Bayla v. Silang Traffic Co. Aerospace Chemical Industries v.

Court of
G.R. 48195 & 48196 | May 1, 1942 | Oblicon | Appeals
Case 1 | Delay G.R 108129 | Sept 23, 1999 | Oblicon | Case 2 |
Facts Delay
 circumstances of the Facts
obligation it shall appear that  June 27, 1986 – Petitioner purchased sulfuric
the designation of the time at acid from Private Respondent which was made
which the thing was to be in a letter form stating the said agreement
delivered or service rendered between the two parties.
was the principal inducement
o The said agreement was set to begin in
to the creation of the
July 1986 which provides that the
obligation.
Petitioner shall pay its purchases in
equivalent of Philippine Currency five
days prior to the shipment date.
Petitioner is also committed to secure
the means of transport of the said
items from the port of private
respondent located in Basay, Negros
and Sangi, Cebu
 Aug 6, 1986 – Private Respondent sent a letter
to petitioner withdrawing the sulfuric acid at
Basay because Private Respondent had been
incurring expense of 2,000 pesos per day for
each day of delay in shipment.
 Oct 3, 1986 – Petitioner paid 553,280 for the
500 tons of sulfuric acid which it ordered.
 Nov. 19, 1986 – Petitioner chartered a ship, the
ship was assigned to carry the volume of the
sulfuric acid to the loading-port of Private
Respondent from Basay. However, the ship
withdrew only 70 metric tons of the said item
because the ship tilted while carrying the said
cargo
o The ship then underwent repairs.
 Dec 12, 1986 – Private Respondent demanded
petitioner through a letter to retrieve the
remaining acid in the Basay Tanks so that it
can be emptied on or before Dec 15, 1986
Respondent states that it would charge
petitioner the storage and costs for the Basay
tanks including all other expenses due to
loading delay if petitioner fails to comply.
 Dec 15, 1986 – the ship chartered by petitioner
docked in Cebu but withdrew only 157 tons of
the sulfuric acid. The vessel tilted again, and
loading was aborted.
o After the said incident, the chartered
Ship M/T Sultan Kayumanggi sank with
227.51 Metric tons of sulfuric acid on
board.
 Petitioner then chartered another vessel with a
bigger capacity. Then on the dates of Jan 26
and Mar 20, 1987. Melecio Hernandez acting
for the petitioner, addressed letters to private
respondent concerning additional orders of
sulfuric acid to replace its sunken purchases.
With no reply, Petitioner sent another letter on
May 15, 1987.
  January 25, 1988 – Petitioner’s Counsel sent a
demand letter to private respondent for the
delivery of sulfuric acid paid by his client or the
return of the purchase price of 307,530 pesos.
o Private Respondent replied on March 8,
1988 and instructed petitioner to lift
the remaining 30 MT of sulfuric acid
from Basay or pay maintenance and
storage expenses commencing August
1, 1986.
 July 6, 1988 – Petitioner wrote another letter
insisting on picking up the 272.49 MT and an
additional 227.51 MT of acid as Petitioner
already paid a chartered vessel for the full
capacity. Debtor delays performance
o Creditor requires the performance
judicially or extrajudicially.
Binalbagan Tech Inc v. Court of Appeals
G.R 100594 | Mar. 10, 1993 | Oblicon | Case 3 | Kinds
of Delay
Facts
 May 11, 1967 – Private Respondents through a
certain Angelina Echaus in her capacity as
administrator of the intestate of Mr. Puetevella
 nd damages.
RTC Decision
 The RTC declared that the case had not fraud and
on top of that, the action on the written contract
had already long prescribed, judgment is
rendered in favor of the defendants and against
the plaintiffs, dismissing the complaint.
o The counterclaim filed was also dismissed
for lack of proof.
Court of Appeals Ruling
 The Court of Appeals reversed the decision of the
RTC. A new one was made ordering the Petitioner
through any of its officers execute a deed of
conveyance transferring and returning the
ownership of the lands to Private Respondent.
Issue
 Whether or not Respondent’s cause of action is
barred by prescription.
Ruling
 The Court denies the Petition and affirms
the Decision of the Court of Appeals.
 For the first issue, the court ruled that the
prescriptive period to institute an action upon a
written contract is 10 years. IN this case, the deed
of sale whereby Private Respondent transferred
the ownership of the lots was executed on May
1967, she then filed the case on Oct. 1982 which
is 15 years.
o However, the Court ruled that the period
from 1974 to 1982 should be deducted in
computing the period because Private
Respondent was not in a legal position to
initiate action against petitioner.
 The Prescriptive period to
institute action upon written
contract was interrupted by the
issuance of an injunctive write.
 In this case, the court ruled that the appellants
could not have prospered in any suit to compel
performance or payment from the appellees-
buyers, because appellants were in no position to
perform their own corresponding obligation to
deliver to and maintain said buyers in possession
of the lots.
o A party unable to comply with own
obligations under a contract cannot
demand rescission thereof. The right to
rescind a contract can be demanded only
if a party thereto is ready, willing and
able to comply with his own obligations.
( Art. 1191 NCC)
 IN a contract of sale, the vendor is bound to
transfer the ownership of and deliver as well as
warrant the thing which is the object of the sale.
o Additionally, from the years 1974 to
1982, Private Respondent’s warranty
against eviction given to buyer Petitioner
was breached though it was not her fault.
Thus, on the period of 1974 to 1982,
private respondent was not in a legal
position to demand compliance of the
prestation of petitioner to pay the price of
said subdivision rights. Her right to
demand payment was suspended during
1974 to 1982.
 Lastly, the Court cited the principle against unjust
enrichment where a situation of unjust
enrichment would result if petitioner is allowed to
own the lots without full payment.
Agcaoili v. GSIS
G.R L-30056 |Aug. 30, 1988 | Oblicon | Case 4 |
Delay
Facts
 Defendant approved the application of Plaintiff
for the purchase a house and lot in the GSIS
Housing Project at Nangka subject to the
condition that the house be occupied by
Plaintiff. However, Plaintiff failed to fulfill this
condition as according to him, the house was
uninhabitable.
 After paying the first installment and other fees
and also refusing to make further payment of
the other stipulated installments until
Defendant had made the house habitable as
according to him, the house was nothing more
than a shell and that civilized occupation was
not possible, due to this, Plaintiff asked a
homeless
  but found it so uninhabitable that he had to
leave it the following day, however, he left a
friend to live there who is homeless even if the
house is rudimentary who only agreed because
of his homelessness.
Bricktown Development Corp. v. Amor Tierra
Dev’t Corp.
G.R 112182 | Dec 12, 1994 | Oblicon | Case 5 |
Delay
Facts
 Mar. 31, 1981 – Petitioner represented by its
President and co-petitioner Velarde executed
two contracts to sell in favor of Private
Respondent who was represented by its Vice-
President, the said contract covers 96
residential lots situated at a subdivision located
in Manila.
o The said contract also stipulated
amounts to be paid and maturity dates
in the following dates:
 Mar. 31, 1981 – 2.200,000
 June 30, 1981 – 3,209,968.75
 Balance of 11,500,000.00 to be
paid by means of an
assumption by Private
Respondent of Petitioner’s
mortgage liability to the
Philippine Savings Bank or to
be made in cash.
 On the same date above, the parties executed
a supplemental agreement providing that
Private Respondent would pay to petitioner
amounts of 55,364.68 on the balance of down
payment for the period from Mar 31 to June 30,
1981.
 While the agreement was made, Private
Respondent was only able to pay Petitioner the
sum of 1,334,443.21. Meanwhile the parties
continued to negotiate for a possible
modification of their agreement although
nothing conclusive happened.
 Oct. 12, 1981 – Petitioner through its legal
counsel sent Private Respondent a notice of
cancellation of contract sent a notice of
cancellation of contract on account of Private
Respondent’s failure to pay the installment due
on June 30, 1981. However, Petitioner advised
Private respondent that it still had the right to
pay its arrearages within 30 days or the actual
cancellation of the contract would take place.
 Sept 26, 1983 – Private Respondent through
counsel demanded the refund of their various
payments made to Petitioner which amounts to
2,455,497.71 with interest or in lieu of a cash
payment assigned to them an equivalent
number of unencumbered lots at the same
price fixed in the contracts. Petitioner did not
heed the demand; hence, Private Respondent
started an action with the Court.
RTC Ruling
 The trial Court rescinded the supplemental
agreement of the two parties and ordering
Petitioner to return the amount of 1,334,443.21
with interest and to pay attorney’s fees and
dismissing petitioner’s counterclaim for lack of
merit.
Court of Appeals Ruling
 The Court of Appeals affirmed the trial court’s
findings and judgment.
Issue
  Whether or not the contracts to sell were
rescinded or cancelled validly by Petitioner
 Whether or not the amounts remitted by
Private Respondent were rightly forfeited by
Petitioner Corporation
Ruling
 The appealed decision is affirmed insofar as it
declared valid the cancellation of the contracts
in question but modified by ordering the refund
by Petitioner of 1,334,443.21 with interest to
commence from the finality of the decision.
 While the terms of the payment agreed upon
by the parties of the contract were not met by
Private Respondent, the fact that private
respondent was only able to remit the sum of
1,334,443.21 which was short of the initial
payment of 2,200,000.00, no additional
payments were made, and a notice of
cancellation was ultimately made after the
lapse of the contracted grace period.
 The Court in this case defined Grace Period.
o According to the Court, a grace period
is a right, not an obligation of the
debtor. When unconditionally conferred
such as in this case, the grace period is
effective without further need of
demand either calling for the payment
of the obligation or for honoring the
right.
o The grace period must not be likened
to an obligation, the non-payment of
which under Art. 1169 of the Civil Code
would still require judicial or
extrajudicial demand before default
can arise.
 In the case at bar, the 60-day
grace period in the contract
became ipso-facto operative
from the moment the due
payments were not met at their
stated maturities. Thus, Art.
1169 of the Civil Code would
not apply in this case.
 Furthermore, the cancellation of the contracts
to sell by Petitioner accord with the contractual
covenants of the parties, thus the cancellation
must be respected.
o In a contract to sell, the non-payment
of the purchase price can prevent the
obligation to convey title from
acquiring any obligatory force.
 While the court concludes that Petitioner acted
within its legal right to declare the contracts to
sell rescinded, the peculiar circumstances
found in this case and confirmed by the C.A, it
would be unconscionable to sanction the
forfeiture by petitioner of payments made to it
by private respondent.
 Lastly, the relationship between parties in any
contract must always be characterized and
punctuated by good faith and fair dealing. In
this case, petitioners fell from the said
standard of good faith and fair dealing. As it
was not equitable for petitioners to adjudge
any interest payment on the amount to be
refunded.
Enriquez v. Ramos
G.R L-23616 | Sept 30, 1976 | Oblicon | Case 6 |
Delay
Facts
 Nov. 24, 1958 – Plaintiffs sold to defendant 20
subdivision lots for a sum of 235,036 of which
only 35,056 had been paid by defendants. The
said balance of 200,000 was to be liquidated
within two years from the date of the execution
of the deed of sale with interest until fully paid.
o To secure the payment of the said
balance, defendant executed a deed of
mortgage in favor of the vendors’
seven parcels of land.
 The deed of mortgage has
certain stipulations which
states that if the mortgagor
should fail to pay the amount
secured by the mortgage or
any part of the terms and
conditions, the mortgagee shall
have the right to foreclose the
mortgage extrajudicially where
mortgagee is appointed as the
attorney-in-fact of the
mortgagor with full power of
substitution to enter and take
possession of the properties
without order of any court or
any authority other than what
is granted.
 In this second case, the plaintiffs state that in
pursuance to their agreement made in the first
case of L-18077 the defendants violated the
terms of their agreement in the following
aspects:
o Defendant refused to pay the sum of
200,000 within the stipulated period
 o The mortgage on the property in o The effect of the demand retroacts to
Bulacan was not registered the day of the constitution of
defendant’s obligation. It is provided in
o The realty tax for the lots mortgaged Art 1187 that the effects of a
were not paid by defendant. conditional obligation to give, once the
condition has been fulfilled shall
 While defendant admits that she has not paid
retroact to the day of the constitution
the realty taxes and has not registered the
of the obligation.
mortgage on the property, defendant argues
that the said matters were only minor ones  In this instant case, the
which was explained by her in the first case contracted obligation of
invoking the rule of res judicata. appellee was to pay the
balance of 200,000 within two
o In addition to this, defendant does not
years from the date of the
dispute that she did not pay the sum of
roads in question are
200,000. However, she contends that
completed.
the roads have not yet been completed
in accordance with the ordinance of
Quezon City which states that there
should be water facilities and tree
plantings in the subdivision which
according to defendant are not yet in
the roads, thus, the roads are not yet
completed.

Issue

 Whether or not Ramos should pay her balance

to Enriquez and spouses Dizon even though
she is not yet fully satisfied with her demand?

Ruling

 The court order dated December 3, 1963 is set

aside and judgment is hereby rendered
ordering the defendant-appellee to pay
plaintiffs the sum of 200,000, interest, and
amount equivalent to 5% of the mortgage
indebtedness of attorney’s fees and the costs.

 The Court ruled that the deed of sale with

mortgage makes it the express duty of the
defendant to pay the realty taxes on the
mortgaged lots, to register the mortgaged lots
and to contribute 50,000 for the construction of
the roads. In its express terms, the appellee
failed to fulfill the conditions of her entire
obligation which means that the mortgagee
has the option to foreclose the mortgage. The
terms of the contract have the force of law
between the parties.

 The court ruled that the opinions of the

Supreme Court cannot be taken as license for
continued non-fulfillment of defendant of her
contractual obligations. The court did not
intend to allow or enable the litigants to use
the first decision as an instrument to avoid the
obligations of the parties.
 Lastly, the court states that the filing of the
case is sufficient notice to defendant f the
completion of the roads in question and of the
appellant’s desire to be paid the purchase price
of the questioned lots.
Leaño v. Court of Appeals
G.R. 129018 | Nov. 15, 2001 | Oblicon | Case 7 |
Delay
Facts
 Nov. 13, 1985 – Hermogenes Fernando, as
vendor, and Petitioner Leaño, as vendee
executed a contract to sell involving a piece of
land in Bulacan.
o In the said contract, Petitioner bound
herself to pay Fernando the sum of
107,750.00 pesos as the total purchase
price of the lot. According to the
 contract, the sum of 10,775 shall be
paid at the signing of the contract as
down payment. The remaining balance
shall be paid within a period of 10
years at a monthly amortization of
1,747.30 starting from Dec. 7, 1985.
 IN addition to this, the contract provided for a
grace period of one month within which to
make payments, together with the one
corresponding to the month of grace.
o Should the grace period expire without
installments for both months having
been satisfied an interest of 18% per
annum shall be charged on the unpaid
installments.
o Additionally, should a period of 90 days
elapse from the expiration of the grace
period without the overdue and unpaid
installments been paid. Respondent
Fernando, as vendor is authorized to
declare the contract cancelled and to
dispose the parcel of land as if the
contract had not been entered to, the
payments shall be considered as rents
for the use and occupation of the
premises.
 After the execution of the contract, Petitioner
made payments in lump sum. She then built a
house on the lot valued 800,000. The last
payment according to the facts of the case was
on April 1, 1989.
o Due to her non-payment of the
subsequent payments, Respondent
filed a case for ejectment against
Petitioner to vacate the premises.
MTC Ruling (Ejectment Case by Respondent)
 The trial court ordered Petitioner to vacate the
premises and to pay 250.00 per month by way
of compensation for the use and occupation of
the property from May 27, 1991 until she
vacates the premises of the property. A writ of
execution was issued on August 24, 1993
which was served to Petitioner.
o IN response to this, Petitioner filed a
specific performance complaint against
Respondent on Sept. 27, 1993 and to
assail the decision of the court as the
order was violative to the intentions of
R.A 6552 which afford buyers of lots on
installments protection.
RTC Ruling (Specific Performance Case by
Petitioner)
 The preliminary injunction issued by the RTC is
made permanent. Furthermore, the plaintiff is
ordered to pay the defendant the sum of
103,090.70 corresponding to her outstanding
obligations under the contract to sell with
defendant and to pay attorney’s fees and the
costs of the suit.
o A motion for reconsideration was filed
by Respondent. However, the court
increased the amount to be paid by
Petitioner to 183,687 and ordered
petitioner to pay attorney’s fees.
o The trial court reasoned out that the
transaction between the parties was an
absolute sale, making petitioner the
owner of the lot upon actual and
constructive delivery thereof.
Respondent was divested of his
ownership and cannot recover unless
the contract is rescinded in pursuance
to Art. 1592 of the Civil Code which
requires a judicial or notarial
demand.
o For the issue of delay, the trial
court ruled that the contract
clearly specifies that the purchase
price shall be payable in monthly
installments for which the
corresponding penalty shall be
imposed in case of default.
Plaintiff’s failure to pay the
amortization is a clear default on
Plaintiff’s part therefore she
should be liable for interests and
penalties.
Court of Appeals ruling
 The Court of Appeals affirmed the decision of
the RTC.
Issue
 Whether the transaction between the parties is
an absolute sale or a conditional sale
 Whether or not there was a proper cancellation
of the contract to sell
 Whether petitioner was in delay in the payment
of the amortizations.
Ruling
 The Court denies the Petition and affirms
the decision of the Court of Appeals
 The Court ruled that even if the contract
provided that the total purchase price is
payable within a ten-year period, specifying the
price shall be paid in monthly installments for
which the corresponding penalty shall be
imposed in case of default, the vendee cannot
ignore the provision on the payment of
monthly installments by stating that the 10
year period has not elapsed.
 In reciprocal obligations, neither party incurs in
delay if the other does not comply or is not
ready to comply in a proper manner with what
is incumbent upon him, but from the moment
 one of the parties fulfills his obligation, delay
by the other begins (Art 1169)
o In this case, Respondent performed his
part of the obligation by allowing
Petitioner to continue in possession
and use of the property. Petitioner did
not pay the monthly amortizations in
accordance with their contract, thus
she was in delay and liable for
damages.
 Lastly, it is a cardinal rule in the interpretation
of contracts that if the terms are clear and
leave no doubt upon the intention of the
contracting parties, the literal meaning of its
stipulations shall control. If there is no
ambiguity in the language, there is no room for
construction only compliance.
Lee v. De Guzman
G.R 90926 | Jul 6, 1990 | Oblicon | Case 8 | Delay
Facts
 Nov. 8, 1983 – Freelance salesman of
Respondent Motorcars Inc named Arsemio
Tumibay signed in half of the branch manager
of Respondent Company a price quotation and
delivered to Petitioner one Toyota Corolla,
1983 with the price of 149,7000 plus
miscellaneous expenses of 10,033.
o Petitioner then signed the sales order
of the vehicle. Delivery was then
scheduled to be within the Nov. 1983.
 Nov. 10, 1983 – Petitioner made a deposit of
1,000 which was required in the agreed price
quotation. After depositing the said amount,
petitioner then wrote that Motorcars had
acknowledgment receipt of the delivery receipt
for petitioner.
 Dec 15, 1983 – Petitioner’s counsel wrote to
the Executive Vice-president of Motorcars
demanding for the delivery of the said Toyota
Car. Respondent Company replied that due to
the sudden change of prices by the
manufacturer of the car, they decided to
exercise the option in the vehicles order which
states:
o Whenever deposits are made by
customers for vehicles, parts and
services ordered, the sales for such
vehicles, parts or services shall be at
the option of Motorcars Inc. refund o
the deposits shall be made upon
request and without undue delay
should the option be exercised.
 Due to the said stipulation in the said order,
Respondent Company offered to refund the
deposit of 1,000 made by Petitioner. However,
it was revealed that the sales order contains:
o Order is not valid unless signed and
accepted by the dealer principal,
President, Executive Vice President or
General Sales Manager of the
dealership.
RTC Ruling
 The Trial Court rendered a judgment in favor of
Respondent by ordering Petitioner to pay 5,000
as damages and attorney’s fees.
Court of Appeals Ruling
 The Court of Appeals reversed the decision of
the RTC stating that there was a perfected
contract of sale, and that there was the
undisputed signature of Mr. Tapas, the branch
manager of Motorcars.
o Respondent was ordered to deliver to
Petitioner the vehicle upon payment of
149,7000 and the amount of 8,833 for
miscellaneous expenses and other
charges. Respondent then appealed to
the Supreme Court in another case.
G.R 77992 (Related Case; Case filed by
Respondent)
 The Court in the said case ruled that there was
indeed a contract of sale between the parties.
Thus, it denied the petition and affirmed the
decision of the Court of Appeals, furthermore,
after the case was remanded, Petitioner filed a
motion for writ of execution.
 However, Respondent company filed a motion
to quash the said writ of execution stating that
the obligation has become impossible to
comply on the ground that Delta Motors had
closed shop.
o Petitioner opposed the motion of
Respondent, but Respondent continued
to defy the order of the court.
Petitioner then filed a motion for
contempt of court for the stance that
what Respondent did was contempt.
o Respondent trial court then issued the
assailed order where it favored
respondent company’s contention that
they cannot comply with the
obligations.
Issue
  Whether or not the decision rendered by the
C.A and affirmed by the S.C is capable of
performance and can be executed.
Ruling
 Respondent is ordered to give petitioner
the sum of 100,000 as damages.
 The Court agrees with the contention that
Respondent could not comply with the writ of
execution as Delta Motors who manufactured
the 19883 models of the Liftback had already
closed shop. However, there is no question that
there was a perfected contract between
Petitioner and Respondent.
o The relief that Petitioner left can do is
provided under Art. 1170 of the Civil
Code where those who in the
performance of their obligations are
guilty of fraud, negligence or delay,
and those who in any manner
contravene the tenor thereof, are liable
for damages.
 In this case, there was delay in the delivery of
the subject vehicle which was stated in the
letter of Respondent Company addressed to
Petitioner by stating the sudden change of
prices by the car manufacturer as what was
agreed upon by the parties is the delivery of
the subject vehicle within November 1983.
Tanguilig v. Court of Appeals
G.R. 117190 | Jan 2, 1997 | Oblicon | Case 9 |
Delay
Facts
 April 1987 – Petitioner under the name of JMT
Engineering and General Merchandising
proposed to Respondent Herce to construct a
windmill system for him. The parties
negotiated and agreed on the construction of
the windmill for 60,000 pesos with a one-year
guaranty from the date of completion and
acceptance by Respondent Herce
o In pursuance to the agreement,
respondent paid Petitioner 30,000 as
downpayment and installment
payment of 15,000 leaving a balance of
15,000.
 March 14, 1988 – Respondent refused to pay
the balance. This prompted Petitioner to file a
complaint to collect the amount.
Private Respondent’s Arguments
 For his reply, Respondent denies the claim
made by Petitioner. According to Private
Respondent, he already paid the said balance
to San Pedro General Merchandising which
made the deep well connected to the windmill
system.
o Since the said deep well is a part of th
e system, the payment he gave to
SPGMI should be credited to his
account by petitioner. The balance he
owes to Petitioner should be offset by
the defects in the windmill which
caused its collapse after strong winds.
Petitioner’s Reply
 Petitioner denies that the construction of the
deep well was included in the agreement to
build the windmill system. According to
Petitioner the price of 60,000 was solely for the
windmill assembly and its installation,
exclusive of other incidental materials needed
for the project.
 Furthermore, petitioner disowns any obligation
to repair or rebuild the system as he delivered
the said windmill in good and working condition
to respondent. According to Petitioner, the
collapse was attributable to a typhoon, a force
majeure which relieves him from any liability.
RTC Ruling
 The Trial Court held that the deep well was not
part of the windmill. This is evidenced by the
proposals submitted by Petitioner to
Respondent. Due to the absence of the
agreement regarding the construction of the
deep well, the trial court concluded that it was
not part of the project of Petitioner.
 o The Court adds that Plaintiff is not
liable for the collapse of the windmill as
it was not proven that the system fell
down because of defect.
Court of Appeals Ruling
 Court of Appeals reversed the trial court ruling.
Stating that the deep well was included in the
agreement of the parties because the term was
mentioned in the two proposals. Furthermore,
testimony of respondent who is the proprietor
of SPGMI, the company which installed the
deep well stated that Petitioner told him that
the cost of the deep well would be deducted
from the contract price of 60,000.
 Due to this, the Court of Appeals ruled that the
payment of 15,000 to SPGMI should be applied
to his remaining balance.
 Furthermore, the Court of Appeals rejects the
claim of force majeure, ordering Petitioner to
rebuild the windmill in accordance with the one
year guarantee.
Issue
 Whether or not the payment of 15,000 for the
deep well should be included in the 60,000 for
the windmill assembly.
 Whether or not Petitioner is obligated to rebuild
the said windmill
Ruling
 The Court modifies the decision ordering
Respondent to pay Petitioner the balance
of 15,000 with interest at the legal rate.
Petitioner is ordered to reconstruct the
windmill subject to the one-year guaranty
and to complete the reconstruction within
3 months.
 The Court took notice that the proposal made
by Petitioner does not mention the installation
of a deep well, even remotely.
o In addition to this, in the itemization or
description of the materials to be used.
There is no mention of the two
documents
o While there is a mention of deep well
and deep well pump, they do not
indicate that the said object is part of
the windmill. AS the description only
describes that the pump is suitable for
the proposed windmill.
 Furthermore, it is a rule in the interpretation of
contracts that the intention of then parties
shall be accorded primordial consideration and
in case of doubt, their contemporaneous and
subsequent acts shall be considered.
 The Court ruled that payments made by a third
person does not apply as there is no creditor –
debtor relationship between Petitioner and
SPGMI has been established regarding the
deep well.
o Proprietor also states that he entered
into a contract with petitioner for the
construction of deep well.
 Art 1174
o For the second issue, the Court ruled
that in order for a party to claim
exemption by reason of fortuitous
event under 1174 of the Civil Code.
The event should be the sole and
proximate cause of the loss or
destruction of the object of the
contract.
 4 Requisites of Fortuitous Event
o Cause of breach must be independent
of the will of debtor
o Event must be unforeseeable or
unavoidable
o Event must render the debtor to fulfill
his obligation in a normal manner
o Debtor must be free from any
participation in or aggravation to the
creditor.
 Art 1167
o Petitioner’s argument that Respondent
was already in default, hence, he
should bear his own loss is untenable.
This is because in reciprocal
obligations, neither party incurs in
delay if the other does not comply or is
not ready to comply.
o When the windmill failed to function,
Petitioner is supposed to repair it in
accordance with the guaranty. As
provided in Article 1167, that if a
person is obliged to do something and
fails to do it, the same shall be
executed at his cost.
Vernen Realty v. Court of Appeals
G.R 101762 | Jul 6, 1993 | Oblicon | Case 10 |
Delay
Facts
 Mar. 2, 1981 – Petitioner and Private
Respondent entered into a contract called an
offsetting agreement. The said contract
stipulates the different payments and the
agreement regarding the delivery of
construction materials for the purposes of the
condominium units that are being built by
Petitioner.
o Private Respondent had paid Petitioner
the amount of 110,151.75 and at the
same time, delivered construction
materials worth 219,727. Pending the
completion of the Phase 2 of the
Condominiums, Petitioner delivered to
Private Respondent Units 601 and 602
of the Phase 1 of the Condominiums.
  1982 – Petitioner repossessed unit 602, as a
consequence of the repossession, Private
Respondent had to rent another unit for their
use when they went to Baguio.
 May 10, 1982 – Officers of Private Respondent
requested for clarification of the petitioner’s
action of preventing them and their families
from occupying condominium unit 602.
o Petitioner replied that the room was
leased to another tenant because
Private Respondent had not paid
anything for purchase of the
condominium unit.
o Petitioner then demanded payment of
27,848.25 representing the balance of
the purchase price of Room 601.
 1983 – the loan application for the construction
of the Phase 2 of the condominiums was
denied which resulted into the stoppage of the
construction of the condominium project.
 June 21, 1985 – Private Respondent field a
complaint with the RTC for rescission of the
Offsetting Agreement with damages. Private
Respondent alleges that petitioner had stopped
issuing purchase orders of construction
materials after April 1982 without valid reason
which violated the offsetting agreement
between the two parties.
o For its reply, Petitioner alleges that it
was private respondent who could not
deliver the supplies stated in their
agreement according to Petitioner,
Respondent stated that the supplies
were out of stock. Furthermore,
Respondent had given a higher price
quote for the materials which resulted
to Petitioner seeking other suppliers.
For the issue of unit 602, petitioner
states that his was done because
private respondent had not paid
anything for it.
 Dec. 16, 1986 – Private Respondent had paid
110,151.75 in cash and made deliveries of
construction materials worth 219,727 leaving a
balance of 27,848.25 which represents the
purchase price of unit 601.
RTC Decision
 The trial court dismissed the complaint and
ordered Private Respondent to pay Petitioner
its counterclaim the balance due on the
purchase price of unit 601.
Court of Appeals Decision
 The Court of Appeals reversed the trial court’s
decision.
Issue
 Whether or not the circumstance of the case
warrants a rescission of the Offsetting
Agreement prayed by Private Respondent
when he instituted the case before the RTC.
Ruling
 The Court denies the petition for lack of
merit, costs against petitioner.
 In this case, the court ruled that after a perusal
of the offsetting agreement, it is not a question
that the said agreement is reciprocal in nature.
o Reciprocal obligations are those
created or established at the same
time, out of the same cause and which
results in a mutual relationship of
creditor and debtor between parties.
 In this type of obligation, the
performance of one is
conditioned on the
simultaneous fulfillment of the
other obligation.
 Article 1191 of the Civil Code provides the
remedy of a rescission in case of reciprocal
obligations where one of the obligors fail to
comply with what is incumbent upon him.
 The general rule is that rescission of a contract
will not be permitted for a slight or casual
breach, but only for such substantial and
fundamental breach as would defeat the very
object of the parties in executing the
agreement.
o However, the question of whether a
breach of contract is substantial
depends upon the attendant
circumstances of the case.
 In this case, while petitioner argues that it was
private respondent who failed to perform the
obligation in the agreement. It averred that
contrary to the C. A’s ruling, the stoppage of
the loan for the phase 2 of the condominiums
should not have any effect on the obligations in
the Offsetting agreement.
o On the other hand, private respondent
states that the subject of the offsetting
agreement is phase 2 of the
condominiums, which means that since
the construction of the phase 2 of the
condominiums failed to start, Private
Respondent had reason to rescind the
contract as it cannot wait forever for
the delivery of the condominium units.
 The Court ruled in this case that Private
Respondent did not fail to fulfill its obligation in
the offsetting agreement. The discontinuance
of the delivery of construction materials was
rooted on the failure of petitioner to send
purchase orders to private respondent.
o In this case, Petitioner failed to produce
the purchase orders of Petitioner with
Private Respondent, however,
 Petitioner failed to produce the same to
the Court.
 The non-fulfillment of the obligation of
Petitioner constitutes a substantial breach of
the offsetting agreement. Since the
construction of the Phase 2 of the
condominiums has stopped, it is impossible to
fulfill the obligation, thus, Private Respondent
was correct to rescind the contract.
Heirs of Luis Bacus v. Court of Appeals
G.R 127695 | Dec. 3, 2001 | Oblicon | Case 11 | Delay
Facts
 Jun. 1, 1984 – Luis Bacus leased to Private
Repsondent Duray a parcel of agricultural land
in Talisay Cebu. The said lease was for 6 years
which ended on May 31, 1990. In the said
contract, an option to buy clause was provided.
o Under the said option to buy, the
lessee had the exclusive and
irrevocable right to buy 2,000 square
miles of the property within 5 years
from a year after the effectivity of the
contract at 200 / sqm. Rate shall be
also adjusted in proportion to the
exchange rate of Peso and USD.
 Oct. 10, 1989 – Luis Bacus died.
 Mar 15, 1990 – The Duray spouses informed
one of the heirs of Luis Bacus that they were
willing and ready to purchase the property
under the option to buy the clause. Thus, they
requested that the heir prepare the necessary
documents such as a Special Power of Attorney
authorizing him to enter into a contract of sale
on behalf of his sisters.
 Mar 30, 1990 – Petitioners refused to sell the
property, due to this, Private Respondent had
an adverse claim annotated by the Register of
Deeds of Cebu.
 Apr 5, 1990 – Duray filed a complaint for
specific performance against Petitioners with
the Lupon Tagapamayapa, asking that he be
allowed to purchase the lot specifically referred
to in the lease contract with option to buy.
o Private Respondent presented a upon performance of his part of the
certification from a bank stating that
arrangements were being made to
allow Mr. Duray to borrow funds of
700,000 to be able to meet his
obligations under the contract with Luis
Bacus
 Apr. 27, 1990 – Parties failed to reach an
agreement, thus, Private Respondents field a
complaint for specific performance with
damages against Petitioners before the RTC.
o According to Petitioners, their father
conveyed to them that he had no
interest to exercise the option because
of insufficiency of funds, they were
surprised to learn of private
respondent’s demand, thus, they
requested that private respondent pay
the purchase price in full, but they
refused, and the amount deposited by
Respondent was insufficient.
Furthermore, what was presented by
Private Respondent was a bank
certificate which is not legal tender
 Oct 30, 1990 – Private Repsondents manifested
in court that they caused the issuance of a
cashier’s check in 650,000 payables to
petitioners at any time upon demand.
RTC Ruling
 RTC Ruled in favor of Private Respondents,
finding that defendants should perform their
obligation in the option to buy and to execute a
document of sale over the property in issue.
C.A Ruling
 The Court of Appeals denied the appeal of
petitioners on the ground that private
respondents exercised their option to buy the
leased the property before the expiration of the
contract of lease.
Issue
 Whether or not Private Respondents incurred
delay when they did not deliver the purchase
price or consign it on or before the expiry of
contract.
Ruling
 The Court denies the petition and affirms the
C.A Ruling
 The Court ruled that obligations under an
option to buy are reciprocal obligations.
Performance of one obligation is conditioned
on the simultaneous fulfillment of the other
obligation; notice of the creditor’s decision to
exercise his option to buy need not be coupled
with actual payment of the price, so long as
this is delivered to the owner of the property
agreement. Where the obligation is not yet
due, consignation in court of the purchase
price is not yet required.
o In this case, when private respondents
opted to buy the property, their
 obligation was to advise petitioners of
their decision and their readiness to
pay the price. They were not yet
obliged to make actual payment. Only
upon petitioners’ actual execution and
delivery of the deed were they required
to pay.
 Consignation
o 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.
 Furthermore, in reciprocal obligations, neither
party incurs in delay if the other does not
comply or is not ready to comply in a proper
manner with what is incumbent upon him.
o In this case, private respondents did
not incur in delay when they did not
yet deliver payment nor make a
consignation before the expiration of
the contract.
RTC Ruling
Court of Appeals Ruling
Pacmac v. IAC
G.R. L-72405 | May 29, 1987 | Oblicon | Case 1 |
Contravention of Tenor of Obligations
Facts
 The controversy of the case started in a civil
Issue
case wherein Petitioner alleged that by virtue
of an existing contract and arrangement with
Respondent, since 1953 to Aug. 3, 1965 has
been the exclusive distributor of the latter’s
products.
Ruling
o In the said arrangement, Private
Respondent was obliged to periodically
deliver and sell at its own price any
number or volume of its products
exclusively to Petitioner. Petitioner, in
turn would exclusively sell and
distribute the products to the open
market, whole sale or retail at a price
set by Private Respondent.
 The said agreement, however, was terminated
unilaterally by Private Respondent causing
damages to Petitioner.
o Private Respondent replied by denying
that the exclusive distributorship with
Petitioner. Private Respondent alleges
that Petitioner is indebted to them as
of Sept. 30, 1965 a sum of 320,220.25
plus interest representing the unpaid
purchase price of Private Respondent’s
products.
 The drift of the companies started when on
February 17, 1962, a majority of the members
of the board of directors of Petitioner company
approved an amendment to its articles of
incorporation thereby authorizing the said
corporation to engage in the merchandizing
business as one of its secondary purposes and
also increasing the product types it could
manufacture.
o The said amendment was approved,
and a written contract was made
regarding the exclusive distributorship
for two years starting Nov 16, 1962
over two products made by Private
Respondent
 The trial court ruled in favor of petitioner. The
trial court considered the amount Petitioner
owed to Private Respondent which represented
the unpaid purchase price of Private
Respondent sold and delivered to petitioner
and that the damages due to Petitioner was
fixed in 189,908.76, the court ordered
Petitioner to pay 14,946.74 with interest.
 The Court of Appeals ordered Petitioner to pay
Respondent 304,855 with legal interest as the
said amount was agreed between the parties
during the pre-trial proceedings which was the
balance due to the defendant from plaintiff.
 What is the actual business relationship
between Petitioner and Private Respondent on
Aug 3, 1965 when the deliveries stopped?
 The Court grants the petition and the
questioned decision of the IAC is reversed and
set aside. Trial Court’s decision is reinstated.
 The Court ruled that the IAC erred when it
failed to consider the evidence proving that the
exclusive contract of distributorship between
the parties went beyond the expiration of the
two year written contract between the parties.
 The records establish that after the termination
of the two-year written contract, the parties
agreed on another term regarding the
distributorship arrangement would remain in
full force until one year from and after notice of
its termination would have given to Petitioner.
 The parties’ contract of exclusive
distributorship arrangement was still in
existence on Aug 13, 19654 when Private
Respondent decided to stop its deliveries of its
products to Petitioner, Private Respondents
unilateral act of terminating the contract
without legal justification makes it liable for
damages suffered by Petitioner in pursuance to
Art 1170 of the Civil Code.
Llorente Jr. v. Sandiganbayan
G.R 122166 | Mar 11, 1998 | Oblicon | Case 2 |
Contravention of Tenor of Obligations
Facts
 The case is about Petitioner, who is the mayor of
Sindangan, Zamboanga Del Norte was charged
with violating Section 3 (e) of R.A 3019 or the
Anti-Graft and Corrupt Practices Act, wherein he
refused to sign and approve payrolls and
vouchers representing the payments of the
salaries and emoluments of an employee without
valid cause and due process of law causing injury
to the employee.
 The case had two versions of its antecedent facts:
Prosecution’s Version
 According to the Prosecution, the controversy
started when the Petitioner, presiding over the
Sangguniang Bayan passed a resolution which he
vehemently objecting to the assignment of the
complainant or employee as the Assistant
Municipal Treasurer of Singan.
 After this, Petitioner received a letter from the SB
demanding from the private complainant return of
the amount overpaid to her as salaries.
 After the said demand, a petition was filed against
the accused mayor before the RTC for Petitioner’s
unjustified refusal to sign and or approve her
payrolls and vouchers representing her salaries
and other emoluments.
 Later on, Petitioner did not file an answer but
instead, he negotiated for an amicable settlement
of the case. Then on August 27, 1991, Petitioner
and Complainant executed a compromise
agreement which states that Petitioner binds
himself to sign all vouchers and payrolls and other
emoluments and that the parties renounce their
claims against each other.
o While the said compromise agreement
was signed by the parties, Private
complainant states that she was only able
to receive her payments on January 1993,
in checks dated Dec. 29, 1992. Her other
emoluments were also delayed.
Petitioner’s Version
 While Petitioner admits that there were delays in
the payment of the claims of complainant,
Petitioner sought to prove that the delay was in
good faith because according to Petitioner,
Private Complainant failed to submit the money
and property clearance to the SB’s delayed
enactment of a supplemental budget to cover
Private Complainant’s claims.
Sandiganbayan’s Ruling o actual damages are primarily intended to
simply make good or replace the loss
 The Sandiganbayan held that the delay or
caused by the wrong. Furthermore,
withholding of Complainant’s salaries and
damages must not only be capable of
emoluments was unreasonable and caused undue
proof but must be actually proven with
injury to Private Complainant as being the sole
reasonable certainty or upon speculation,
breadwinner of the family, the withholding of her
conjecture or guesswork it cannot include
salaries resulted in difficulties in meeting her
any speculative damages, which are too
family’s financial obligations.
remote in an accurate estimate of the
o According to the Sandiganbayan, the injury.
defense of Petitioner that complainant
 In this case, the court ruled that after an
failed to attach the clearance was held to
employee, whose salary was withheld fully
be an afterthought that was brought
received her monetary claims, there is no longer
about by his own failure to issue any
any basis for compensatory damages or undue
memorandum requiring its submission.
injury, there being nothing more the compensate.
o Furthermore, the Sandiganbayan ruled
 Undue injury entails damages that are more than
that the Petitioner’s bad faith was the
necessary or are excessive or illegal.
direct and proximate cause of Fuertes’
undue injury. Complainant’s salaries and o In this case, the prosecution failed to
allowances were withheld for no valid or prove any other loss or damage sustained
justifiable reason. The delay of Petitioner by complainant, while it is noted that
was intended to harass complainant complainant suffered from the
because Petitioner wanted to replace withholding of her salary and
Complainant with his political protégé. emoluments, the inconvenience is not
Furthermore, bad faith was further constitutive of undue injury.
evidenced by the instruction of Petitioner
 The Court does not agree that the imputed act
to the outgoing treasurer not to give
does not fall under Sec. 3 (e) as according to
complaining witnesses any work
Petitioner it requires a positive act. The Court
assignment, not to provide her with office
clarified that causing means to be the cause or
table and chair and not to act on her DTR.
occasion of, causing does not limit itself to
Issue positive acts, it can be passive acts or inaction
which cause undue injury. What is essential is that
 Whether or not petitioner acted in bad faith in
the injury is quantifiable and demonstrable.
refusing to sign the vouchers and implement the
compromise agreement until the SB had enacted
the appropriation ordinance.
Ruling
 Petition is GRANTED, Petitioner is Acquitted of violating
Sec 3 (e) of R.A 3019
 In this case, the court ruled that unlike in action
for torts, undue injury in Section 3 (e) cannot be
presumed even after a wrong or a violation of a
right has been established – its existence must be
proven as one of the elements of the crim, and FGU Insurance v. G.P Sarmiento Trucking
that the undue injury be specified, quantified and G.R 141910 | Aug 6, 2002 | Oblicon | Case 3 |
proven to the point of moral certainty.
Contravention of Tenor of Obligations
o The causing of undue injury or giving of
any unwarranted benefits through Facts
manifest partiality, evident bad faith or  June 18, 1994 – Respondent undertook to deliver
gross inexcusable negligence constitutes 30 units of Condura S.D. white refrigerators
the very act punished under the section. aboard one of its Isuzu trucks, driven by Mr.
Eroles from the plant site of Concepcion Industries
 Undue injury definition
in Manila to Dagupan City.
o The invasion of any legally protected o While the truck was traversing the
interest of another. In this context. Undue highway, it collided with an unidentified
injury can also be defined as actual truck causing it to fall into a deep canal
damage. resulting in damage to the cargoes.
 The court additionally states that it is  Petitioner, an insurer of the shipment paid to
fundamental in the law on damages that one Respondent the value of 204,450.00 being the
injured by a breach of a contract or by a wrongful subrogee of the rights industries of Concepcion
or negligent act or omission shall have a fair and Industries sought reimbursement of the amount it
just compensation commensurate to the loss paid from Respondent. Since the trucking
sustained as a consequence of the defendant’s company failed to heed the claim, Petitioner filed
act.
 a complaint for damages and breach of contract
against Respondent
Respondent’s Reply
 Respondent replied that they have been the only
hauler of Concepcion Industries since 1988 and it
was not engaged in business as a common
carrier. Furthermore, respondents assert that the
cause of damage was accidental.
 Respondent also filed a leave of court with motion
to dismiss the complaint by way of demurrer on
the ground that petitioner failed to prove that
Respondent was a common carrier.
RTC Ruling
 The RTC granted the motion to dismiss stating
that petitioner did not present any single
evidence that would prove that Respondent is a
common carrier.
o The RTC added that under the law on
obligations and contracts, negligence or
fault is not presumed. The law on quasi
delict provides for some presumption of
negligence but only upon the attendance
of some circumstances.
o Thus, Art 2185 provides that a person
driving a motor vehicle has been
negligent if at the time of the mishap he
was violating any traffic regulation.
 In this case, there was no proof
that Respondent had been
violating traffic regulation,
hence, the negligence does not
apply.
Court of Appeals Ruling
 The Court of appeals rejected the appeal of
Petitioner and ruled in favor of Respondent. In its
ruling, the C.A stated the following:
o In order for the presumption of
negligence provided for under the law
governing common carriers to arise,
petitioner must prove that respondent is
a common carrier. Failing to do so would
mean that the presumption would not
arise.
o The Court of Appeals added that basing
from the facts presented, Respondent
had been the trucking corporation of
Petitioner exclusively since 1079, thus,
Respondent had no choice but to comply
with the directive of its principal, that
Respondent is a private carrier.
Issue
 Whether or not Respondent may be considered as
a common carrier
 Whether or not Respondent either as a common
carrier or a private carrier may be presumed to
have been negligent when the goods it undertook
to transport safely were damaged while in its
protective custody and possession.
 Whether or not Res Ipsa Loquitor is applicable in
the case at bar.
Ruling
 The Court affirms the decision of the C.A and
RTC insofar as Respondent Driver is
concerned, but the assailed order of the
trial court and decision of appellate court
are reversed as regards to Respondent
which is ordered to pay Petitioner 204,450
for the lost and damaged cargoes.
 On the first issue, the court finds that the
conclusion of the lower courts was justified as
Respondent is an exclusive contractor and hauler
of Concepcion Industries. A trucking company
which is an exclusive contractor and hauler of
another company, rendering or offering its
services to no other individual or entity, cannot be
considered a common carrier.
o Common carriers are persons,
corporations, firms or associations iin the
business of carrying or transporting
passengers or goods or both by land
water or air for hire or compensation,
offering their services to the public,
whether to the public in general or to a
limited clientele in particular, but never
on an exclusive basis.
o The test of a common carrier is the
carriage of passengers or goods providing
space for those who opt to avail
themselves of its transportation service
for a fee.
 In culpa contractual, the mere proof of the
existence of the contract and the failure of its
compliance justify prima facie, a corresponding
right of relief; indeed, agreements can accomplish
little, either for their makers or for society unless
they are made the basis for action – the effect of
every infraction is to create a new duty, that is, to
make recompense to the one who has been
injured by the failure of another to observe his
contractual obligation unless there is a showing of
extenuating circumstances like proof of due
diligence or the attendance of a fortuitous event
which can excuse him from liability.
 In this case, the driver, who is not a party to the
contract of carriage may not be held liable under
the agreement – action against the driver can
only be based on culpa aquiline which unlike
culpa contractual would require the claimant for
damages to prove negligence or fault on his part.
o The court applied the latin maxim of “res
inter alios acta aliis neque nocet prodest”
or “a thing done between others does not
harm or benefit others" which means that
such contract can neither favor nor
prejudice a third person.
 While Petitioner invokes the doctrine of Res Ipsa
Loquitur, the said doctrine is not a rule of
substantive law and as such it does not create an
independent ground of liability – instead the said
doctrine is a mode of proof and relieves the
plaintiff of the burden of producing specific proof
of negligence.
o The doctrine is allowed in the following
cases only:
  Event is of a kind which does not
ordinarily occur in the absence of
negligence
 Other responsible causes
including the conduct of plaintiff
and third persons are eliminated
by the evidence
 Indicated negligence is within the
scope of defendant’s duty to
plaintiff.
 While Res Ipsa Loquitur generally finds relevance
whether or not a contractual relationship exists
between the plaintiff and the defendant – for the
inference of negligence arises from the
circumstances and nature of the parties – the
requirement that responsible other than those
due to defendant’s conduct must first be
eliminated for res ipsa loquitur to apply. As it
should be understood as being confined only to
cases of pure tort or non-contractual ones
because negligence in culpa contractual
immediately attaches a failure of the convenant
or its tenor.