision [2] dated May 30, 1992 of the
RegionalTrial Court (RTC), Branch 27 of Lapu-Lapu City, Cebu in
Civil Case No.2365- reconsideration of August 8, 2000 Decision.
Agapita Catungal owns a specific parcel of land in Cebu City.
This saidproperty is allegedly the paraphernal property of Agapita.
With herhusbands consent both spouses entered into contract to sell
the same pieceof land to the respondent Rodriguez. The contract
subsequently wasupgraded into a Deed of Sale between both of the
parties. With negotiationsfor the sale, the spouses Catungal asked
for the advancement amounting toP5,000,000 for personal reasons.
Respondent then refused to pay theadvancement stating that this was
not part of their agreement. Furthermore,he claims that the spouses
were planning on selling the same property tointerested third
parties. With a letter signed by Atty. Jose Catungal,respondents
were then given an ultimatum whether or not they will buy thesaid
property, and was warned that should they fail to pay the
advancementthey will rescind the contract and will pursue other
interested buyers insteadbecause they needed the down payment of
P5, 000,000.
The respondent contended that the rescission of the deed of sale
isunjustified stating that they have no right to rescind.
Issue:
Whether or not the provisions of the Contract of Deed of Sale
constitutes apositive condition.
Held:
A provision in a Conditional Deed of Sale stating that the
vendee shall pay
the balance of the purchase price when he has successfully
negotiated andsecured a road right of way is not a condition on the
perfection of thecontract nor on the validity of the entire
contract or its compliance ascontemplated by Article 1308 of the
Civil Code such condition is not purelypotestative such a condition
is likewise dependent on chance as there is noguarantee that the
vendee and the third-party landowners would commit anagreement
regarding the road right of way, a type mixed condition
expresslyallowed under Article1182 of the Civil Code. Where the
so-calledpotestative condition is imposed not on the birth of the
obligation but on itsfulfillment, only the condition is avoided,
leaving unaffected the obligationitself.
CASUAL CONDITION
8) Cruz v. Gasilian (Impossible Conditions)
Facts:
On September 5, 1941, Santos Ilagan, administrator,one of the
children andheir of Eulalio Ilagan Bisig executed an absolute deed
of sale over twoparcels of land for P18,000 in favor of Severo Cruz
and his wife. OnSeptember 18, Santos Ilagan submitted the deed of
absolute sale to the courtand likewise set the same date as
conveyance of approval of the deed. Theother children, and heirs of
Eulalio Ilagan Bisig gave their approval andconformity to the said
deed and signed on the administrator's motion. Themotion was set
for hearing on September 22, but the motion was not actedupon.
On December 18, 1943, the heirs of the deceased, except the
administrator,filed a written opposition to the sale. On June 30,
1944, Judge QuintinParedes, Jr., sustained the opposition and held
that the sale was inpropersince the sale was primarily intended for
the payment of the mortgage debt,and thus the property should be
sold to the mortgagee. The opposition statedthat, the price fixed
in the motion is not reasonable under the presentcondition and that
the two parcels of land command a better and higherprice.
By reason of sale, and relying on good faith of these heirs, the
vendees, Sps.Cruz, agreed to the cancellation of the mortgage and
stopped collectinginterest.
To disallow estoppel against the appelles in the face of the
lsecircumstances would be to allow them to profit by their own
wrong and
inconsistency at the expense of the innocent parties.
Thus, this case is an appeal from an order of the Court of First
Instance ofNueva Ecija in an intestate proceeding disapproving the
sale of two parce lsof land by the administrator to the present
appellant and her husband, sincedeceased.
Issue:
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Whether or not the sale of the two parcels of land to Sps. Cruz
wasvalid and proper given the grounds of opposition of the heirs of
EulalioIlagan Bisig, except the administrator.
Held:
At the case at bar, the court seemed to believe that the sale
wasconditional. It should be noted that the disapproval, was caused
by the heirsthemselves, and that, had no objection been offered by
them there wouldbeen little likelihood of the approval being
withheld. The point is that aparty to a contract may not be excused
from performing his promise by thenon-occurence of an event which
he himself prevented.
Wherefore, the order appealed from is reversed and the court
below shallenter a new order approving the sale and ordering the
delivery of the landsin question to the vendees or the successors
in interest, with costs againstthe appellees.
9) Song Fo & Co. v. Hawaiian Phil. Co. 33 SCRA 1 (Art.
1191)
Simple breach does not justify resolution
G.R. No. 23769 (September 16, 1925)
FACTS
Hawaiian-Philippine Co. got into a contract with Song Fo &
Co. where itwould deliver molasses to the latter.
Hawaiian-Philippine Co. was able todeliver 55,006 gallons of
molasses before the breach of contract. SFC filed
a complaint for breach of contract against Hawaiian-Philippine
Co. andasked P70,369.50. Hawaiian-Philippine Co. answered that
there was a delayin the payment from Song Fo & Co. and that
Hawaiian-Philippine Co. hasthe right to rescind the contract due to
that and claims it as a specialdefense. The judgment of the trial
court condemned Hawaiian-PhilippineCo. to pay Song Fo & Co. a
total of P35,317.93, with legal interest from thedate of the
presentation of the complaint, and with costs.
ISSUE
(1) Did Hawaiian-Philippine Co. agree to sell 400,000 gallons of
molassesor 300,000 gallons of molasses?
(2) Had Hawaiian-Philippine Co. the right to rescind the
contract of salemade with Song Fo & Co.?
(3) On the basis first, of a contract for 300,000 gallons of
molasses, andsecond, of a contract imprudently breached by
Hawaiian-Philippine Co.,what is the measure of damages?
HELD
(1) Only 300,000 gallons of molasses was agreed to by
Hawaiian-PhilippineCo. as seen in the documents presented in court.
The language used withreference to the additional 100,000 gallons
was not a definite promise.
(2) With reference to the second question, doubt has risen as to
when SongFo & Co. was supposed to make the payments for the
delivery of molasses
as shown in the documents presented by the parties.
The Supreme Court said that Hawaiian-Philippine Co. does not
have theright to rescind the contract. It should be noted that the
time of paymentstipulated for in the contract should be treated as
of the presence of thecontract. There was only a slight breach of
contract when the payment wasdelayed for 20 days after which
Hawaiian-Philippine Co. accepted thepayment of the overdue accounts
and continued with the contract, waivingits right to rescind the
contract. The delay in the payment of Song Fo & Co.was not such
a violation for the contract.
(3) With regard to the third question, the first cause of action
of Song Fo &Co. is based on the greater expense to which it was
put in being compelledto secure molasses from other sources to
which Supreme Court ruled thatP3,000 should be paid by
Hawaiian-Philippine Co. with legal interest fromOctober 2, 1923
until payment.
The second cause of action was based on the lost profits on
account of thebreach of contract. Supreme Court said that Song Fo
& Co. i s not entitled torecover anything under the second
cause of action because the testimony of
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Mr. Song Heng will follow the same line of thought as that of
the trial courtwhich in unsustainable and there was no means for
the court to find outwhat items make up the P14,000 of alleged lost
profits.
10) Filoil Refinery Corp. v. Mendoza, June 15, 1987
(1191, Simple breach)
G.R. No. L-55526 (June 15, 1987)
FACTS
In a complaint filed by herein private respondents, the lower
court renderedon May 14, 1976, a decision rescinding the contract
of lease over a 750square meters lot situated in Cebu City covered
by TCT No. 30712 enteredinto between Filoil Refinery Corporation
and private respondents Jesus P.
Garcia and Severina B. Garcia and ordering the petitioner to
vacate theleased premises. It appears that the petitioners violated
the terms andconditions of the lease agreement in the sense that
the signatory FiloilRefinery Corporation subleased it to Filoil
Marketing and subsequently topetitioner Petrophil Corporation and
that herein petitioners were delayedseveral times in the payment of
the monthly rentals.
Private respondents filed a Motion for Execution pending appeal
which wasopposed by petitioners in their Motion for
Reconsideration. Said Motion forReconsideration was denied by the
lower court prompting petitioners to filea Petition for certiorari
and Review with the Court of Appeals. OnSeptember 29, 1980, the
Court of Appeals rendered its decision denying thepetition for
certiorari and review to annul and set aside the order of thelower
court granting the Motion for Execution pending appeal.
Private respondents filed a motion to dismiss the appeal of
petitioners in theoriginal complaint on the ground of alleged
abandonment by reason of thefailure of the petitioners to amend
their record on appeal.
On September 24, 1979, the lower court dismissed the appeal
because it isbelieved the Court of Appeals will not be in a
position to know why thecase was decided on summary judgment, what
exhibits have been admitted
in evidence and why Filoil Marketing Corporation had been
orderedimpleaded.
Petitioners filed their Motion for Reconsideration which was
denied by thelower court Hence, the present petition for certiorari
and mandamus.
Petitioners' contentions of the alleged failure however, it is a
fact thatpetitioners filed their record on appeal well within the
reglementary periodand that the lower court never issued an order
declaring the Record onAppeal incomplete or defective nor an order
ordering petitioners tocomplete or correct the same. In addition,
that had the lower court approvedoutright the record on appeal, or
had it required petitioners to amend thesame and petitioners
complied, constraining it to give its approval thereto, itwould
have lost its jurisdiction to order execution of the decision
pendingappeal. Petitioners cited the ruling handed by Us in the
case of De Leon vs.De Los Santos:
To invoke the rule that once an appeal has been perfected, the
trial court
loses jurisdiction
over the case and cannot generally act anymore on any matter
raised therein.It was more for these reasons that petitioners felt
there was no need tofollow up or to inquire about the approval of
their record on appeal ratherthan an act of abandonment of their
appeal as theorized by private
respondents.
ISSUE:
1. Whether or not rescinding the contract of lease between
petitionersand respondents is valid
2. Whether or not petitioners breach the simple contract
HELD:
WHEREFORE premises considered the petition is hereby
DISMISSED,
with the petitioners ordered to VACATE the premises.
1. The contract of lease sought to be rescinded expired or
terminatedlast September 16, 1982 or almost 5 years ago by its own
terms as providedfor in the Lease Contract. An examination of the
lease contract reveals thatthere is no express prohibition against
the assignment of the leasehold right.
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Under the law, when there is no express prohibition, the lessee
may subletthe thing leased and all rights acquired by virtue of an
obligation aretransmissible, if there has been no stipulation to
the contrary.
2. Petitioners admit that on a few occasions, they were late in
payingthe rentals which were due within the first 15 days of each
month but theirdelay was only for a few days. Such breaches were
not as substantial andfundamental as to defeat the object of the
parties in making the agreementbecause the law is not concerned
with such trifles.
11) Legarda Hermaos v. Saldaa, January 28, 1974 (1191)
2 lots bought, 1 lot paid. Recession only applies to 1 not
2)
GR No L 26578 ( January 28, 1974)
FACTS
Saldana had entered into two written contracts with Legarda, a
subdivisionowner, whereby Legarda agreed to sell to him two of his
lots for 1,500 perlot, payable over a span of 10 years on 120
monthly instalments with 10%interest per annum. Saldana paid for
eight consecutive years but did notmake any further down payments
due to Legardas failure to make thenecessary improvement on the
said lot which was promised by theirrepresentative, the said Mr.
Cenon. Saldana already paid a total of Php3,582.06. The statement
of account shows that Saldana paid Php 1,682.28 ofthe principal and
Php1,889.78 for the interest. It did not distinguish whichof the
two said lots was paid. Petitioner, then, rescinded the contract
basedon the stipulation of the contract that payments made by
respondent shall beconsidered as rentals and any improvements made
shall be forfeited infavour of the petitioner. The lower court
ruled sustaining petitionerscancellation of contract. So respondent
appealed and judgement wasreversed in favour of the responded
ordering petitioners to deliver toplaintiff one of the two lots at
the choice of the defendant and execute the
deed of conveyance. Hence this petition
ISSUE
Was the cancellation of the sale of contract valid?
HELD
No, even though it was stipulated that failure to complete the
paymentwould result to the cancellation of the contract, it was
still not valid. Asclearly shown in the statement of account,
Saldana was able to pay one ofthe two said lots. Under Article 1234
of the New Civil Code, if theobligation has been substantially
performed in good faith, the obligor mayrecover as though there had
been a strict and complete fulfilment, lessdamages suffered by the
obligee. Hence, under the authority of Article1234 of the New Civil
Code, Saladana is entitled to one of the two lots ofhis choice and
the interest paid shall be forfeited in favour of the
petitioners.
12) Solar Harvest, Inc. v. Davao Corrugated Cartoon Corp., 26
July
2010 (Art. 1191)
G.R. No. 176868
FACTS
In 1998, Solar Harvest, Inc. (SHI), entered into an agreement
with DavaoCorrugated Carton Corporation (DCCC) for the purchase of
corrugatedcarton boxes. This agreement was not reduced into
writing. To start theproduction, SHI deposited US$40,150.00 in
DCCCs US Dollar SavingsAccount with Westmont Bank, as full payment
for the ordered boxes.However, SHI did not receive any boxes from
DCCC. SHI wrote a demandletter for reimbursement but DCCC replied
that the boxes had beencompleted in April and that SHI failed to
pick them up from the formerswarehouse 30 days from completion, as
agreed upon. DCCC mentioned that
SHI even placed an additional order of 24,000 boxes, out of
which, 14,000had been manufactured without any advanced payment
from SHI. DCCCthen demanded SHI to remove the boxes from the
factory and to pay the
balance of US$15,400 for the additional boxes and P132,000 as
storage fee.
SHI filed a Complaint for sum of money and damages against DCCC.
TheComplaint averred that the parties agreed that the boxes will be
deliveredwithin 30 days from payment but respondent failed to
deliver the boxeswithin such time. The RTC ruled that DCCC did not
commit any breach offaith that would justify rescission of the
contract and the consequentreimbursement of the amount paid by SHI.
The RTC said that DCCC was
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able to produce the ordered boxes but SHI failed to obtain
possessionthereof because its ship did not arrive.
SHI filed a notice of appeal with the CA but it was denied for
lack of meritbecause SHI failed to discharge its burden of proving
what it claimed to bethe parties agreement with respect to the
delivery of the boxes and also,that even assuming that the
agreement was for respondent to deliver theboxes, DCCC would not be
liable for breach of contract as petitioner hadnot yet demanded
from it the delivery of the boxes. Petition moved for
reconsideration but it was denied.
ISSUE
Whether or not DAVAO CORRUGATED CARTON CORPORATIONcommitted any
breach of contract.
HELD
No. In reciprocal obligations, as in a contract of sale, the
general rule is thatthe fulfillment of the parties respective
obligations should be simultaneous.Hence, no demand is generally
necessary because, once a party fulfills hisobligation and the
other party does not fulfill his, the latter automaticallyincurs in
delay. But when different dates for performance of the
obligationsare fixed, the, the other party would incur in delay
only from the momentthe other party demands fulfillment of the
formers obligation. Thus, evenin reciprocal obligations, if the
period for the fulfillment of the obligation isfixed, demand upon
the obligee is still necessary before the obligor can beconsidered
in default and before a cause of action for rescission will
accrue.SHIs witness also testified that they made a follow -up of
the boxes, but nota demand. SHI failed to establish a cause of
action for rescission. Petition is
dismissed.
13) Lorenzo Shipping Corp. v. BJ Marhel International, Inc.,
Nov. 19,
2004
(Time is of the essenceDemand not necessary1169)
Facts: Petitioner Lorenzo Shipping Corporation is a domestic
corporationengaged in coastwise shipping. It used to own the cargo
vessel M/VDadiangas Express.
Upon the other hand, respondent BJ Marthel International, Inc.
is a businessentity engaged in trading, marketing, and selling of
various industrialcommodities. It is also an importer and
distributor of different brands ofengines and spare parts.
From 1987 up to the institution of this case, respondent
supplied petitionerwith spare parts for the latters marine engines.
Sometime in 1989,petitioner asked respondent for a quotation for
various machine parts.Acceding to this request, respondent
furnished petitioner with a formalquotation
It was stipulated in the contract that DELIVERY is within 2
months afterreceipt of firm order. The TERMS is 25% upon delivery,
balance payable in5 bi-monthly equal and Installment[s] not to
exceed 90 days.
Petitioner thereafter issued to respondent Purchase Order. For
theprocurement of one set of cylinder liner, valued at P477,000, to
be used forM/V Dadiangas Express. Instead of paying the 25% down
payment for thefirst cylinder liner, petitioner issued in favor of
respondent ten postdatedchecks to be drawn against the former's
account with Allied BankingCorporation. The checks were supposed to
represent the full payment of theaforementioned cylinder liner.
Subsequently, petitioner issued Purchase Order dated 15 January
1990, foryet another unit of cylinder liner. This purchase order
stated the term ofpayment to be "25% upon delivery, balance payable
in 5 bi-monthly equal
installment[s]. On 26 January 1990, respondent deposited
petitioner's checkthat was postdated 18 January 1990, however, the
same was dishonored bythe drawee bank due to insufficiency of
funds. The remaining nine
postdated checks were eventually returned by respondent to
petitioner.
However, the parties presented disparate accounts of what
happened to thecheck which was previously dishonored. Petitioner
claimed that it replacedsaid check with a good one, the proceeds of
which were applied to its otherobligation to respondent. For its
part, respondent insisted that it returned
said postdated check to petitioner.
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On 20 April 1990, Pajarillo delivered the two cylinder liners at
petitioner'swarehouse in North Harbor, Manila. The sales invoices
evidencing thedelivery of the cylinder liners both contain the
notation "subject toverification" under which the signature of Eric
Go, petitioner's
warehouseman, appeared.
Due to the failure of the parties to settle the matter,
respondent filed anaction for sum of money and damages before the
Regional Trial Court(RTC) of Makati City. In its complaint,
respondent (plaintiff below) allegedthat despite its repeated oral
and written demands, petitioner obstinatelyrefused to settle its
obligations. Respondent prayed that petitioner beordered to pay for
the value of the cylinder liners plus accrued interest ofP111,300
as of May 1991 and additional interest of 14% per annum to
bereckoned from June 1991 until the full payment of the principal;
attorney'sfees; costs of suits; exemplary damages; actual damages;
and compensatory
damages.
In an Order dated 25 July 1991, the court a quo granted
respondent's prayer
for the issuance of a preliminary attachment. On 09 August 1991,
petitionerfiled an Urgent Ex-Parte Motion to Discharge Writ of
Attachment attachingthereto a counter-bond as required by the Rules
of Court. On even date, thetrial court issued an Order lifting the
levy on petitioner's properties and the
garnishment of its bank accounts.
Petitioner afterwards filed its Answer alleging therein that
time was of theessence in the delivery of the cylinder liners and
that the delivery on 20April 1990 of said items was late as
respondent committed to deliver saiditems "within two (2) months
after receipt of firm order" from petitioner.Petitioner likewise
sought counterclaims for moral damages, exemplarydamages,
attorney's fees plus appearance fees, and expenses of
litigation.
Subsequently, respondent filed a Second Amended Complaint
withPreliminary Attachment dated 25 October 1991. The amendment
introduceddealt solely with the number of postdated checks issued
by petitioner as fullpayment for the first cylinder liner it
ordered from respondent. Whereas inthe first amended complaint,
only nine postdated checks were involved.
Issue: Whether or not respondent incurred delay in performing
itsobligation under the contract of sale and
Whether or not said contract was validly rescinded by
petitioner.
Held: There is no showing that petitioner notified respondent of
its intentionto rescind the contract of sale between them. Quite
the contrary,respondents act of proceeding with the opening of an
irrevocable letter ofcredit on 23 February 1990 belies petitioners
claim that it notifiedrespondent of the cancellation of the
contract of sale. Truly, no prudentbusinessman would pursue such
action knowing that the contract o f sale, forwhich the letter of
credit was opened, was already rescinded by the other
party.
WHEREFORE, premises considered, the instant Petition for Review
on
Certiorari is DENIED.
14) Pacific Banking Corp. v. CA, May 5, 1989 (Art.1169)
Facts: On October 21,1963, Fire Policy No. F-3770 (Exhibit "A"),
an openpolicy, was issued to the Paramount Shirt Manufacturing Co.
(hereinafterreferred to as the insured, for brevity), by which
private respondent OrientalAssurance Corporation bound itself to
indemnify the insured for any loss ordamage, not exceeding
P61,000.00, caused by fire to its property consistingof stocks,
materials and supplies usual to a shirt factory, including
furniture,fixtures, machinery and equipment while contained in the
ground, secondand third floors of the building situated at number
256 Jaboneros St., SanNicolas, Manila, for a period of one year
commencing from that date to
October 21, 1964.
The insured was at the time of the issuance of the policy and is
up to this
time, a debtor of petitioner in the amount of not less than
Eight HundredThousand Pesos (P800,000.00) and the goods described
in the policy wereheld in trust by the insured for the petitioner
under thrust receipts
Said policy was duly endorsed to petitioner as mortgagee/
trustor of theproperties insured, with the knowledge and consent of
private respondent tothe effect that "loss if any under this policy
is payable to the PacificBanking Corporation".
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On January 4, 1964, while the aforesaid policy was in full force
and effect, afire broke out on the subject premises destroying the
goods contained in itsground and second floors
On January 24, 1964, counsel for the petitioner sent a letter of
demand toprivate respondent for indemnity due to the loss of
property by fire underthe endorsement of said policy
On January 28, 1964, private respondent informed counsel for the
petitionerthat it was not yet ready to accede to the latter's
demand as the former isawaiting the final report of the insurance
adjuster, H.H. Bayne AdjustmentCompany
On March 25, 1964, the said insurance adjuster notified counsel
for thepetitioner that the insured under the policy had not filed
any claim with it,nor submitted proof of loss which is a clear
violation of Policy ConditionNo.11, and for which reason,
determination of the liability of privaterespondent could not be
had
On April 24, 1964, petitioner's counsel replied to aforesaid
letter asking theinsurance adjuster to verify from the records of
the Bureau of Customs theentries of merchandise taken into the
customs bonded warehouse razed byfire as a reliable proof of loss
). For failure of the insurance company to paythe loss as demanded,
petitioner (plaintiff therein) on April 28, 1 964, filedin the
court a quo an action for a sum of money against the
privaterespondent, Oriental Assurance Corporation, in the principal
sum ofP61,000.00 issued in favor of Paramount Shirt Manufacturing
Co.
Issue: Whether or not the CAs decision in reversing the trial
courtsjudgment to order the respondent liable
Held: It is but fair and just that where the insured who is
primarily entitledto receive the proceeds of the policy has by its
fraud and/ormisrepresentation, forfeited said right, with more
reason petitioner which ismerely claiming as indorsee of said
insured, cannot be entitled to suchproceeds.
Petitioner further stressed that fraud which was not pleaded as
a defense inprivate respondent's answer or motion to dismiss,
should be deemed to havebeen waived.
It will be noted that the fact of fraud was tried by express or
at least impliedconsent of the parties. Petitioner did not only
object to the introduction ofevidence but on the contrary,
presented the very evidence that proved itsexistence.
It appearing that insured has violated or failed to perform the
conditionsunder No. 3 and 11 of the contract, and such violation or
want ofperformance has not been waived by the insurer, the insured
cannot recover,much less the herein petitioner. Courts are not
permitted to make contractsfor the parties; the function and duty
of the courts is simply to enforce andcarry out the contracts
actually made
Finally, the established rule in this jurisdiction that findings
of fact of theCourt of Appeals when supported by substantial
evidence, are notreviewable on appeal by certiorari, deserves
reiteration. Said findings of theappellate court are final and
cannot be disturbed by the Supreme Courtexcept in certain
cases.
PREMISES CONSIDERED, the petition is DISMISSED for lack of
merit,and the decision appealed from is AFFIRMED. No costs.
15) Sps. Felipe & Leticia Conner v. Sps. Gil &
Fernandina Galang
(May 25, 2005)
G.R. No. 139523
May 26, 2005
FACTS: In order to buy a house and lot with an area of 150
square metersin Pulanglupa, Las Pinas City, Gil and Fernandina
Galang (hereinrespondents) loaned from Fortune Savings and Loan
Association (FSLA)the amount of Php 173,800.00. In order to pay it,
they mortgaged theproperty in favour of the Fortune Savings and
Loan Association and theNational Home Mortgage Finance Corporation
(NHMFC) bought the lotfrom FSLA. Leticia Cannu, one of the
petitioners in this case, agreed topurchase the mortgaged property
for Php 120,000.00 and to assume thebalance of the mortgage
obligations with the NHMFC and the developer ofthe property.
Several payments were made and there was a remainingbalance of Php
45,000.00. A deed of sale & assumption of mortgage wasexecuted
between the Galang and Cannu spouses and the petitionersimmediately
took possession and occupied the house and lot. Although
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there have been requests by Adelina Timbang (the
attorney-in-fact) andFernandina Galang for the payment of the
balance, else the Cannu spouseswould be forced to vacate the
property, the Cannus refused to do so. OnMay 21, 1993, Fernandina
Galang paid Php 233, 957.64 as the full paymentof the remaining
balance in the mortgage loan with the NHMFC. TheCannus opposed the
release of Transfer Certificate Title Number T-8505 infavour of the
Galangs insisting that the subject property had already beensold to
them. A Complaint for Specific Performance and Damages was
filedpraying that the Cannu spouses be declared as owners of the
house and lotinvolved subject to reimbursements of the amount made
by the Galang
spouses in preterminating the mortgage loan with NHMFC.
ISSUES: Whether or not the petitioners breach of obligation
wassubstantial; whether or not there was no substantial compliance
with theobligation to pay the monthly amortization with the NHMFC;
whether or
not the action for rescission was subsidiary
HELD: The failure of the Cannus to pay the Php 45,000.00 is a
substantial
breach of obligation. Under Article 1191 of the Civil Code of
thePhilippines, the resolution of a party to pay an obligation is
founded on abreach of faith by the other party which violates the
reciprocal obligation.The petitioners had ample amount of time to
pay the amount, but despite thedemands to pay such, they did not
comply with their obligation. Rescissionmay only occur on breaches
which are substantial in order to defeat theobject of the parties
in making the agreement. Furthermore, Felipe andLeticia Cannu
committed another breach in obligation on the Deed of Salewith
Assumption of Mortgage. The mortgage obligation with the NHMFCwas
not formally assumed on account of the Cannus failure to submit
therequirements in order to be considered as successors-in-interest
of theinvolved house and lot in Pulanglupa. Article 1191, not
Article 1381, is the
applicable provision in the case at bar since it is a
retaliatory provision in asense that the action is not substantive
and because it is the duty of the courtto require the parties
involved to surrender whatever they may havereceived from the other
in the resolution of the Deed of Sale withAssumption of Mortgage.
It is unjust that a party is bound to fulfil his partof the
obligation when the other does not do his part.
16) Binalbagan Tech, Inc. v. CA, March 10, 1993 (1191)
FACTS: On May 11, 1967, private respondents, through Angelina
P.Echaus, the Judicial Administrator of the intestate estate of
Luis B.Puentevella, executed a Contract to Sell and a Deed of Sale
of forty-two(42) subdivision lots of the Puentebella family, and
transferred the lots topetitioner Binalbagan Tech., Inc. The
President of Binalbagan, PetitionerNava, executed an Acknowledgment
of Debt with Mortgage Agreement,
and mortgaged the lots in favour of the estate of
Puentebella.
Upon the transfer, Balbagan took possession of the lots,
including its
building and improvement, and operated a school on the
property.
However, there was a pending civil case stationed
beforehand.
The intestate estate of the late Luis Puentevella, who is the
owner ofsubdivision lots, was sold to Raul Javelllana, through
Angelina Puentavella,with the condition that the vendee-promisee
would not transfer his rights tosaid lots without the express
consent of Puentevella. If there would becancellation of the
contract by reason of violtion of the terms, the payments
made and improvements on the property shall pertain to the
promissor andshall be considered as rentals for the use and
occupation thereof.
Javellana failed to pay the instalments for his five years of
occupation.Puentevella filed an action against Javellana and
Southern Negros Colleges(SNC) which was a party defendant it being
in possession thereof, forrescinding the contract to sell and
recovering the possession of lots andbuildings, including the
damages.
After trial, judgment was rendered in favour of Puentevella The
deputysheriffs served the writ of execution on the SNC and
delivered possession ofinvolved properties to defendant Pentevellas
representative, Manuel
Gentapan. Books and school equipment, supplies, library,
apparatus, etc.were also delivered as depositary to satisfy the
monetary portion of thejudgment.
The plaintiffs in the instant case on appeal filed their
Third-Party Claimbased on an alleged Deed of Sale executed in their
favor by spouses Joseand Lolita Lopez. Puentevella thus Puentevella
was prohibited to assertphysical possession of premises to
counteract the fictitious c laim of hereinplaintiffs.
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After an instant case for injunction and damages was filed, an
exp-parte writof preliminary injunction was issued by Judge Abiera
and which lead toanother issuance of a writ of preliminary
injunction by CA. The final orderenjoined Judge Abiera or any other
persons or persons in his behalf torefrain from further enforcing
the injunction, pending the finality of thedecision of the CA in
the latter case. Thus, possession of Puentevella wasrestored.
Nevertheless, the plaintiffs filed a petition for review with the
SCwhich issued a restraining order against the sale of the
properties claimed bythe spouses-plaintiffs.
When the SC dissolved the CAs injunction, possession of the
building andother property was taken from petitioner Binalbagan and
given to the third-party claimants, the de la Cruz spouses.
Petitioner Binalbagan transferred itsschool to another location.
Later on, he was restored to the possession of thesubdivision lots.
Petitioner was not in possession of the lots from 1974 to
1982.
Thus, private respondent Angelina Echaus demanded payment
from
Binalbagan for the subdivision lots, a total amount due of
P367,509.93, forthe price of the land and accrued interest.
Binalbagan failed to pay. Thus,Echaus filed an action for recovery
of title and damages through Civil Case1345.
The trial court dismissed the complaint. The decision was
appealed to CAwhich reversed the decision and set aside and ordered
Binabalgan Tech. Inc,to execute a deed of conveyance or any other
instrument, transferring andreturning unto the appellants the
ownership and titles of the subdivision
lines.
Thus, this petition for review on certiorari wherein petitioners
averred that
CA erred in its decision.
ISSUE: WON private respondents' cause of action in Civil Case
No. 1354 isbarred by prescription.
HELD:
The prescriptive period within which to institute an action upon
a writtencontract is ten years. The cause of action of private
respondent Echaus isbased on the deed of sale executed on May 11,
1967, as ownership of thesubdivision lots was transferred to
petitioner. She filed Civil Case No. 1354for recovery of title and
damages only on October 8, 1982. From 1967 to1982, more than 15
years elapsed. However, the period 1974 to 1982 shouldbe deducted
in computing the prescriptive period for the reason that from1974
to 1982, private respondent Echaus was not in a legal position
toinitiate action against petitioner since as aforestated, through
no fault ofhers, her warranty against eviction was breached.
Deducting eight yearsfrom the period, only seven years elapsed.
Consequently, the civil case wasfiled within the 10-year
prescriptive period.
Specifically, the period of prescription was interrupted. From
1974 up to1982, the appellants themselves could not have restored
unto the appelleesthe possession of the subdivision lots precisely
due to a preliminary
injunction. The appellants could not have prospered in any suit
to compelperformance or payment from the appellees-buyers, because
the appellantsthemselves were in no position to perform their own
correspondingobligation to deliver to and maintain said buyers in
possession of the lots
subject matter of the sale.
A party to a contract cannot demand performance of the other
party'sobligations unless he is in a position to comply with his
own obligations.Similarly, the right to rescind a contract can be
demanded only if a partythereto is ready, willing and able to
comply with his own obligationsthereunder. In a contract of sale,
the vendor is bound to transfer theownership of and deliver, as
well as warrant, the thing which is the object of
the sale; he warrants that the buyer shall, from the time
ownership is passed,have and enjoy the legal and peaceful
possession of the thing.
17) Vicelet & Vicelen Lalicon v. NHA, 13 July 2011
GR No. 185440
FACTS: In 1980 National Housing Authority (NHA) executed a Deed
ofSale with Mortgage over a Quezon City lot in favor of the spouses
Alfaro.
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In due time, the Quezon City Registry of Deeds issued a title in
the name ofthe Alfaros. The deed of sale provided, among others,
that the Alfaros couldsell the land within 5 years from the date of
its release from mortgage evenwithout NHAs prior written consent.
The mortgage and the restriction on
sale were annotated on the Alfaros title.
About nine years later or on November 30, 1990 while the
mortgage on theland subsisted, the Alfaros sold the same to their
son, Victor Alfaro, whohad taken in a common-law wife, Cecilia,
with whom he had two daughters,petitioners Vicelet and Vicelen
Lalicon. Cecilia, who had the means, had ahouse built on the
property and paid for the amortizations. After fullpayment of the
loan the NHA released the mortgage. Six days later
Victortransferred ownership of the land to his illegitimate
daughters.
About four and a half years after the release of the mortgage,
Victorregistered the November 30, 1990 sale of the land in his
favor, resulting inthe cancellation of his parents title. The
register of deeds issued a title inVictors name. 2 months later
Victor mortgaged the land to Chua, Sy, Ong,
and See. Subsequently, in 1997 Victor sold the property to Chua,
one of themortgagees, resulting in the cancellation of his title
and the issuance of titlein Chuas name. A year later the NHA
instituted a case before the QuezonCity RTC for the annulment of
the NHAs 1980 sale of the land to theAlfaros, the latters 1990 sale
of the land to their son Victor, and thesubsequent sale of the same
to Chua, made in violation of NHA rules and
regulations.
RTC ruled that, although the Alfaros clearly violated the
five-yearprohibition, the NHA could no longer rescind its sale to
them since its rightto do so had already prescribed, applying
Article 1389 of the New CivilCode. CA reversed the RTC decision and
found the NHA entitled to
rescission.
ISSUES:
1. Whether or not the Alfaros violated their contract with the
NHA;
2. Whether or not the NHAs right to rescind has prescribed;
and
HELD:
On the first issue, the contract between the NHA and the Alfaros
forbadethe latter from selling the land within five years from the
date of the releaseof the mortgage in their favor. But the Alfaros
sold the property to Victor onNovember 30, 1990 even before the NHA
could release the mortgage intheir favor on March 21, 1991.
Clearly, the Alfaros violated the five-yearrestriction, thus
entitling the NHA to rescind the contract.
On the 2nd issue, petitioners claim that under Article 1389 of
the CivilCode the action to claim rescission must be commenced
within four yearsfrom the time of the commission of the cause for
it. But an action forrescission can proceed from either Article
1191 or Article 1381. It has beenheld that Article 1191 speaks of
rescission in reciprocal obligations withinthe context of Article
1124 of the Old Civil Code which uses the termresolution.
Resolution applies only to reciprocal obligations such that abreach
on the part of one party constitutes an implied resolutory
conditionwhich entitles the other party to rescission. Resolution
grants the injuredparty the option to pursue, as principal actions,
either a rescission or specificperformance of the obligation, with
payment of damages in either case.
Rescission under Article 1381, on the other hand, was taken from
Article1291 of the Old Civil Code, which is a subsidiary action,
not based on apartys breach of obligation. The four-year
prescriptive period provided inArticle 1389 applies to rescissions
under Article 1381. Here, the NHAsought annulment of the Alfaros
sale to Victor because they violated thefive-year restriction
against such sale provided in their contract. Thus, theCA correctly
ruled that such violation comes under Article 1191 where
theapplicable prescriptive period is that provided in Article 1144
which is 10years from the time the right of action accrues. The
NHAs right of actionaccrued on February 18, 1992 when it learned of
the Alfaros forbidden saleof the property to Victor. Since the NHA
filed its action for annulment ofsale on April 10, 1998, it did so
well within the 10-year prescriptive period.
18) Ayala Life Insurance v. Ray Burton Devt, 23 January 2006
Facts: The petitioners Victorias Planters Association, Inc. and
NorthNegros Planters Association, Inc. are non-stock corporations
and arecomposed of sugar cane planters having been established as
therepresentative entities of the numerous sugar cane planters in
the districts ofVictorias, Manapla and Cadiz. The sugar cane
productions were milled bythe respondent corporation. Petitioners
are the ones in charge of taking upwith the respondent corporation
problems which may come up. At variousdates, the sugarcane planters
executed identical milling contracts setting
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forth the terms and conditions which the sugar central North
Negros SugarCo. Inc. would mill the sugar produced by the sugar
cane planters. Becauseof the Japanese occupation, the North Negros
Sugar Co., Inc. did notreconstruct its destroyed central and it had
made arrangements with therespondent Victorias Milling Co., Inc.
for said respondent corporation tomill the sugarcane produced by
the planters of Manapla and Cadiz holdingmilling contracts with it.
When the planters-members of the North NegrosPlanters Association,
Inc. considered that the stipulated 30-year period oftheir milling
contracts had already expired and terminated and the
planters-members of the Victorias Planters Association, Inc.
likewise considered thestipulated30-year period of their milling
contracts as having likewiseexpired and terminated. Respondent has
refused to accept the fact that the30-year period has expired. They
contend that the 30 years stipulated in thecontracts referred to 30
years of milling not 30 years in time. Theycontend that as there
was no milling during 4 years of the recent war and 2years of
reconstruction, 6 years of service still has to be rendered by
petitioners.
Issue: Whether or not respondent is correct.
Held:
The trial court rendered judgment, which the Supreme
Courtaffirmed.Wherefore, the Court renders judgment in favor of the
petitionersand against the respondent and declares that the milling
contracts executedbetween the sugar cane planters of
Victorias,Manapla and Cadiz, NegrosOccidental, and the respondent
corporation or its predecessors-in-interest,the North Negros Sugar
Co., Inc., expired and terminated upon the lapse ofthe therein
stipulated 30-year period, and that respondent corporation is
notentitled to claim any extension.
The reason the planters failed to deliver the sugar cane wasthe
war or afortuitious event. The appellant ceased to run its mill
dueto the samecause.Fortuitious event relieves the obligor from
fulfilling acontractualobligation. The fact that the contracts make
reference to"first milling" doesnot make the period of thirty years
one of thirtymilling years.The seventhparagraph of Annex "C", not
found in the earlier contracts (Annexes "A","B", and "B-1"), quoted
by the appellant in itsbrief, where the partiesstipulated that in
the event of flood, typhoon,earthquake, or other forcemajeure, war,
insurrection, civil commotion,organized strike, etc., thecontract
shall be deemed suspended duringsaid period, does not mean that
the happening of any of those eventsstops the running of the
period agreedupon. It only relieves theparties from the fulfillment
of their respectiveobligations during thattime.To require the
planters to deliver the sugar canewhich theyfailed to deliver
during the four years of the Japanese occupationandthe two years
after liberation when the mill was being rebuilt istodemand from
the obligors the fulfillment of an obligation which
wasimpossible of performance at the time it became due.
19) Victorias Planters v. VMC, 97 Phil 318
(Effect of an agreement that in case fortuitous event contract
to besuspended)
GR No. 163075, January 23, 2006
FACTS: On December 22, 1995, Ayala Inc. and Ray Burton Corp.
entered
into a contract denominated as a Contract to Sell, with a
SideAgreement of even date. In these contracts, petitioner agreed
to sell torespondent a parcel of land situated at Muntinlupa City.
The purchase price
of the land is payable as follows:
On contract date: 26%, inclusive of option money
Not later than 1-6-96: 4%
In consecutive quarterly installments for a period of 5 years:
70%
Respondent paid thirty (30%) down payment and the quarterly
amortization.However in 1998, respondent notified petitioner in
writing that it will no
longer continue to pay due to the adverse effects of the
economic crisis toits business. Respondent then asked for the
immediate cancellation of thecontract and for a refund of its
previous payments as provided in thecontract.
Petitioner refused to cancel the contract to sell. Instead, it
filed with theRTC Makati City, a complaint for specific performance
against respondent,demanding from the latter the payment of the
remaining unpaid quarterlyinstallments inclusive of interest and
penalties.
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Respondent, in its answer, denied any further obligation to
petitioner,asserting that it (respondent) notified the latter of
its inability to pay theremaining installments. Respondent invoked
the provisions of paragraphs 3and 3.1 of the contract to sell
providing for the refund to it of the amountspaid, less interest
and the sum of 25% of all sums paid as liquidateddamages.
The trial court rendered a Decision in favor of Ayala and
holding thatrespondent transgressed the law in obvious bad faith.
It ordered thedefendant ordered to pay Ayala the unpaid balance,
interest agreed upon,and penalties. Defendant is further ordered to
pay plaintiff for attorneysfees and the costs of suit. Upon full
payment of the aforementioned amountsby defendant, plaintiff shall,
as it is hereby ordered, execute the appropriatedeed of absolute
sale conveying and transferring full title and ownership ofthe
parcel of land subject of the sale to and in favor of
defendant.
On appeal, the CA rendered a Decision reversing the trial courts
Decision.Hence, the instant petition for review on certiorari.
ISSUE:
1. WON respondents non-payment of the balance of the purchase
pricegave rise to a cause of action on the part of petitioner to
demand fullpayment of the purchase price; and
2. WON Ayala should refund respondent the amount the latter paid
underthe contract to sell.
HELD: The petition is denied. The CA decision is affirmed.
At the outset, it is significant to note that petitioner does
not dispute that itsDecember 22, 1995 transaction with respondent
is a contract to sell. Also,the questioned agreement clearly
indicates that it is a contract to sell, not a
contract of sale. Paragraph 4 of the contract provides:
4. TITLE AND OWNERSHIP OF THE PROPERTY. The title to theproperty
shall transfer to the PURCHASER upon payment of the balance ofthe
Purchase Price and all expenses, penalties and other costs which
shall bedue and payable hereunder or which may have accrued
thereto. Thereupon,the SELLER shall execute a Deed of Absolute Sale
in favor of the
PURCHASER conveying all the SELLERS rights, title and interest
in andto the Property to the PURCHASER
1. NO. Considering that the parties transaction is a contract to
sell, canpetitioner, as seller, demand specific performance from
respondent, asbuyer?
Blacks Law Dictionary defined specific performance as (t)he
remedy ofrequiring exact performance of a contract in the specific
form in which itwas made, or according to the precise terms agreed
upon. The actual
accomplishment of a contract by a party bound to fulfill it.
Evidently, before the remedy of specific performance may be
availed of,there must be a breach of the contract.
Under a contract to sell, the title of the thing to be sold is
retained by theseller until the purchaser makes full payment of the
agreed purchase price.The non-fulfillment by the respondent of his
obligation to pay, which is a
suspensive condition to the obligation of the petitioners to
sell and deliverthe title to the property, rendered the contract to
sell ineffective and withoutforce and effect; failure of which is
not really a breach, serious or otherwise,but an event that
prevents the obligation of the petitioners to convey titlefrom
arising, in accordance with Article 1184 of the Civil Code .
The parties stand as if the conditional obligation had never
existed. Article1191 of the New Civil Code will not apply because
it presupposes anobligation already extant. There can be no
rescission of an obligation that isstill non-existing, the
suspensive condition not having happened Thus, acause of action for
specific performance does not arise.
Here, the provisions of the contract to sell categorically
indicate thatrespondents default in the payment of the purchase
price is consideredmerely as an event, the happening of which gives
rise to the respective
obligations of the parties mentioned therein, thus:
3. EVENT OF DEFAULT. The following event shall constitute an
Event ofDefault under this contract: the PURCHASER fails to pay any
installmenton the balance, for any reason not attributable to the
SELLER, on the date itis due, provided, however, that the SELLER
shall have the right to chargethe PURCHASER a late penalty interest
on the said unpaid interest at the
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rate of 2% per month computed from the date the amount became
due andpayable until full payment thereof.
3.1. If the Event of Default shall have occurred, then at any
time thereafter,if any such event shall then be continuing for a
period of six (6) months, theSELLER shall have the right to cancel
this Contract without need of court
declaration to that effect by giving the PURCHASER a written
notice ofcancellation sent to the address of the PURCHASER as
specified herein byregistered mail or personal delivery.
Thereafter, the SELLER shall return tothe PURCHASER the aggregate
amount that the SELLER shall havereceived as of the cancellation of
this Contract, less: (i) penalties accrued asof the date of such
cancellation, (ii) an amount equivalent to twenty fivepercent (25%)
of the total amount paid as liquidated damages, and (iii) anyunpaid
charges and dues on the Property. Any amount to be refunded to
thePURCHASER shall be collected by the PURCHASER at the office of
theSELLER. Upon notice to the PURCHASER of such cancellation,
theSELLER shall be free to dispose of the Property covered hereby
as if thisContract had not been executed. Notice to the PURCHASER
sent by
registered mail or by personal delivery to its address stated in
this Contractshall be considered as sufficient compliance with all
requirements of noticefor purposes of this Contract.14
Therefore, in the event of respondents default in payment,
petitioner, underthe above provisions of the contract, has the
right to retain an amountequivalent to 25% of the total payments.
As stated by the CA, petitionerhaving been informed in writing by
respondent of its intention not toproceed with the contract prior
to incurring delay in payment of succeedinginstallments, the
provisions in the contract relative to penalties and interestfind
no application.
2. YES. The CA is correct that with respect to the award of
interest,petitioner is liable to pay interest of 12% per annum upon
the net refundableamount due from the time respondent made the
extrajudicial demand upon itto refund payment under the Contract to
Sell, pursuant to our ruling inEastern Shipping Lines, Inc. v.
Court of Appeals.
20) Ponce de Leon v. Sujuco (31 October 1951)
G.R. No. L-3316 October 31, 1951
FACTS: The appellee, Philippine National Bank, was the owner of
two (2)parcels of land in Negros Occidental. The Bank executed a
contract to sellthe said properties to the plaintiff, Jose Ponce de
Leon, the total price ofP26,300. Ponce de Leon obtained a loan from
Santiago Syjuco, Inc., in theamount of P200,000 in Japanese
Military Notes, payable within one yearfrom May 5, 1948. It was
also provided in said promissory note that thepromisor (Ponce de
Leon) could not pay, and the payee (Syjuco) could notdemand, the
payment of said note except within the aforementioned period.To
secure the payment of said obligation, Ponce de Leon mortgaged
infavor of Syjuco the parcels of land which he agreed to purchase
from theBank. Ponce de Leon paid the Bank of the balance of the
purchase priceamounting to P23,670 in Japanese Military notes and,
on the same date, theBank executed the deed of absolute sale for
the parcels of land. The deed ofsale executed by the Bank in favor
of Ponce de Leon and the deed ofmortgage executed by Ponce de Leon
in favor of Syjuco were registered inthe Office of the Register of
Deeds of Negros Occidental and, as aconsequence of such
registration, Transfer Certificate of Title Nos. 17175and 17176 in
the name of the Bank were cancelled and Transfer Certificate
of Title No. 398 (P.R.) and No. 399 (P.R.), respectively, were
issued in thename of Ponce de Leon. The mortgage in favor of Syjuco
was annotated onthe back of said certificates. Ponce de Leon
obtained another loan fromSyjuco for the amount of P16,000 in
Japanese note with the same tenor asthe first loan. Ponce de Leon
tendered to Syjuco not only the amount of hisdebt but also with
interests. Syjuco refused to accept the payment tenderedby Ponce de
Leon. In view of Syjucos refusal, Ponce de Leon deposited theamount
of his debt with the Clerk of Court and consigned with it filed
acomplaint.
ISSUE: Whether or not the consignation made by the plaintiff
valid in thelight of the law and the stipulations agreed upon in
the two promissory
notes signed by the plaintiff?
RULING: The Supreme Court ruled in the negative. In order
thatcogsignation may be effective, the debtor must first comply
with certainrequirements prescribed by law. The debtor must show
(1) that there was adebt due; (2) that the consignation of the
obligation had been made bacausethe creditor to whom tender of
payment was made refused to accept it, orbecause he was absent for
incapacitated, or because several persons claimedto be entitled to
receive the amount due (Art. 1176, Civil Code); (3) thatprevious
notice of the consignation have been given to the person
interested
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in the performance of the obligation (Art. 1177, Civil Code);
(4) that theamount due was placed at the disposal of the court (Art
1178, Civil Code);and (5) that after the consignation had been made
the person interested wasnotified thereof (Art. 1178, Civil Code).
In the instant case, while it isadmitted a debt existed, that the
consignation was made because of therefusal of the creditor to
accept it, and the filing of the complaint to compelits acceptance
on the part of the creditor can be considered sufficient noticeof
the consignation to the creditor, nevertheless, it appears that at
least twoof the above requirements have not been complied with.
Thus, it appearsthat plaintiff, before making the consignation with
the clerk of the court,failed to give previous notice thereof to
the person interested in theperformance of the obligation. It also
appears that the obligation was no t yetdue and demandable when the
money was consigned, because, as alreadystated, by the very express
provisions of the document evidencing the same,the obligation was
to be paid within one year after May 5, 1948, and theconsignation
was made before this period matured. The failure of these
tworequirements is enough ground to render the consignation
ineffective. Andit cannot be contended that plaintiff is justified
in accelerating the payment
of the obligation because he was willing to pay the interests
due up to thedate of its maturity, because, under the law, in a
monetary obligationcontracted with a period, the presumption is
that the same is deemedconstituted in favor of both the creditor
and the debtor unless from its tenoror from other circumstances it
appears that the period has been establishedfor the benefit of
either one of them (Art. 1127, Civil Code). Here no suchexception
or circumstance exists.
21) Pacific Banking Corp. v. CA, May 5, 1989 (Art.1197
judicial
period)
Facts.
On April 15, 1955, herein private respondents Joseph and Eleanor
Hartdiscovered an area consisting of 480 hectares of tidewater land
in TambacGulf of. They organized Insular Farms Inc., obtained a
lease from theDepartment of Agriculture for a period of 25 years,
renewable for another25 years.
Subsequently Joseph Hart approached businessman John Clarkin,
thenPresident of Pepsi-Cola Bottling Co. in Manila, for financial
assistance.
On July 15, 1956, Joseph Hart and Clarkin signed a Memorandum
ofAgreement dividing a total of 1000 shares, 510 were issued to
Clarkin and490 were issued to the Harts. Hart was appointed
President and GeneralManager as a result of which he resigned as
Acting Manager of the FirstNational City Bank at the Port Area,
giving up salary of P 1,125.00 a monthand related fringe
benefits.
Due to financial difficulties, Insular Farms Inc. borrowed P
250,000.00from Pacific Banking Corporation sometime in July of
1956.
On July 31, 1956 Insular Farms Inc. executed a Promissory Note
of P250,000.00 to the bank payable in five equal annual
installments, the firstinstallment payable on or before July 1957.
Said note provided that upondefault in the payment of any
installment when due, all other installmentsshall become due and
payable. Eventually the company floundered butnevertheless
petitioner pacific banking corporation did not demanded thesaid
obligation but rather opted for more collateral in addition to
theguaranty of Clarkin.
Hart and clarkin agreed that all shares of stocks be pledged to
petitionerbank in lieu of additional collateral and to insure an
extension of the periodto pay the July 1957 installment. Said
pledge was executed on February 19,1958. Less than a month later
they were given 48 hours to pay saidobligation by the petitioner.
On march 7 1958 all the shares of the insularfarm were putted into
auction to satisfy the obligation. On March 8, 1958,the private
respondents commenced the case below by filing a complaint
forreconveyance and damages with prayer for writ of preliminary
injunctionbefore the Court of First Instance of Manila docketed as
Civil Case No.35524. On the same date the Court granted the prayer
for a writ of pre-preliminary injunction.
However, on March 19, 1958, the trial court, acting on the
urgent petitionsfor dissolution of preliminary injunction filed by
petitioners PBC and Babston March 11 and March 14,1958,
respectively, lifted the writ of preliminary
injunction.
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The next day, or on March 20, 1958 respondents Hart received a
noticefrom PBC signed by Babst that the shares of stocks of Insular
Farms will besold at public auction on March 21,1958 at 8:00
A.M.
In the morning of March 21, 1958, PBC through its lawyer notary
publicsold the 1,000 shares of stocks of Insular Farms to Pacific
Farms for P
285,126.99. The latter then sold its shares of stocks to its own
stockholders,who constituted themselves as stockholders of Insular
Farms and thenresold back to Pacific Farms Inc. all of Insular
Farms assets except for a
certificate of public convenience to operate an iceplant.
On September 28, 1959 Joseph Hart filed another case for I
recovery of sumof money comprising his investments and earnings
against Insular Farms,Inc. before the Court of First Instance of
Manila, docketed as Civil Case No.41557. Lower court decision in
favor of the plaintiff and against defendantInsular Farms, Inc.,
sentencing the latter to pay the former the sum of P25,333.30,
representing unpaid salaries to plaintiff Joseph C. Hart;
thefurther sum of P 86,366.91 representing loans made by plaintiffs
to Insular
Farms, Inc. and attorney's fees equivalent to 10% of the amount
dueplaintiffs. This is a petition for review of the decision of the
Court ofAppeals in CA-G.R. Nos. 52573 and 52574 directing
petitioners to pay torespondent Hart ONE HUNDRED THOUSAND (P
100,000.00) PESOSwith legal interest from February 19, 1958 until
fully paid, plus FIFTEENTHOUSAND (P 15,000.00) PESOS attorneys
fees, but subject to the rightof reimbursement of petitioner
Pacific Banking Corporation (PBC) frompetitioner Babst, whatever
amounts PBC should pay on account o f thejudgment.
Issue: WON the sale by Pacific Ban