CA
Requisites: Conditional Obligations
FACTS:
HELD:
Applying in this case, the full payment by the Appellee retroacts to the time
the contract of conditional sale was executed on April 6, 1984. Hence it does
not come under the coverage of RA 6657.
The Deed of Condition sale was executed on 6 April 1984. They paid in full
on 6 April 1990.
CARL was not intended to impair the contract that was concluded.
Moreover, Section 6 of CARL deals with “execution by the original land
owner” who is not the petitioner but the private respondents.
TOMIMBANG v. TOMIMBANG
Suspensive Condition: Meaning
FACTS:
Maria and Atty. Jose are siblings. Their parents donated to Maria an 8-door
apartment with the CONDITION that during the parent’s lifetime, they shall
retain control over the property and Maria shall be the administrator
thereof.
Maria tried and failed to apply for a loan from PAG-IBIG for renovations.
P accepted.
R quarreled with another sister and they had a hearing at their barangay. R
reminded the payment however, P allegedly answered “wala tayong
pinirmahan”
HELD:
(1) The loan obligation arising from the loan is due and demandable.
Their younger brother testified that they made a new agreement and Maria
agreed to pay.
Hence, the parties mutually dispensed with the condition that P shall only
begin paying after the completion of all renovations.
An extinctive novation would thus have the twin effects of, first,
extinguishing an existing obligation and, second, creating a new one in its
stead. This kind of novation presupposes a confluence of four essential
requisites: (1) a previous valid obligation; (2) an agreement of all parties
concerned to a new contract; (3) the extinguishment of the old obligation;
and (4) the birth of a new valid obligation. Novation is merely
modificatory where the change brought about by any subsequent
agreement is merely incidental to the main obligation (e.g., a change in
interest rates or an extension of time to pay); in this instance, the new
agreement will not have the effect of extinguishing the first but would
merely supplement it or supplant some but not all of its provisions.
There is partial novation when there is only a modification or change in
some principal conditions of the obligation. It is total, when the obligation
is completely extinguished. Also, the term principal conditions in Article
1291 should be construed to include a change in the period to comply with
the obligation. Such a change in the period would only be a partial
novation since the period merely affects the performance, not the creation
of the obligation
The payment by Maria is proof that the original agreement had been
novated.
(2) Since the obligation in this case involves a loan and there is no
stipulation in writing as to interest due, the rate of interest shall be 12% per
annum computed from the date of extrajudicial demand.
FACTS:
Eulalio entered into a contract to sell with Naguiat on the lot (200m) fo
20,000. Advance payment of 2,000. 18,000 to pay in 10 years to start
immediately. Default, 12% per annum.
In the wake of Eulalio, R contended that he also offered to pay the balance
but P refused hence there is no breach. R also said that he is the present
owner in fee simple of the subject lot by virtue of Free Patent Title by the
Bureau of Lands and his title has already become indefeasible and
incontrovertible.
HELD:
P contends that the interest did not extend the period to pay.
The Court disagrees. The contract was a Contract of Sale. There was no
stipulation that the title will be transferred until the full payment; nor there
was a stipulation giving the vendor the right to unilaterally resolve the
contract the moment the buyer fails to pay within a fixed period.
The failure to pay in full the purchase price stipulated in a deed of sale does
not ipso facto grant the seller the right to rescind the agreement. Unless
otherwise stipulated by the parties, rescission is allowed only when the
breach of the contract is substantial and fundamental to the fulfillment of
the obligation.
The failure to pay within 10 years did not amount to a substantial breach. It
was stipulated in the Kasulatan that payment could be made even after ten
years from the execution of the Contract.
Moreover, there was no demand for the balance. P even refused payment.
FACTS:
HELD:
There is nothing in the record to show that the College accepted the term of
payment. As the application was inconsistent with the terms issued by
Quezon College, it was necessary for the College to express its agreement
because it’s unfair to immediately obligate the College in Damasa’s terms.
Hence, the offer had not ripened into an enforceable contract.
The proposal was solely based on his own will, facultative in nature,
rendering the obligation void.
VISCAYAN SAWMILL v. CA
Positive Suspensive Condition
FACTS:
RJH and Viscayan entered into a sale (May 1, 1983) involving scrap iron
subject to the condition that RJH will open a Letter of Credit for 250,000.
RJH started to gather scrap iron at Viscayan’s premises (May 17). Viscayan
directed Plaintiff-appellee’s men to stop in view of an alleged case against
RJH by Alberto Pursuelo (May 30).
Viscayan denied the matter and alleged that they sent a telegram (May 23)
to RJH cancelling the contract of sale because of failure to comply with the
conditions.
RJH informed that they opened the LOC at BPI on May 12 but the
transmittal was delayed.
May 26, BPI advised Viscayan that they received the opening of the LOC.
July 19, RJH sent a series of telegrams stating that the case against him had
been dismissed and demanding that Viscayan comply with the deed of sale,
otherwise a case will be filed.
HELD:
In the case at bar, control and possession over the subject matter of the
contract was given to Plaintiff-appellee, the buyer, when the Viscayan as the
seller, allowed the buyer and his men to enter the corporation's premises
and to dig-up the scrap iron. The pieces of scrap iron then placed at the
disposal of the buyer. Delivery was therefore complete. The identification
and designation by the seller does not complete delivery.
Viscayan also argued that under Articles 1593 and 1597 of the Civil Code,
automatic rescission may take place by a mere notice to the buyer if the
latter committed a breach of the contract of sale.
Moreover, in the case at bar, the trial court ruled that rescission is improper
because the breach was very slight and the delay in opening the letter of
credit was only 11 days.
And since, it is a contract to sell, the failure to open LOC cannot even be
considered a breach.
In the first place, said Article 1497 falls under the Chapter 15 Obligations of
the Vendor, which is found in Title VI (Sales), Book IV of the Civil Code. As
such, therefore, the obligation imposed therein is premised on an existing
obligation to deliver the subject of the contract. In the instant case, in view
of the private respondent's failure to comply with the positive suspensive
condition earlier discussed, such an obligation had not yet arisen. In the
second place, it was a mere accommodation to expedite the weighing and
hauling of the iron in the event that the sale would materialize. The private
respondent was not thereby placed in possession of and control over the
scrap iron. Thirdly, We cannot even assume the conversion of the initial
contract or promise to sell into a contract of sale by the petitioner
corporation's alleged implied delivery of the scrap iron because its action
and conduct in the premises do not support this conclusion. Indeed,
petitioners demanded the fulfillment of the suspensive condition and
eventually cancelled the contract.
DE LEON v. ONG
Effects of non-fulfillment of Suspensive condition
FACTS:
The parties then executed a notarized deed of absolute sale with assumption
of mortgage. As indicated in the deed of mortgage, the parties stipulated
that De Leon shall execute a deed of assumption of mortgage in favor of Ong
after full payment of the 415,000. They also agreed that Ong shall assume
the mortgage for the outstanding loan of 684,500.
Petitioner insists that he entered into a contract to sell since the validity of
the transaction was subject to a suspensive condition, that is, the approval
by RSLAI of respondent’s assumption of mortgage. Because RSLAI did not
allow respondent to assume his (petitioner’s) obligation, the condition never
materialized. Consequently, there was no sale.
Respondent, on the other hand, asserts that they entered into a contract of
sale as petitioner already conveyed full ownership of the subject properties
upon the execution of the deed.
ISSUE:
RULING:
The deed was a contract of sale the parties entered into and not subject to a
suspensive condition.
Furthermore, even assuming arguendo that the agreement of the parties was
subject to the condition that RSLAI had to approve the assumption of
mortgage, the said condition was considered fulfilled as petitioner prevented
its fulfillment by paying his outstanding obligation and taking back the
certificates of title without even notifying respondent. In this connection,
Article 1186 of the Civil Code provides:
Article 1186. The condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment.
CIR v. PRIMETOWN
Obligation with a period
FACTS:
Mar 11, 1999. Gilbert Yap, vice chair of primetown applied for the refund or
credit of income tax respondent paid in 1997.
In Yap’s letter to petitioner Parcero of BIR, he stated that the increase in the
cost of labor and materials and diff in obtaining financing for projects cause
the Real Estate Industry to slowdown. Hence, Primetown suffered
71,879,228 that year.
And it was not liable for income tax. Still, Primetown paid its quarterly
corporate income tax and remitted creditable withholding tax from RE sales
to the BIR for 26,318,398.32. So Primetown was entitled to tax refund or tax
credit.
Dec 15, 2000. CTA dismissed as it was filed beyond the 2 year prescriptive
period for filing a judicial claim for tax refund or tax credit.
The CTA found that respondent filed its final adjusted return on April 14,
1998.
Art. 13. When the law speaks of years, months, days or nights, it shall be
understood that years are of three hundred sixty-five days each; months, of
thirty days; days, of twenty-four hours, and nights from sunset to sunrise.
2000 was a leap year. Primetown’s petition was filed 731 days.
HELD:
Article 13 of the Civil Code provides that when the law speaks of a year, it is
understood to be equivalent to 365 days.
Thus, the provision above only impliedly repealed all laws inconsistent with
the Administrative Code of 1987.
Being the more recent law, it governs the computation of legal periods. Lex
posteriori derogat priori.
We therefore hold that respondent's petition (filed on April 14, 2000) was
filed on the last day of the 24th calendar month from the day respondent
filed its final adjusted return. Hence, it was filed within the reglementary
period.
NAMARCO v. TECSON
As compared to CIR v. Primetown
FACTS:
On 1955 CFi rendered judgment (Price Stabilization Corp v. Tecson and Alto
Surety):
a. Tecson and Alto pay jointly and severally PRATRA 7,00 + 7% interest
from May 25, 1960 until fully paid + 500 atty’s fees
b. Tecson to indemnify his co-defendant Alto in case Alto pay the amount at
12% per annum
On Dec 21, 1965, NAMOCOR (as successor of Price Stab Corp), filed against
Tecson in the said case.
Plaintiffs admit the decision became final on December 21, 1955. This case
was filed on December 21, 1965 — but more than ten years have passed a
year is a period of 365 days (Art. 13, CCP). Plaintiff forgot that 1960, 1964
were both leap years, hence this present case was filed it was filed two days
too late.
NAMOCOR stated that since what is being computed is the number of years,
a calendar year should be used as the basis of computation.
HELD:
FACTS:
Ever since September 22, 1943 plaintiff, Berg and defendants under
Magdalena Estate, Inc. were co-owners of the Property, Crystal Arcade. One
third of it belonged to the plaintiff-petitioner and two thirds, to the
defendant-respondent. These parties executed a deed of sale that should
either of them sell his share, the other party will have an irrevocable option
to purchase it at the seller’s at the seller’s price. The two, eventually had a
disagreement on what really happened with regard to the deal.
On January. 1946, the petitioner offered his share for Php 200,000 and was
accepted by the defendant, including the stipulation that Berg was giving the
defendant a period of time which, including the extensions granted, would
expire on May 31, 1947.
The defendant claimed that, in spite of the acceptance of the offer, plaintiff
refused to accept the payment of the price and that because of this, they
suffered damages in the amount of Php 100,000 and asked for specific
performance. The plaintiff argued that this transaction, referred to by the
defendant, is not supported by any note or memorandum subscribed by the
parties and that this transaction falls under the statue of frauds and cannot
be the basis of the defendant’s special defense.
The lower court found that there was no agreement reached between the
parties regarding the purchase and sale of the property in question, it
granted the case in favor of the petitioner.
ISSUE:
APPLICABLE LAW:
Article 1193. Obligations for whose fulfillment a day certain has been fixed,
shall be demandable only when that day comes.
Obligations with a resolutory period take effect at once, but terminate upon
arrival of the day certain.
If the uncertainty consists in whether the day will come or not, the
obligation is conditional, and it shall be regulated by the rules of the
preceding Section. (1125a)
HELD:
The loan did not materialize. And if we consider that the period given was
until such time as defendant could raise money from other sources, we also
find it to be indefinite and contingent and so it is also a condition and not a
term within the meaning of the law.
Both parties did not put the terms in their agreement clearly in writing. The
lower courts’ judgment is affirmed.
FACTS:
The parties also stipulated that in the event of force majuere, the contract
shall be deemed suspended during this period. The petitioner failed to
deliver the sugar cane during the four years of the Japanese occupation and
the two years after liberation when the mill was being rebuilt or a total of six
years.
ISSUE:
Can the petitioners be compelled to deliver sugarcane for six more years
after the expiration of the 30-yearperiod to make up for what they failed to
deliver to the respondent?
RULING:
No. Fortuitous event relieves the obligor from fulfilling the contractual
obligation under Article 1174 of the Civil Code. The stipulation in the
contract that in the event of force majeure the contract shall be deemed
suspended during the said period does not mean that the happening of any
of those events stops the running of the period agreed upon.
It only relieves the parties from the fulfillment of their respective obligations
during that time the petitioner from delivering the sugar cane and the
respondent central from milling. In order that the respondent central may
be entitled to demand from the petitioner the fulfillment of their part in the
contracts, the latter must have been able to perform it but failed or refused
to do so and not when they were prevented by force majeure such as war. To
require the petitioners to deliver the sugar cane which they failed to deliver
during the six years is to demand from them the fulfillment of an obligation,
which was impossible of performance during the time it became due. Nemo
tenetur ed impossibilia.
The respondent central not being entitled to demand from the petitioners
the performance of the latter’s part of the contracts under those
circumstances cannot later on demand its fulfillment. The performance of
what the law has written off cannot be demanded and required. The prayer
that the petitioners be compelled to deliver sugar cannot for six years more
to make up for what they failed to deliver, the fulfillment of which was
impossible, of granted, would in effect be an extension of the terms of the
contracts entered into by and between the parties.
JESPAJO REALTY v. CA
Potestative Period
FACTS:
Feb 1, 1985. It entered into separate contracts of lease with Tan Te Gutierrez
and Co Tong.
Tan Te occupied a room for 847 a month while Co Ten occupied the
Penthouse for 910 a month.
Period of Lease: Effective on Feb 1 and shall continue for an indefinite
period provided the lessee is up-to-date in the payment of his monthly
rentals. The LESSEE may terminate this contract any time by giving 60 days
prior written notice of termination to the LESSOR. Viol will be a ground for
termination of contract.
They paid until Jan 1990 when Lessor Corp. sent a notice to them that the
rent is now 3500 a month. They sent a reply alleging that it is a
contravention of the terms of increased monthly rentals.
However, the lessor demanded that the lessees vacate the premises and pay
the amount of 7k.
The lessees offered to pay based on the contract but lessor refused. Hence,
they filed a case for consignation.
2107 and 2264 are the correct rentals. They prayed that the court issue
directing the LESSOR to honor the terms and conditions of the lease
contract.
They deposited with the City Treasurer of Manila for their rentals until
January 1991.
Jespajo insists that the subject contract of lease did not provide for a
definite period hence it falls under the ambit of Art. 1687 of the NCC,
making the agreement effective on a month-to-month basis since rental
payments are made monthly.
HELD:
BALUYUT v. POBLETE
Effects: Oblig with a Period/Term
FACTS:
July 20, 1981. Guillermina Baluyut loaned from spouses Eugolio and Salud
Poblete for 850k under a promissory note. Mature in one 1 month.
She failed to pay her debt. Spouses extrajudicially foreclosed the REM.
August 27, 1982. It was sold by the Prov Sherrif to the Spouses.
Baluyut filed to redeem the property within the period required by law (1
year). Hence, the title was transferred to Eulogio and heirs of Salud.
Baluyut remained and refused to vacate. The respondents filed a petition for
the issuance of a writ of possession. Before they could take possession,
Baluyut filed an action for annulment of mortgage, extrajudicial foreclosure
and sale of the subject property and cancellation of title issued.
Baluyut contends that the maturity of the loan is one year, evidence by the
testimony of Atty. Mendoza, and that the issue regarding the real date of the
maturity can only be settled by a formal letter of demand, in the absence,
there is no demand.
HELD:
In the present case, the promissory note and the real estate mortgage are the
law between petitioner and private respondents. It is not disputed that
under the Promissory Note dated July 20, 1981, the loan shall mature in one
month from date of the said Promissory Note.
FACTS:
Petitioner alleged that Huang and Fa violated their lease contract over a
1,112 sq2 lot, when they did not pay monthly rentals for a total of 4.32m.
Contract expired on Sep 16, 1996 but Huang refused to surrender possession
and pay the rent despite repeated demands.
The contract was entered into August 1991 (No exact date). They amended
on Aug 8:
2. Monthly rental shall be the same at 100 pesos per square meters or 111.2k
per month.
MTC, RTC and CA affirmed the dismissal of the unlawful detainer case and
extension of the lease for another 5 years.
ISSUE:
Whether or not the court could still extend the term of the lease, after its
expiration. Is expiration of the lease a proper ground in a case of unlawful
detainer?
HELD:
The Contract is for 5 years – “specifically” from Sept 16, 1991 to September
15, 1996, hence, it was for a determinate time or period. Art 1669, “it ceases
upon the day fixed, without a need of a demand”.
Ejectment was on Oct 6. Because there was no longer any lease that could be
extended, the MeTC, made a new contract for the parties, a power it did not
have.
Because the parties did not reach any agreement for renewal, respondents
can be ejected from the premises.
Its renewal may be authorized only upon their mutual agreement or at their
joint will.
The improvements were a risk, having the knowledge that the contract is
only of a five-year lease period. The fact that the contractual stipulations
may turn out to be financially disadvantageous will not relieve the latter of
their obligations.
ISSUE:
Nonpayment of rentals
HELD:
Civil Code:
Art. 1673. The lessor may judicially eject the lessee for any of the following
causes:
(1) When the period agreed upon, or that which is fixed for the duration of
lease under Articles 1682 and 1687, has expired;
(2) Lack of payment of the price stipulated;
(3) Violation of any of the conditions agreed upon in the contract;
(4) When the lessee devotes the thing leased to any use or service not
stipulated which causes the deterioration thereof; or if he does not observe
the requirement in No. 2 of Article 1657, as regards the use thereof.
Respondents should have deposited the rent based on the previous rate.
Respondents failed to pay the rent from October 1993 to March 1998.
Article 1658 of the Civil Code provides only two instances in which the lessee
may suspend payment of rent; namely, in case the lessor fails to make the
necessary repairs or to maintain the lessee in peaceful and adequate
enjoyment of the property leased.
Moreover, the mere subsequent payment of rentals by the lessee and the
receipt thereof by the lessor does not, absent any other circumstance that
may dictate a contrary conclusion, legitimize the unlawful character of the
possession. The lessor may still pursue the demand for ejectment.
However, the Court cannot authorize a unilateral increase in the rental rate,
considering that (1) the option to renew is reciprocal and, thus, the terms
and conditions thereof -- including the rental rate -- must likewise be
reciprocal; and (2) the contracted clause authorizing an increase -- "upon
presentation of the increased real estate tax to lessees" -- has not been
complied with by petitioner.