NAKPIL & SONS v.

CA

FACTS:

Private respondents – Philippine Bar Association (PBA) – a non-profit organization formed under the
corporation law decided to put up a building in Intramuros, Manila. Hired to plan the specifications of
the building were Juan Nakpil & Sons, while United Construction was hired to construct it. The proposal
was approved by the Board of Directors and signed by the President, Ramon Ozaeta. The building was
completed in 1966.

In 1968, there was an unusually strong earthquake which caused the building heavy damage, which led
the building to tilt forward, leading the tenants to vacate the premises. United Construction took
remedial measures to sustain the building.

ISSUE:

Whether or not an act of God (fortuitous event) exempts from liability parties who would otherwise be
due to negligence?

HELD:

No, although the damage was ultimately caused by the earthquake which was an act of God, the defects
in the construction, as well as the deviations in the specifications and plans aggravated the damage, and
lessened the preventive measures that the building would otherwise have had.
Republic vs Luzon Stevedoring Corporation

Facts: A barge being towed by tugboats "Bangus" and "Barbero" all owned by Luzon
Stevedoring Corp. rammed one of the wooden piles of the Nagtahan Bailey Bridge due
to the swollen current of the Pasig after heavy rains days before. The Republic sued
Luzon Stevedoring for actual and consequential damages. Luzon Stevedoring claimed
it had exercised due diligence in the selection and supervision of its employees; that the
damages to the bridge were caused by force majeure; that plaintiff has no capacity to
sue; and that the Nagtahan bailey bridge is an obstruction to navigation.

Issue: Whether or not the collision of appellant's barge with the supports or piers of the
Nagtahan bridge was in law caused by fortuitous event or force majeure.

Held: yes, There is a presumption of negligence on part of the employees of Luzon

Stevedoring. It is, therefore, not enough that the event should not have been foreseen
or anticipated, as is commonly believed, but it must be one impossible to foresee or to
avoid. The mere difficulty to foresee the happening is not impossibility to foresee the
same. Luzon Stevedoring knew the perils posed by the swollen stream and its swift
current, and voluntarily entered into a situation involving obvious danger.
PEDRO D. DIOQUINO VS. LAUREANO
G.R. No. L-25906 May 28, 1970
FACTS:
Attorney Pedro Dioquino is the owner of a car. He
went to the office of the MVO, Masbate, to register the
same where he met the defendant Federico Laureano, a
patrol officer of said MVO office. Dioquino requested
Laureano to introduce him to one of the clerks in the MVO
Office, who could facilitate the registration of his car and
the request was attended to. Laureano rode on the car of
Atty. Dioquino on his way to the P.C. Barracks at Masbate.
While about to reach their destination, the car driven by
plaintiff's driver and with Laureano as the sole passenger
was stoned by some 'mischievous boys,' and its windshield
was broken. Laureano chased the boys and he was able to
catch one of them. The plaintiff and Laureano with the boy
returned to the P.C. barracks and the father of the boy was
called, but no satisfactory arrangements were made about
the damage to the windshield.

ISSUE:
whether or not Federico Laureano liable for the payment of the
windshield of Atty Dioquino?

RULING:
No. The law being what it is, such a belief on the
part of defendant Federico Laureano was justified. The
express language of Art. 1174 of the present Civil Code
which is a restatement of Art. 1105 of the Old Civil Code,
except for the addition of the nature of an obligation
requiring the assumption of risk, compels such a
conclusion. It reads thus: "Except in cases expressly
specified by the law, or when it is otherwise declared by
stipulation, or when the nature of the obligation requires
the assumption of risk, no person shall be responsible for
those events which could not be, foreseen, or which,
though foreseen were inevitable.
Yobido v CA

FACTS:
On April 26, 1988, spouses Tito and Leny Tumboy and their minor children, Ardee and Jasmin,
boarded at Mangagoy, Surigao del Sur, a Yobido bus bound for Davao City. Along Picop road in
Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the bus suddenly exploded. The bus fell
into a ravine around three (3) feet from the road and struck a tree which resulted in the death of
Tito Tumboy and physical injuries to other passengers. Thereafter, a complaint for breach of
contract of carriage, damages and attorney's fees was filed by Leny and her children against
Alberta Yobido, the owner of the bus, and Cresencio Yobido, its driver in the Regional Trial
Court of Davao City.

ISSUE:
Whether the tire blow-out is a fortuitous event

RULING:
No. A fortuitous event is possessed of the following characteristics:
(a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply
with his obligations must be independent of human will;
(b) it must be impossible to foresee the event which constitutes the caso fortuito, or if it can be
foreseen, it must be impossible to avoid;
(c) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in
a normal manner; and
(d) the obligor must be free from any participation in the aggravation of the injury resulting to
the creditor.
Austria vs. Court of Appeals
FACTS:

On January 30, 1961, Maria G. Abad acknowledged that she received from Guillermo Austria one
(1) pendant with diamonds to be sold on a commission basis or to be returned on demand. However,
on February 1, 1961, while walking home to her residence, Abad was said to have been accosted by
two men, one of whom hit her on the face, while the other snatched her purse containing jewelry and
cash, and ran away.

Since Abad failed to return the jewelry or pay for its value notwithstanding demands, Austria brought
in the Court of First Instance of Manila an action against her and her husband for recovery of the
pendant or of its value, and damages. On their answer, the defendant spouses set up the defense
that the alleged robbery had extinguished their obligation.

ISSUE:

Whether in a contract of agency (consignment of goods for sale) it is necessary that there be prior
conviction for robbery before the loss of the article shall exempt the consignee from liability for such
loss.

RULING:

NO, the law provides that except in case expressly specified by law, or when it is otherwise declared
by stipulation, or when the nature of the obligation require the assumption of risk, no person shall be
responsible for those events which could not be foreseen, or which, though foreseen, were
inevitable.

It must be noted that to avail of the exemption granted in the law, it is not necessary that the persons
responsible for the occurrence should be punished; it would only be sufficient to establish that the
enforceable event, the robbery in this case did take place without any concurrent fault on the
debtor`s part, and this can be done by preponderant evidence.
NPC v. CA

Facts:

At the height of the typhoon “Kading”, a flash flood covered the towns near the Angat Dam, causing
deaths and destructions to residents and their properties. Respondents blamed the tragedy to the
reckless and imprudent opening of the 3 floodgates by petitioner, without prior warning to the residents
within the vicinity of the dam. Petitioners denied the allegations and contended that they have kept the
water at a safe level, that the opening of floodgates was done gradually, that it exercises diligence in the
selection of its employees, and that written warnings were sent to the residents. It further contended
that there was no direct causal relationship between the damage and the alleged negligence on their
part, that the residents assumed the risk by living near the dam, and that what happened was a
fortuitous event and are of the nature of damnum absque injuria.

Issues:

Whether the petitioner can be held liable even though the coming of the typhoon is a fortuitous event

Held:

yes, The obligor cannot escape liability, if upon the happening of a fortuitous event or an act of God, a
corresponding fraud, negligence, delay or violation or contravention in any manner of the tenor of the
obligation as provided in Article 1170 of the Civil Code which results in loss or damage. Even if there was
no contractual relation between themselves and private respondents, they are still liable under the law
on quasi-delict.
Philcomsat vs. Globe Telecom
FACTS:

On 07 May 1991, Philcomsat and Globe entered into an Agreement whereby Philcomsat obligated
itself to establish, operate and provide an IBS Standard B earth station (earth station) within Cubi
Point for the exclusive use of the USDCA. The term of the contract was for 60 months, or five (5)
years. In turn, Globe promised to pay Philcomsat monthly rentals for each leased circuit involved. At
the time of the execution of the Agreement, both parties knew that the Military Bases Agreement
between the Republic of the Philippines and the US (RP-US Military Bases Agreement) was to
expire. Under Section 25, Article XVIII of the 1987 Constitution, foreign military bases, troops or
facilities, which include those located at the US Naval Facility in Cubi Point, shall not be allowed in
the Philippines unless a new treaty is duly concurred in by the Senate and ratified by a majority of
the votes cast by the people in a national referendum when the Congress so requires, and such new
treaty is recognized as such by the US Government.

ISSUE:

Whether or not the non-ratification by the Senate of the Treaty of Friendship, Cooperation and
Security and its Supplementary Agreements constitutes force majeure (fortuitous event) which
exempts Globe from complying with its obligations under the Agreement.

RULING:

Yes. Globe asserts that Section 8 of the Agreement is not contrary to Article 1174 of the Civil Code
because said provision does not prohibit parties to a contract from providing for other instances
when they would be exempt from fulfilling their contractual obligations. Globe also claims that the
termination of the RP-US Military Bases Agreement constitutes force majeure and exempts it from
complying with its obligations under the Agreement.
Naga Telephone Co. v. CA

FACTS:

NATELCO entered into contract with CASURECO II for the use in operation of its telephone service,
electric light posts of CASURECO II and in return, there will be free use of 10 telephone connections
as long as NATELCO needs electric light posts. The period would last for as long as NATELCO
needs electric light posts. In other words, the contract will terminate when they are forced to stop,
abandon operation and remove light posts. After 10 years, CASURECO filed for reformation of
contract with damages, for petitioner’s failure to conform to the guidelines of National Electrification
Administration of reasonable compensation for use of posts. Compensation is worth P10, but the
consumption of telephone cables costs P2,630. NATELCO, who used 319, without the contract of
P10 each, refused to pay. Moreover, respondent alleged poor servicing. All in all, an amount of not
less than P100,000 is claimed as damages.

ISSUE:

Can there be reformation of contract?

RULING:

No. However, the allegations in private respondent’s complaint and the evidence it has presented
sufficiently made out a cause of action under Article 1267. The Court, therefore, released the parties
from their correlative obligations under the contract. However, the Court has to take into account the
possible consequences of such condition—disruption of electric services to the public and prejudice
to business of petitoners.
Luna vs abrigo

FACTS:

De Luna donated a portion of a 75 sq. m. lot to the Luzonian University Foundation. The
donation was embodied in a Deed of Donation Intervivos and was subject to certain
terms and conditions. In case of violation or non-compliance, the property would
automatically revert to the donor. When the Foundation failed to comply with the
conditions, de Luna “revived” the said donation by executing a Revival of Donation
Intervivos

ISSUE:

Whether the action prescribes in 4 years (based on art. 764 NCC-judicial decree of
revocation of the donation) or in 10 years (based on art. 1144 –enforcement of a written
contract)

RULING:

Yes, The donation subject of this case is one with an onerous cause.

Under the old Civil Code, it is a settled rule that donations with an onerous cause are
governed not by the law on donations but by the rules on contract. On the matter of
prescription of actions for the revocation of onerous donation, it was held that the
general rules on prescription apply. The same rules apply under the New Civil Code as
provided in Article 733.
UNIVERSITY OF THE PHILIPPINES VS. DE LOS
ANGELES
35 SCRA 102

FACTS:
On November 2, 1960, UP and ALUMCO entered
into a logging agreement whereby the latter was granted
exclusive authority to cut, collect and remove timber from
the Land Grant for a period starting from the date of
agreement to December 31, 1965, extendible for a period of
5 years by mutual agreement.

ISSUE:
Can petitioner UP treat its contract with ALUMCO
rescinded, and may disregard the same before any judicial
pronouncement to that effect?

RULING:
Yes. In the first place, UP and ALUMCO had
expressly stipulated that upon default by the debtor, UP
has the right and the power to consider the Logging
Agreement of December 2, 1960 as rescinded without the necessity of any judicial suit. As to such
special stipulation
and in connection with Article 1191 of the Civil Code, the
Supreme Court, stated in Froilan vs. Pan Oriental Shipping
Gaite v. Fonacier

Facts:

Gaite was appointed by Fonacier as attorney-in-fact to contract any party for the exploration and
development of mining claims. Gaite executed a deed of assignment in favor of a single proprietorship
owned by him. For some reasons, Fonacier revoked the agency, which was acceded to by Gaite, subject
to certain conditions, one of which being the transfer of ores extracted from the mineral claims for
P75,000, of which P10,000 has already been paid upon signing of the agreement and the balance to be
paid from the first letter of credit for the first local sale of the iron ores.

Issue:

Whether the sale is conditional or one with a period

Held:

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.
Gonzales vs. Heirs of Thomas
FACTS:

On December 1, 1983, Paula Ao Cruz together with the plaintiffs heirs of Thomas and Paula Cruz,
entered into a Contract of Lease/Purchase with the defendant, Felix L. Gonzales, a certain parcel of
land. The defendant Gonzales paid the annual rental on the half-portion of the property covered by
Transfer Certificate of Title No. 12111 in accordance with the second provision of the Contract of
Lease/Purchase and thereafter took possession of the property, installing thereon the defendant
Jesus Sambrano as his caretaker. The defendant Gonzales did not, however, exercise his option to
purchase the property immediately after the expiration of the one-year lease. 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 thereon.

ISSUE:

Whether or not the express stipulation of the contract which is to secure the Transfer Certificate of
Title a condition precedent before the petitioner could exercise his option to buy the property.

RULING:

Yes, it is a condition precedent. If a stipulation in a contract admits of several meanings, it shall be

understood as bearing that import most adequate to render it effectual. An obligation cannot be
enforced unless the plaintiff has fulfilled the condition upon which it is premised. Hence, an
obligation to purchase cannot be implemented unless and until the sellers have shown their title to
the specific portion of the property being sold.
We hold that the ninth provision was intended to ensure that respondents would have a valid title
over the specific portion they were selling to petitioner.
PARKS V. PROVINCE OF TARLAC

FACTS:

In 1910, Concepcion Cirer and James Hill donated parcels of land to the municipality of
Tarlac on the condition that it be used absolutely and exclusively for the erection of a
central school and public parks, the work to commence within six months. The president
of the municipality of Tarlac accepted and registered the donation.

In 1921, Cirer and Hill sold the same property to George L. Parks.

Later on the, the municipality of Tarlac transferred their rights in the property to the
Province of Tarlac.
Parks filed a complaint seeking the annulment of the donation and asking that he be
declared the absolute owner of the property. Parks allege that the conditions of the
donation were not complied with.

ISSUE:

Whether or not the donation was coupled with a condition precedent? W/N the action to
revoke has prescribed?

HELD:

No. The condition to erect a school within six months is not a condition precedent. The
characteristic of a condition precedent is that the acquisiito of the right is not effected
while said condition is mot complied with or is not deemed complied with. Meanwhile
nothing is acquired and there is only an expectancy of a 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. In the present
case the condition that a public school be erected and a public park be made of the
donated land could not be complied with except after giving effect to the donation.
CENTRAL PHILIPPINE UNIVERSITY VS. CA

FACTS:

In 1939, the late Don Ramon Lopez was a member of the board of trustees of Central
Philippine University when he executed a donation to the school, stating that the land
must be for exclusive use of a medical college. 50 years later, The heirs of Ramon
Lopez filed an action to annul the donation, stating the failure of the school to construct
the medical college over the land. RTC ruled in favor of respondents, which the CA
affirmed.

ISSUE: Whether there is a resolutory condition

RULING:

The donation was an onerous one, where failure of the school to construct a medical
college would give the heirs the power to revoke the donation, reverting the property
back to the heirs of the donor. It is therefore a resolutory condition. Although, the period
was not stated, and the courts should have fixed a period, in this case, 50 years has
lapsed since the donation was executed, thus fixing a period would serve no purpose
and the property must already be reverted back.
Romulo A. Coronel, et al vs. The Court of Appeals,
et al
FACTS:

Coronel et al. consummated the sale of his property located in Quezon City to respondent Alcaraz.
Since the title of the property was still in the name of the deceased father of the Coronels, they
agreed to transfer its title to their name upon payment of the down payment and thereafter an
absolute deed of sale will be executed.

Alcaraz’s mother paid the down payment in behalf of her daughter and as such, Coronel made the
transfer of title to their name. Notwithstanding this fact, Coronel sold the property to petitioner
Mabanag and rescinded its prior contract with Alcaraz.

ISSUE:

Whether or not the contract between the petitioner and the respondent was a contract to sell subject
to a suspensive condition.

RULING:

No. The agreement could not have been a contract to sell because the sellers herein made no
express reservation of ownership or title to the subject parcel of land. Unlike in a contract to sell,
petitioners in the case at bar did not merely promise to sell the property to private respondent upon
the fulfillment of the suspensive condition. On the contrary, having already agreed to sell the subject
property, they undertook to have the certificate of title change to their names and immediately
thereafter, to execute the written deed of absolute sale.
Lao Lim vs. CA
FACTS:

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 former in the City Court of Manila. The
case was terminated by a judicially compromise agreement. On 1985 Dy, informed Lim of his
intention to renew the lease up to 1988, Lim did not agree to the renewal. Another ejectment suit
was filed by Lim against Dy due to the failure to vacate the premises. The RTC dismissed the case
then later affirmed by the CA for the following reasons: (1) the stipulation in the compromise
agreement which allows the lessee (Benito Dy) to stay on the premises as long as he needs it and
can pay rents is valid, being a resolutory condition, and therefore beyond the ambit of art 1308 of the
NCC; and (2) the compromise agreement has the effect of res judicata.

ISSUE:

Whether or not the stipulation 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?

RULING:

No, the stipulation in the compromise agreement is not valid. The statement “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 the lessee.
Naga Telephone Co. v. CA

FACTS:

NATELCO entered into contract with CASURECO II for the use in operation of its telephone service,
electric light posts of CASURECO II and in return, there will be free use of 10 telephone connections
as long as NATELCO needs electric light posts. The period would last for as long as NATELCO
needs electric light posts. In other words, the contract will terminate when they are forced to stop,
abandon operation and remove light posts. After 10 years, CASURECO filed for reformation of
contract with damages, for petitioner’s failure to conform to the guidelines of National Electrification
Administration of reasonable compensation for use of posts. Compensation is worth P10, but the
consumption of telephone cables costs P2,630. NATELCO, who used 319, without the contract of
P10 each, refused to pay. Moreover, respondent alleged poor servicing. All in all, an amount of not
less than P100,000 is claimed as damages.

ISSUE:

Can there be reformation of contract?

RULING:

No. However, the allegations in private respondent’s complaint and the evidence it has presented
sufficiently made out a cause of action under Article 1267. The Court, therefore, released the parties
from their correlative obligations under the contract. However, the Court has to take into account the
possible consequences of such condition—disruption of electric services to the public and prejudice
to business of petitoners.
Osmeña vs Rama
FACTS:

Petitioner – defendant (Rama) obtained a series of loans from respondent – plaintiff (Osmena), with
which petitioner pledged her sugar harvest, present and future properties including her house.
Sometime after the execution and delivery of the loans, respondent died. Plaintiff was succeeded by
his heir who filed a case and presented evidence of an acknowledgment by defendant of the loan
stating that the same shall be paid “when her house is sold”. Petitioner answered by setting up the
defense of prescription. The lower court ruled in favor of the respondent. Hence the petition.

ISSUE:

Whether or not the loan obligation had prescribed.

RULING:

No. The loans did not prescribe.

Article 1182 of the Civil Code provides that: “When the fulfillment of the condition depends upon
the sole will of the debtor, the conditional obligation shall be void. If it depends upon chance or
upon the will of a third person, the obligation shall take effect in conformity with the provisions of this
Code.”
Hermosa v. Longara
FACTS:

Three kinds of claims received after the death of the intestate in December 1944. The claimant
presented evidence and the Court of Appeals found that the intestate has asked for the said credit
advances for himself and for the members of his family “on condition that their payment should be
made by Fernando Hermosa, Sr. as soon as he received funds derived from the sale of his property
in Spain.” The Court of Appeals held that payment of the advances did not become due until the
administratrix received the sum of P20,000 from the buyer of the property. Upon authorization of the
probate court in October 1997, the same was paid for subsequently.

ISSUE:

Whether the obligation contracted by the intestate was subject to a condition exclusively dependent
upon the will of the debtor and therefore null and void.

RULING:

As the obligation retroacts to the date when the contract was entered into, all amounts advanced
from the time of the agreement became due, upon the happening of the suspensive condition. As
the obligation to pay became due and demandable only when the house was sold and the proceeds
received in the islands, the action to recover the same only accrued, within the meaning of the
statute of limitations, on date the money became available here hence the action to recover the
advances has not yet prescribed.
Taylor v. Uy Tieng Piao
FACTS:

On December 12, 1918, the plaintiff contracted his services to Tan Liuan and Co., as superintendent
of an oil factory which the latter contemplated establishing in this city. The period of the contract
extended over two years from the date mentioned; and the salary was to be at the rate of P600 per
month during the first year and P700 per month during the second, with electric light and water for
domestic consumption, and a residence to live in, or in lieu thereof P60 per month.

At the time this agreement was made, the machinery for the factory had not been acquired, though
ten expellers had been ordered from the U.S. as agreed, for any reason the machinery failed to
arrived in the city of Manila for the period of six months from the date given, the contract may be
canceled by the party of the second part.

ISSUE:

Whether or not the plaintiff may demand perquisites under the rescinded contract.

RULING:

Yes, it has been concluded that the Court of First Instance committed no error in rejecting the
plaintiff claim in so far as damages are sought for the period subsequent to the expiration of the first
six months, but in the assessment of damages due for six months period, the trial judge evidently
overlooked the item of P60 specified in the plaintiff fourth assignment of error, which represent
commutation of house rental for the month of June 1919. This amount the plaintiff is clearly entitled
to recover, in addition to the P300 awarded in the lower court.
Rustan Pulp and Paper Mills v. IAC
FACTS:

Petitioner Rustan established a pulp and paper mill in Baloi, Lano del Norte. Respondent Lluch, who
is a holder of a forest products license, transmitted a letter to petitioner Rustan for the supply of raw
materials by the former to the latter. In their contract it stated that the supply is not exclusive, Rustan
shall have the option to buy supplies from other and that buyer shall have the right to stop delivery of
the materials by the seller if the supply will be efficient, however the seller is given sufficient notice.

During the test run of the pulp mill, the machinery line thereat had major defects while deliveries of
the raw materials piled up, which prompted the Japanese supplier of the machinery to recommend
the stoppage of the deliveries. The suppliers were informed to stop deliveries and the letter of similar
advice sent by petitioners to private respondents.

ISSUE:

Is the suspension of deliveries by Rustan (D) a proper exercise of its rights under the contract of
sale?

RULING:

No. There is cogent basis for private respondent’s apprehension on the illusory resumption of
deliveries inasmuch as the prerogative suggests a condition solely dependent upon the will of
petitioners. Petitioners can stop delivery of pulp wood from private respondents if the supply at the
plant is sufficient as ascertained by petitioners, subject to re-delivery when the need arises as
determined likewise by petitioners.
Papa v. Valencia

Facts:
The case arose from a sale of a parcel of land allegedly made to
private respondent Penarroyo by petitioner acting as attorney-in-fact
of Anne Butte. The purchaser, through Valencia, made a check
payment in the amount of P40,000 and in cash, P5,000. Both were
accepted by petitioner as evidenced by various receipts. It appeared
that the said property has already been mortgaged to the bank
previously together with other properties of Butte.

Issue: Whether or not the check is a valid tender of

payment/Whether or not there was a valid sale of the subject
property

RULING: Yes. While it is true that the delivery of check produces

payment only when encashed (pursuant to Art. 1249, Civil Code), the
rule is otherwise if the debtor is prejudiced by the delay in
presentment. (Here in this case, the petitioner now alleges that he did
not present the check, ten years after the same was paid to him as
part of the purchase price of the property.)
Philippine Airlines v. Court of Appeals

FACTS

Amelia Tan was found to have been wronged by Philippine Air Lines (PAL). She filed her complaint in
1967. After ten (10) years of protracted litigation in the Court of First Instance and the Court of Appeals,
Ms. Tan won her case. Almost twenty-two (22) years later, Ms. Tan has not seen a centavo of what the
courts have solemnly declared as rightfully hers. Through absolutely no fault of her own, Ms. Tan has
been deprived of what, technically, she should have been paid from the start, before 1967, without
need of her going to court to enforce her rights. And all because PAL did not issue the checks intended
for her, in her name.

ISSUE

Whether or not payment by check to the sheriff extinguished the judgment debt.

RULING

NO. The payment made by the petitioner to the absconding sheriff was not in cash or legal tender but in
checks. The checks were not payable to Amelia Tan or Able Printing Press but to the
absconding sheriff.In the absence of an agreement, either express or implied, payment means the
discharge of a debt or obligation in money and unless the parties so agree, a debtor has no rights,
except at his own peril, to substitute something in lieu of cash as medium of payment of his debt.
Reparations Commission v. Universal Deep Sea
Fishing
FACTS:

Universal Deep Sea Fishing acquired 6 trawl boats by the Reparations Commission to be delivered
two at a time and a Contract Purchase and Sale of Reparations Goods between the parties. The
Manila Surety & Fidelity Co. Inc. was the surety of UNIVERSAL to indemnify the Reparations in case
of damage or loss. Now after the Reparations have given all the boats they were now filing a suit
against UNIVERSAL and the Manila Surety to pay the amount of the boats. The surety company
now contends that the action is premature, but set up a cross-claim against UNIVERSAL for
reimbursement of whatever amount of money it may have to pay judgment, plaintiff by reason of
judgment, complaint, including interest, and for judgment, collection of accumulated and unpaid
premiums on judgment, bonds with interest thereon.

ISSUE:

Whether or not the paying of the down payment by UNIVERSAL to Reparations Commission
guaranteed indebtedness.

RULING:

No, Surety company, under Article 1254 of judgment, Civil Code, where there is no imputation of
payment made by either judgment, debtor or creditor, The debt which is the most onerous to the
debtor shall be deemed to have been satisfied, so that the amount of P10,000.00 paid by
UNIVERSAL as down payment on the purchase of the, M/S UNIFISH 1 and M/S UNIFISH 2 should
be applied to the guaranteed portion of the debt, this releasing part of the liability hence the
obligation of the surety company shall be only P43,643.00, instead of P53,643.00.
PACULDO VS. REGALADO

FACTS: On December 27, 1990, petitioner Nereo Paculdo and respondent Bonifacio Regalado
entered into a contract of lease over a parcel of land with a wet market building, located at Fairview
Park, Quezon City. The contract was for twenty five (25) years, commencing on January 1, 1991 and
ending on December 27, 2015. For the first five (5) years of the contract beginning December 27,
1990, Nereo would pay a monthly rental of P450,000, payable within the first five (5) days of each
month with a 2% penalty for every month of late payment.

ISSUE: Whether or not the petitioner was truly in arrears in the payment of rentals on the subject
property at the time of the filing of the complaint for ejectment.

RULING: NO, the petitioner was not in arrears in the payment of rentals on the subject property at
the time of the filing of the complaint for ejectment.

As found by the lower court there was a letter sent by respondent to herein petitioner, dated
November 19, 1991, which states that petitioner’s security deposit for the Quirino lot, be applied as
partial payment for his account under the subject lot as well as to the real estate taxes on the Quirino
lot. Petitioner interposed no objection, as evidenced by his signature signifying his conformity
thereto.
DBP V. CA

FACTS:

Spouses Piñedas are registered owners of a parcel of land in Capiz, which they mortgaged to DBP to
secure the loan (P20,000) they obtained from the latter. Piñedas eventually defaulted, prompting DBP to
extra-judicially foreclose and take possession of such property. The Ministry of Justice, then, opined
through its Opinion No. 92 (’78) that lands covered by P.D. No. 27, to which the subject property was
included, may not be the object of foreclosure proceedings. The Piñedas, then, sought to redeem such
property (with P10,000 as downpayment) but was denied as the land was allegedly tenanted. They then
sought the cancellation of the title and specific performance, stating that DBP acted in bad faith when it
took possession of the property andcaused the consolidation of its title in spite of the fact that the 5-
year redemption period expressly stated in the Sheriff’s Certificate of Sale had not yet lapsed and that
their offer to redeem was within the redemption period.

ISSUE:

Whether or not DBP acted in bad faith when it took possession of the property

RULING: NO.

DBP’s act of consolidating its title and taking possession of the property after the expiration of the
redemption period was in accordance with Sec. 6 of Act No. 3135, which states that if no redemption of
a foreclosed property is made within one year, the purchaser (DBP) is entitled as a matter of right to
consolidate and to possess the property. In addition to this, it was in consonance with Sec. 4 of the
mortgage contract between DBP and the Piñedas where they agreed the appointment of DBP as
receiver to take charge and to hold possession of the mortgaged property in case of foreclosure. In fact,
without DBP’s act of consolidating its title, the Piñedas would not be able to assert their right to
repurchase the property within 5 years, which would begin to run after the expiration of the one-year
period. Thus, its acts cannot be tainted with bad faith nor did it impair Piñedas’ right to repurchase.
Filinvest Credit Corporation v. Philippine Acetylene Co.

Facts: Philippine Acetylene Co., Inc., purchased from one Alexander Lim, as evidenced by a Deed of Sale
marked as Exhibit G, a motor vehicle described as Chevorlet, 1969 model with Serial No. 136699Z303652
for P55,247.80 with a down payment of P20,000.00 and the balance of P35,247.80 payable, under the
terms and conditions of the promissory note thirty-four (34) monthly installments. As security for the
payment of said promissory note, the appellant executed a chattel mortgage over the same motor
vehicle in favor of Alexander Lim. Subsequently, on November 2, 1971. Alexander Lim assigned to the
Filinvest Finance Corporation all his rights, title, and interests in the promissory note and chattel
mortgage by virtue of a Deed of Assignment.

Issue: Whether or not the return of the vehicle bars the foreclosure of the chattel mortgage

Held: No. Filinvest did not consented, or at least intended, that the mere delivery to, and acceptance by
him, of the mortgaged motor vehicle be construed as actual payment, more specifically dation in
payment or dacion en pago. The fact that the mortgaged motor vehicle was delivered to Filinvest does
not necessarily mean that ownership thereof, as juridically contemplated by dacion en pago, was
transferred from appellant to appellee.
De Guzman v. CA

Facts:

Respondent Ernesto Cendana was a junk dealer. He buys scrap materials and brings those that he
gathered to Manila for resale using 2 six-wheeler trucks. On the return trip to Pangasinan, respondent
would load his vehicle with cargo which various merchants wanted delivered, charging fee lower than
the commercial rates. Sometime in November 1970, petitioner Pedro de Guzman contracted with
respondent for the delivery of 750 cartons of Liberty Milk. On December 1, 1970, respondent loaded the
cargo. Only 150 boxes were delivered to petitioner because the truck carrying the boxes was hijacked
along the way. Petitioner commenced an action claiming the value of the lost merchandise. Petitioner
argues that respondent, being a common carrier, is bound to exercise extraordinary diligence, which it
failed to do.

Issues:

Whether or not private respondent is a common carrier

Held:

No, Article 1732 makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity. Article 1732 also
carefully avoids making any distinction between a person or enterprise offering transportation service
on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled
basis.
McLaughlin v. Court of Appeals
FACTS:

Petitioner and private respondent, Flores, entered into a contract of conditional sale of real property.
When the private responded failed to pay the balance on the date stipulated, he filed a petition to
rescind the contract. They entered into a Compromise Agreement. Thereafter, the petitioner made a
demand. In response, the Flores sent a letter to the former signifying his willingness and intention to
pay the balance. Flores alleged that he tendered payment to petitioner but the petitioner refused to
accept it. Petitioner filed a motion for writ of execution, to rescind and liquidate damages, alleging
that Flores had failed to pay the installment due, as stipulated in their compromise agreement.
Flores filed a motion for reconsideration and tendered a certified manager’s check covering the
entire obligation, within seventeen days after it was due. The trial court dismissed the motion for
reconsideration.

ISSUE:

WON the tender of payment restored the defendant’s right as vendee.

RULING:

Yes. The tender made by private respondent of a certified bank manager’s check payable to
petitioner was a valid tender of payment. The certified check covered not only the balance of the
purchase price in the amount of P69,059.71, but also the arrears in the rental payments from June to
December 1980 in the amount of P7,000.00, or a total of P76,059.71. But he is not released from the
responsibility to pay the vendor.
Soco vs militante

FACTS
Soco and Francisco entered into a contract of lease on January 17, 1973,
whereby Soco leased her commercial building and lot situated at Manalili
Street, Cebu City, to Francisco for a monthly rental of P 800.00 for a period of
10 years renewable for another 10 years at the option of the lessee.

This situation prompted Francisco to write Soco the letter dated February 7,
1975 which the latter received. After writing this letter, Francisco sent his
payment for rentals by checks issued by the Commercial Bank and Trust
Company.

ISSUE

WON there was a valid consignation of payment of the rentals.

HELD
No, In order that consignation may be effective, the debtor must first comply
with certain requirements prescribed by law. We hold that the respondent
lessee has utterly failed to prove the following requisites of a valid
consignation:

First, tender of payment of the monthly rentals to the lessor.

Second, respondent lessee also failed to prove the first notice to the lessor
prior to consignation.
Sotto v. Mijares
G.R. No. L-23563, 8 May 1969

FACTS:

Sotto filed a Motion for Deposit in the Court of First Instance of Negros Occidental dated March 20,
1963, in its Civil Case No. 6796 which requires them to deposit with the Clerk of Court the amount of
P5,106.00 within ten (10) days from receipt of said order.

“Defendants, in their “Opposition” dated November 23, 1962, signified their willingness to deposit the
requested amount provided that the complaint is dismissed and that they be absolved of all other
liabilities, expenses, and costs.

ISSUE:

Did the court act with authority and in the judicious exercise of its discretion in ordering the
defendants to make the deposit but without the condition they had stated?

RULING:

No, Whether or not to deposit at all the amount of an admitted indebtedness, or to do so under
certain conditions, is a right which belongs to the debtor exclusively. If he refuses he may not be
compelled to do so, and the creditor must fall back on the proper coercive processes provided by
law to secure or satisfy his credit, as by attachment, judgment, and execution. From the viewpoint of
the debtor, a deposit such as the one involved here is in the nature of consignation, and
consignation is a facultative remedy which he may or may not avail himself of.
Meat Packing Corp vs. Sandiganbayan
G.R. No. 103068, June 22, 2001

FACTS:

Meat Packing Corporation of the Philippines (MPCP) is a corporation wholly owned by GSIS. It is
the owner of 3 parcels of land in Pasig as well as the meat processing and packing plant thereon.
MPCP and Philippine Integrated Meat Corporation (PIMECO) entered into an Agreement: MPCP
leased to PIMECO, under a lease-purchase arrangement, its aforesaid property at an annual rental
rate of P1,375,563.92. It is payable over 28 years commencing on the date of execution of the
Agreement, or for a total consideration of P38,515,789.87. The Agreement’s rescission clause: If the
lessee-vendee (PIMECO) should fail or default in the payment of rentals equivalent to the cumulative
sum total of 3 annual installments, the Agreement shall be deemed automatically canceled and
forfeited without the need of judicial intervention.

ISSUE:

Whether or not the lease-purchase agreement has been rescinded.

RULING:

No. Consignation is the act of depositing the thing due with the court or judicial authorities whenever
the creditor cannot accept or refuses to accept payment, and it generally requires a prior tender of
payment. Tender is the antecedent of consignation. Tender of payment may be extrajudicial, while
consignation is necessarily judicial, and the priority of the first is the attempt to make a private
settlement before proceeding to the solemnities of consignation. Tender and consignation, where
validly made, produces the effect of payment and extinguishes the obligation.
BPI V. CA

216 SCRA 51

FACTS:

Someone who identified herself to be Fernando called up BPI, requesting for the pre-
termination of her money market placement with the bank. The person who took the call didn't
bother to verify with Fernando’s office if
whether or not she really intended to preterminate her money market
placement. Instead, he relied on the verification stated by the caller. He
proceeded with the processing of the termination. Thereafter, the caller
gave delivery instructions that instead of delivering the checks to her office, it would be picked up
by her niece and it indeed happen as such. It
was found out later on that the person impersonated Fernando and her
alleged niece in getting the checks. The dispatcher also didn't bother to get the promissory note
evincing the placement when he gave the checks
to the impersonated niece. This was aggravated by the fact that this impersonator opened an
account with the bank and deposited the subject checks. It then withdrew the amounts.

HELD:

The general rule shall apply in this case. Since the payee’s indorsement
has been forged, the instrument is wholly inoperative. However, underlying circumstances of
the case show that the general rule on forgery isn’t applicable. The issue as to who between the parties
should bear the
loss in the payment of the forged checks necessitates the determination of
the rights and liabilities of the parties involved in the controversy in relation to the forged
checks.
Angeles v. Calasanz
FACTS:

Ursula and Tomas Calasanz sold a piece of land to Buenaventura Angeles and Teofila Juani
covered by a contract to sell. Angeles paid a down payment upon the execution of the contract and
started paying the balance in monthly installments for nine years with only a few remaining
installments left to pay. Although Calasanz accepted late payments before, Angeles was now five
months late. Calasanz demanded payment of past due accounts, but did not receive any.
Eventually, Calansanz canceled the said contract and Angeles asked for reconsideration, but was
denied.

ISSUE:

Was the contract to sell validly canceled?

RULING:

No. The act of a party in treating a contract as canceled or resolved on account of infractions by the
other must be made known to the other and is always provisional, being ever subject to scrutiny and
review by the proper court. If the other party denies that rescission is justified, it is free to bring the
matter to court. Then, should the court decide that the resolution of the contract was not warranted,
the responsible party will be sentenced to damages; in the contrary case, the resolution will be
affirmed and indemnity awarded to the party prejudiced.
Gsis vs ca
FACTS:
In 1961, private respondents spouses Nemencio Medina and Josefina Medina
applied with GSIS for a loan of P600,000.00. The GSIS first approved only the
amount of P350,000.00 then reduced the amount to P295,000.00. The
Medinas accepted the amount, executed a promissory note and a real estate
mortgage in favor of GSIS. Then the amount of P350,000.00 was restored.
The Medinas then executed an Amendment of Real Estate Mortgage. In 1963,
an additional loan of P230,000.00 was approved on the security of the same
mortgaged properties and additional properties.
ISSUES:

Whether or not the Court of Appeals erred in holding that the amendment of Real
Estate Mortgage superseded the Mortgage contract, particularly with respect to
compounding of interest.
HELD:

No, A careful perusal of the title, preamble, and body of the Amendment Real
Estate Mortgage taking into account the prior, contemporaneous, and subsequent
acts of the parties, ineluctably shows that said Amendment was never intended to
completely supersede the original mortgage contract. The title recognizes the
existence and effectivity of the previous mortgage contract. Nowhere in the
Amendment did the party manifest their intention to supersede the original
contract and it does not embody the act of conveyancing the subject properties by
way of mortgage.
PNB vs Pineda

Facts: In 1963, Ignacio Arroyo, married to Lourdes Tuason Arroyo (the Arroyo Spouses),
obtained a loan of P580,000.00 from petitioner bank to purchase 60% of the subscribed
capital stock, and thereby acquire the controlling interest of private respondent Tayabas
Cement Company, Inc. (TCC). 2 As security for said loan, the spouses Arroyo executed a
real estate mortgage over a parcel of land covered by Transfer Certificate of Title No. 55323
of the Register of Deeds of Quezon City known as the La Vista property. Thereafter, TCC
filed with petitioner bank an application and agreement for the establishment of an eight (8)
year deferred letter of credit (L/C) for $7,000,000.00 in favor of Toyo Menka Kaisha, Ltd. of
Tokyo, Japan, to cover the importation of a cement plant machinery and equipment.
The imported cement plant machinery and equipment arrived from Japan and were
released to TCC under a trust receipt agreement. Subsequently, Toyo Menka Kaisha, Ltd.
made the corresponding drawings against the L/C as scheduled. TCC, however, failed to
remit and/or pay the corresponding amount covered by the drawings.

Issue: Whether or not the subsequent agreement extinguished the criminal and civil liability
of Pineda

Held: No, PNB’s possession of the subject machinery and equipment being precisely as a
form of security for the advances given to private respondent under the Letter of Credit, said
possession by itself cannot be considered payment of the loan secured thereby.
KALALO vs. LUZ - G.R. No. L-27782

Facts: On 17 November 1959, Octavio Kalalo entered into an agreement with Alfredo Luz where he was
to render engineering design services for a fee. On 11 December 1961, Kalalo sent Luz a statement of
account where the balance due for services rendered was P59,505. On 18 May 1962, Luz sent Kalalo a
resume of fees due to the latter, and a check for P10,861.08. Kalalo refused to accept the check as full
payment of the balance of the fees due him..

Issue: Whether or not the rate of exchange of dollar to peso are those at the time of the payment of the
judgment or at the time when the research institute project became due and demandable.

Held: No, Luz’ obligation to pay Kalalo the sum of US$28,000 accrued on 25 August 1961, or after the
enactment of RA 529 (16 June 1950). Thus, the provision of the statute which requires payment at the
prevailing rate of exchange when the obligation was incurred cannot be applied. RA 529 does not
provide for the rate of exchange for the payment of obligation incurred after the enactment of the Act,
and thus the rate of exchange should be that prevailing at the time of payment. The view finds support
in the ruling of the Court in Engel vs. Velasco & Co. The trial court did not err in holding the rate of
exchange is that at the time of payment.
Ramos v. CA

Facts: Erlinda Ramos, a 47-year old robust woman, was normal except for her experiencing occasional
pain due to the presence of stone in her gall bladder. She was advised to undergo an operation for its
removal. The results in the examinations she underwent indicate that she was fit for the operation. She
and her husband Rogelio met Dr. Hosaka, one of the defendants, who advised that she should undergo
cholecystectomy. Dr. Hosaka assured them that he will get a good anaesthesiologist. At 7:30 a.m. on the
day of the operation at Delos Santos Medical Center, Herminda Cruz, Erlinda’s sister-in-law and the dean
of the College of Nursing in Capitol Medical Center, was there to provide moral support.

Issue:

Whether a surgeon, an anaesthesiologist, and a hospital, should be made liable for the unfortunate
comatose condition of a patient scheduled for cholecystectomy

Held:

Yes, Res ipsa loquitur is a Latin phrase which literally means "the thing or the transaction speaks for
itself." The phrase "res ipsa loquitur'' is a maxim for the rule that the fact of the occurrence of an injury,
taken with the surrounding circumstances, may permit an inference or raise a presumption of
negligence, or make out a plaintiff's prima facie case, and present a question of fact for defendant to
meet with an explanation. Where the thing which caused the injury complained of is shown to be under
the management of the defendant or his servants and the accident is such as in ordinary course of
things does not happen if those who have its management or control use proper care, it affords
reasonable evidence, in the absence of explanation by the defendant, that the accident arose from or
was caused by the defendant's want of care.
Naga Telephone Co. v. CA

FACTS:

NATELCO entered into contract with CASURECO II for the use in operation of its telephone service,
electric light posts of CASURECO II and in return, there will be free use of 10 telephone connections
as long as NATELCO needs electric light posts. The period would last for as long as NATELCO
needs electric light posts. In other words, the contract will terminate when they are forced to stop,
abandon operation and remove light posts. After 10 years, CASURECO filed for reformation of
contract with damages, for petitioner’s failure to conform to the guidelines of National Electrification
Administration of reasonable compensation for use of posts.

ISSUE:

Can there be reformation of contract?

RULING:

No. However, the allegations in private respondent’s complaint and the evidence it has presented
sufficiently made out a cause of action under Article 1267. The Court, therefore, released the parties
from their correlative obligations under the contract. However, the Court has to take into account the
possible consequences of such condition—disruption of electric services to the public and prejudice
to business of petitoners.
Occeña v. CA
FACTS:

Respondent Tropical Homes entered into a subdivision contract to develop petitioner’s land. They
agreed that respondent would receive 40% from the sale of the subdivision lots. Thereafter,
development costs rose to unanticipated levels which prompted respondent to file an action for the
modification of the contract, particularly on the sharing of sale proceeds. Petitioners moved to
dismiss complaint for lack of cause of action. The lower court denied said motion. CA upheld lower
court citing Article 1267 on impossible obligations. Petitioner insists that the increase in said costs do
not justify a modification of the contract. Hence petition.

ISSUE:

WON respondent may demand modification of the contract on the ground that the prestation has
manifestly come beyond the contemplation of the parties.

RULING:

No. private respondent cannot demand modification of the contract.

SC ruled that Article 1267 of the Civil Code which states that: “When the service has become so
difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released
therefrom, in whole or in part” is only applicable if the remedy sought is the release from the
compliance of the obligation not a modification of the same.