Contents1. Angeles v. Calasanz.............................................................................................1

2. Magdalena Estate v. Myrick................................................................................1

3. UFC v. CA............................................................................................................1

4. UP v. delos Angeles.............................................................................................3

5. Roque v. Lapuz....................................................................................................5

6. Simon v. Feria......................................................................................................6

7. Araneta v. Phil Sugar Estate...............................................................................8

8. Chavez v. Gonzales..............................................................................................9

9. Encarnacion v. Baldomar.....................................................................................9

10. Eleizugui v. Manila Lawn Tennis Club.............................................................9

11. PNB v. Independent Planters Assoc...............................................................11

12. Imperial Insurance v. David...........................................................................11

13. Lambert v. Fox...............................................................................................11

14. Pamintuan v. Ca.............................................................................................11

15. Legarda v. Saldana.........................................................................................11

16. Aranas v. Tutaan.............................................................................................11

17. Filinvest v. Phil Acetylene..............................................................................11

18. Soco v. Militante.............................................................................................11

19. People v. Franklin...........................................................................................11

20. Laguna Tayabas v. Manabat...........................................................................12

21. Occena v. Jabson............................................................................................12

22. Gan Tion v. CA................................................................................................13

23. Perez v. CA.....................................................................................................13

24. Solinap v. del Rosario.....................................................................................13

25. Sycip v. CA.....................................................................................................13

26. Republic v. delos Angeles...............................................................................14

27. Uy Tong v. silva..............................................................................................14

28. Mindanao Portland Cement v. CA..................................................................14

1. Angeles v. Calasanz

Angel Villahermosa

Facts:

On 12/19/1957, Ursula Torres Calasanz and Tomas Calasanz (defendants) signed a contract with Buenaventura Angeles and Teofila Juani (plaintiffs). The contract was sale of a land located in Cainta, Rizal. (It is important to note that this contract was drafted by Calasanz making it a contract of adhesion, Angeles’ role was merely to sign the agreed upon contract.) The main agreement shows: “the amount of P3,920.00 plus 7% interest per annum.”

Angeles summary of payments: Down payment – P392 Monthly – P41.20 (deadline every 19th

day of the month until fully paid) On several occasions Angeles’ payment was delayed.

Up until July 1966, Angeles had already paid a total of P4,533.30, and had not made any payments monthly after. There was written demand from Calasanz on December 7 1966 but verbal demands were already made beforehand. On January 28 1967 Calasanz cancelled their contract. The RTC ruled in favor of Angeles who filed to save the contract from cancellation. Hence the appeal.

Issue:

Whether or not Calasanz’ cancellation of the contract was valid.

Calasansz party; Based on section 6 of their contract;

“In case the party of the SECOND PART fails to satisfy any monthly installments, or any other payments herein agreed upon, he is granted a month of grace within which to make the retarded payment, together with the one corresponding to the said month of grace; it is understood, however, that should the month of grace herein granted to the party of the SECOND PART expired; without the payments corresponding to both months having been satisfied, an interest of 10% per annum will be charged on the amounts he should have paid; it is understood further, that should a period of 90 days elapse, to begin from the expiration of the month of grace herein mentioned, and the party of SECOND PART has not paid all the amounts he should have paid with the corresponding interest up to that date, the party of the FIRST PART has the right to declare this contract cancelled and of no effect, and as consequence thereof, the party of the FIRST PART may dispose of the parcel of land covered by this contract in favor of other persons, as if this contract had never been entered into. In case of such cancellation of the contract, all the amounts paid in accordance with this agreement together with all the improvements made on the premises, shall be considered as rents paid for the use and occupation of the above mentioned premises, and as payment for the damages suffered by failure of the party of the SECOND PART to fulfill his part of the agreement; and the party of the SECOND PART hereby renounces all his right to demand or reclaim the return of the same and obliges himself to peacefully vacate the premises and deliver the same to the party of the FIRST PART.”

They also defend with Article 1191 of the Civil Code:

The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.

Why it was rejected - The right to rescind the contract for non-performance of one of its stipulations is not absolute. When there is doubtful cancellation of a contract between two parties as a result of non-performance of an obligation, even with stipulation, the courts will give the final decision to avoid injustice and abuse from a party of the contract.

Angeles party: Article 1234 of the Civil Code which provides that:

If the obligation has been substantially performed in good faith, the obligor may recover as though there had been a strict and complete fulfillment, less damages suffered by the oblige.

Also section 12 of their contract:

That once the payment of the sum of P3,920.00, the total price of the sale is completed, the party to the FIRST PART will execute in favor of the party of the SECOND PART, the necessary deed or deeds to transfer to the latter the title of the parcel of land sold, free from all hens and encumbrances other than those expressly provided in this contract; it is understood, however, that au the expenses which may be incurred in the said transfer of title shall be paid by the party of the SECOND PART, as above stated.

Why it was merited - The contract to sell, being a contract of adhesion, must be construed against the party causing it. We agree with the observation of the plaintiffs-appellees to the effect that "the terms of a contract must be interpreted against the party who drafted the same, especially where such interpretation will help effect justice to buyers who, after having invested a big amount of money, are now sought to be deprived of the same thru the prayed application of a contract clever in its phraseology, condemnable in its lopsidedness and injurious in its effect which, in essence, and in its entirety is most unfair to the buyers."

Held:

The cancellation was invalid, Angeles was to be granted the official deed of sale and was only to pay the remaining balance of P671.67 without interest.

2. Magdalena Estate v. MyrickJulius Anthony Ragay

GR No. L-47774

March 14, 1951

Facts: Magdalena Estate, Inc. sold 2 parcels of land in San Juan, Rizal to Louis Myrick for P7,953. It was payable in 120 monthly installments of P96.39. Myrick delivered a promissory note for the entire amount. Myrick made payments totaling P2,596.08. The last payment was on October 4, 1930, lthough the first unpaid installment was that of May 2, 1930. Magdalena Estate, in a letter (through its president, K.H. Hemady) informed Myrick that Magdalena was cancelling the sale, and all payments were forfeited in favor of Magdalena.

Issue: Does Magdalena Estate, Inc. have the right to retain the payments made by Myrick?

Ruling: No. there is no stipulation in the contract which allows Magdalena Estate to retain the amount paid by Myrick. Under Article 1124 of the Civil Code (old) (Art. 1191 in NCC) Magdalena may choose between demanding the fulfillment of the contract or its resolution. The remedies are alternative and not cumulative. Since Magdalena cancelled the sale, he cannot demand specific performance. As a result, the parties should be restored to their original situations by ordering them to return the things which were the objects of the contract, with their fruits, price, and interest. Such interest is to be computed from the date of the institution of the action.

- The contract of sale, being bilateral, may be cancelled by any of the parties even without any stipulation for its cancellation. (Art. 1191, NCC)

3. UFC v. CAPatrick Amparo

GR No L-29155

May 13, 1970

Facts: Plaintiff, Magdalo Franciso, Sr., invented a formula for a food seasoning known as the MAFRAN sauce. In 1942, plaintiff registered his trademark as owner and inventor with the Bureau of Patents. Subsequently, plaintiff executed a contract entitled “Bill of Assignment” with the defendant, Universal Food Corporation. Under the said contract, plaintiff is 1.) The sole and exclusive owner of the MAFRAN trademark and formula, 2.) To be paid the royalty of two percent of the annual net profit, which the defendant UFC may realize, from the production of MAFRAN sauce and other food products, 3.) To be appointed permanently as Second Vice-President and Chief Chemist of the UFC, 4.) Shall exercise absolute control and supervision over the laboratory personnel and in the purchase and safekeeping of the chemicals used in the preparation of the said sauce. (In order to preserve the secrecy of the formula)

Due to the high prices of materials, UFC issued a memorandum on November 28, 1960, that only factory Supervisor Ricardo Francisco should be retained and the salary of the plaintiff should be stopped until operation resumes. On December 3, 1960, UFC issued a memorandum-ordering plaintiff to produce MAFRAN sauce at a rate of not less than 100 cases a day. On December 6, 1960, UFC ordered the Assistant Chief Chemist, Ricardo Francisco, to recall all employees in the production of the MAFRAN sauce. On December 29, 1960, UFC instructed Ricardo Francisco, as Chief Chemist, to produce MAFRAN sauce in full swing. Plaintiff only received his salary until he was terminated on November 30, 1960. Thus, plaintiff filed an action for rescission of contract.

ISSUE 1: WON plaintiff is entitled to a rescission of contract.

RULING: YES. Article 1191 (Civil Code) provides that in reciprocal obligations, the power to rescind arises when one of the obligors fails to comply what is incumbent form him.Article 1383 provides that the action for rescission is subsidiary and thus, it cannot be instituted when the party suffering damage has not other legal means to obtain reparation. The general rule is that rescission will only be permitted for substantial and fundamental breach (not for slight or casual breach). In this case, the dismissal of plaintiff was a substantial and fundamental breach since he was dismissed without fault or negligence on his part. Moreover, the plaintiff had no alternative but to file for action for rescission and damages. (application of 1191 in conjunction with 1383 seems to be criticized in the concurring opinion below)

Contention of UFC in this issue: Plaintiff is not entitled to an action for rescission since he was remiss in his obligation to cede and transfer to defendant the formula of the MAFRAN sauce.

Reasons why the court rejected the defendant’s contention:

1. Plaintiff did not have the obligation to cede the MAFRAN formula. Under the contract, plaintiff should be paid the royalty of two percent of the annual net profit, which the defendant UFC may realize, from the production of MAFRAN sauce and other food products. The word “royalty” means compensation paid for the use of a patented invention. Thus, what was only transferred was the use of the said formula.

2. In order to preserve the secrecy of the formula plaintiff was appointed as “Chief Chemist” permanent in character. It is also provided in the contract he shall exercise absolute control and supervision over the laboratory personnel and in the purchase and safekeeping of the chemicals used in the preparation of the said sauce. Thus, it is clear that the plaintiff did not have the intention to cede the formula.

ISSUE 2: WON UFC should pay the plaintiff his salary from December 1, 1960 until the right to use the said formula was returned to the plaintiff.

RULING: Yes. One of the considerations for the transfer of the use of the MAFRAN sauce was the obligation of the UFC to employ plaintiff as Second Vice-President and Chief Chemist on a permanent status, at a monthly salary of 300 pesos. Thus, as long as the UFC uses the said formula, it is obliges to pay plaintiff his agreed monthly salary.

Contentions of UFC in this issue:

1. The appellate court made an error of law in granting the plaintiff both the right to rescind from contract and the right for specific performance because both rights are not conjunctive with each other under section 1191 of the Civil Code.

2. It is an error of law to oblige UFC to pay plaintiff’s salary from December 1, 1960 until the Mafran formula is returned since the corporation did not have the formula.

Why these contentions are rejected by the court:

1. First contention is answered by the ruling.2. UFC only had the right to use the formula, not the right to possess it.

ISSUE 3: WON plaintiff is obliged to return the right to use the MAFRAN formula.

RULING: Yes. Article 1385 provides that the rescission creates the obligation to return the contract the things which were the object of the contract. Since the right to use the MAFRAN formula was the object of the contract, UFC was obliged to return the right to its use upon plaintiff’s rescission from the contract.

Contention of UFC in this issue:

1. Court of Appeals erred in ordering UFC to return the plaintiff the trademark and formula for the Mafran sauce because they do not have the formula.

Why this contention was rejected:

UFC only had the right to use the formula, not the right to possess it.

REYES JBL, J., concurring

UFC’s contention that rescission under Article 1191 cannot be demanded except when the party suffering damage has no other legal means to obtain reparation should be rejected. Rescission under 1191 is based on a breach of contract while rescission under 1381 is by reason of lesion or economic prejudice. Rescission on account of breach of stipulation (1191) is not based on the injury to economic interests but on the breach of faith of defendant. It is not subsidiary action.

On the other hand, rescission under 1381 is predicated on the injury to the economic interests of the other party. Hence, when the damage is restored, the action to rescind cannot be maintained as provided under Articles 1383 and 1384. The operation of these articles (1383 and 1384) is limited to the cases of rescission in Article 1381 of the Civil Code and not to cases under Article 1191.

4. UP v. delos AngelesGina Angeli M. Yap

Facts: On November 2, 1960, UP and ALUMCO entered into a logging agreement wherein 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(Nov2, 1960) to December 31, 1965, in which by mutual agreement it is extendible for a period of 5 years.

On December 8, 1964, ALUMCO incurred an unpaid account of P219,362.94 although UP demanded multiple times, ALUMCO still failed to pay. Consequently, UP sent a notice to rescind the logging agreement. On the other hand, ALUMCO executed an instrument entitled “Acknowledgment of Debt and Proposed Manner of Payments. It was approved by the president of UP, which stipulated the following:

* In the event that the payments called for are not sufficient to liquidate the foregoing indebtedness, the balance outstanding after the said payments have been applied shall be paid by the debtor in full no later than June 30, 1965.* In the event that the debtor fails to comply with any of its promises, the Debtor agrees without reservation that Creditor shall have the right to consider the Logging Agreement rescinded, without the necessity of any judicial suit.

ALUMCO continued its logging operations, but then again failed to pay or again incurred an unpaid account. On July 19,1965, UP informed ALUMCO that it had, as of July 19, 1965, considered rescinded and of no further legal effect the logging agreement, and that UP had already taken steps to have another concessionaire take over the logging operation. ALUMCO filed a petition to enjoin UP from conducting the bidding. The lower court ruled in favor of ALUMCO, hence, this appeal.

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

Ruling: Yes. First of all, UP and ALUMCO had clearly stipulated that upon default by the debtor, UP has the right 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 Co: “There is nothing in the law that prohibits the parties from entering into agreement that violation of the terms of the contract would cause cancellation thereof, even without court intervention. In other words, it is not always necessary for the injured party to resort to court for rescission of the contract.”

5. Roque v. LapuzG.R. No. L-32811March 31, 1980Assigned: Bation, Jessa Gwen N.

FACTS: Sometime in 1964, plaintiff and defendant entered into an agreement of sale covering Lots 1, 2 and 9, Block 1, of said property, payable in 120 equal monthly installments at the rate of P16.00, P15.00 per square meter, respectively. In accordance with said agreement, defendant paid to plaintiff the sum of P150.00 as deposit and the further sum of P740.56 to complete the payment of four monthly installments covering the months of July, August, September, and October, 1954. 

On January 24, 1955, defendant requested plaintiff that he be allowed to abandon and substitute Lots 1, 2 and 9, the subject with Lots 4 and 12, Block 2 of the Rockville Subdivision, which are corner lots, to which request plaintiff graciously acceded. The evidence discloses that defendant proposed to plaintiff modification of their previous contract to sell because he found it quite difficult to pay the monthly installments on the three lots, and besides the two lots he had chosen were better lots, being corner lots. In addition, it was agreed that the purchase price of these two lots would be at the uniform rate of P17.00 per square meter payable in 120 equal monthly installments, with interest at 8% annually on the balance unpaid. Pursuant to this new agreement, defendant occupied and possessed Lots 4 and 12, and enclosed them, including the portion where his house now stands, with barbed wires and adobe walls. However, aside from the deposit of P150.00 and the amount of P740.56, which were paid under their previous agreement, defendant failed to make any further payment on account of the agreed monthly installments for the two lots in dispute, under the new contract to sell. Plaintiff demanded upon defendant not only to pay the stipulated monthly installments in arrears, but also to make up-to-date his payments, but defendant refused to comply with plaintiff's demands. 

On or about November 3, 1957, plaintiff demanded upon defendant to vacate the lots in question and to pay the reasonable rentals thereon at the rate of P60.00 per month from August, 1955. On January 22, 1960, petitioner Felipe C, Roque filed the complaint against defendant Nicanor Lapuz for rescission and cancellation of the agreement of sale between them involving the two lots in question and prayed that judgment be rendered ordering the rescission and cancellation of the agreement of sale, the defendant to vacate the two parcels of land and remove his house therefrom and to pay to the plaintiff the reasonable rental thereof at the rate of P60.00 a month from August 1955 until such time as he shall have vacated the premises, and to pay the sum of P2,000.00 as attorney's fees, costs of the suit and award such other relief or remedy as may be deemed just and equitable in the premises.

 The Court of Appeals rendered its decision that the defendant Nicanor Lapuz is granted a period of ninety (90) days from entry hereof within which to pay the balance. Hence, this appeal. 

ISSUE: Can private respondent be entitled to the Benefits of the third paragraph of Article 1191, New Civil Code, for the fixing of period?

RULING: No. Respondent as obligor is not entitled to the benefits of paragraph 3 of Art. 1191, NCC. Having been in default and acted in bad faith, he is not entitled to the new period of 90 days from entry of judgment within which to pay petitioner the balance of P11,434.44 with interest due on the purchase price of P12,325.00 for the two lots. To allow and grant respondent an additional period for him to pay the balance of the purchase price, which balance is about 92% of the agreed price, would be tantamount to excusing his bad faith and sanctioning the deliberate infringement of a contractual obligation that is repugnant and contrary to the stability, security and obligatory force of contracts. Moreover, respondent's failure to pay the succeeding 116 monthly installments after paying only 4 monthly installments is a substantial and material breach on his part, not merely casual, which takes the case out of the application of the benefits of pa paragraph 3, Art. 1191, NCC.

Pursuant to Art. 1191, New Civil Code, petitioner is entitled to rescission with payment of damages which the trial court and the appellate court, in the latter's original decision, granted in the form of rental at the rate of P60.00 per month from August, 1955 until respondent shall have actually vacated the premises, plus P2,000.00 as attorney's fees. The Court affirmed the same to be fair and reasonable. The Court also sustained the right of the petitioner to the possession of the land, ordering thereby respondent to vacate the same and remove his house therefrom.

6. Simon v. Feria

G.R. No. L-39378August 28, 1984(Assigned: Bation , Jessa Gwen N.)

FACTS: On December 13, 1943, Nicolas Adamos and Vicente Feria purchased two lots from Juan Porciuncula. Porciuncula’s successor in interest sought for the annulment and cancellation of the sale which the court a quo favorably ruled.

During the pendency of the above mentioned case, Adamos & Feria sold to Generosa Ayson-Simon the lots in question. Due to the failure of Adamos & Feria to comply with their commitment to have the subdivision plan of the lots approved and to deliver to deliver the  titles and possession to Generosa, the latter filed suit for specific performance. As a result of the sale

of the lot to said Adamos & Feria being null and void, there is an impossibity in complying with  their commitment to Generosa, the latter then seek the rescission of the contract plus damages.

Adamos & Feria contend that Generosa’s action had prescribed, considering that she had only four years from May 29, 1946 to rescind the transaction.

ISSUE: The FULFILLMENT and the RESCISSION of the obligation in reciprocal ones are alternative remedies. That being said, plaintiff whom having chosen FULFILLMENT (or specific performance of obligation), whether or not she can no longer seek rescission?

Ruling: The rule that the injured party can only choose between fulfillment and rescission of the obligation, and cannot have both, applies when the obligation is possible of fulfillment. If, as in this case, the fulfillment has become impossible, Article 1191 “allows the injured party to seek rescission even after he has chosen fulfillment”.

True it is that in Civil Case No. 7275 the Court already rendered a Decision in favor of plaintiff, but since defendants cannot fulfill their obligation to deliver the titles to and possession of the lots to plaintiff, the portion of the decision requiring them to fulfill their obligations is without force and effect. Only that portion relative to the payment of damages remains in the dispositive part of the decision, since in either case (fulfillment or rescission) defendants may be required to pay damages.

ISSUE: And that even if plaintiff could seek rescission, whether or not the action to rescind the obligation has prescribed?

RULING: No. Article 1191 of the Civil Code provides that the injured party may also seek rescission, if the fulfillment should become impossible. The cause of action to claim rescission arises when the fulfillment of the obligation became impossible when the Court of First Instance of Quezon City in Civil Case No. 174 declared the sale of the land to defendants by Juan Porciuncula a complete nullity and ordered the cancellation of Transfer Certificate of Title No. 69475 issued to them. Since the two lots sold to plaintiff by defendants form part of the land involved in Civil Case No. 174, it became impossible for defendants to secure and deliver the titles to and the possession of the lots to plaintiff. But plaintiff had to wait for the finality of the decision in Civil Case No. 174, According to the certification of the clerk of the Court of First Instance of Quezon City (Exhibit "E-2"), the decision in Civil Case No. 174 became final and executory "as per entry of Judgment dated May 3, 1967 of the Court of Appeals." The action for rescission must be commenced within four years from that date, May 3, 1967. Since the complaint for rescission was filed on August 16, 1968, the four year period within which the action must be commenced had not expired.

7. Araneta v. Phil Sugar EstateNo name

Facts: Tuason & Co. own land and through George Araneta Inc., sold part of it (around 43k sq. m.) for P430,500 to Philippine Sugar Estates Development Co. In the contract, the buyer will build the Sto. Domingo Church and Convent while seller will construct streets on the NE and NW and SW sides of the land and the street on the NE side shall be named "Sto. Domingo Avenue. Buyer finished the church and convent, but seller could not finish the NE street because of Manuel Abundo, living in the middle part, who would not vacate the premise. Buyer filed for a complaint for specific performance. Seller’s defense: Action is premature. Obligation to build street has no definite period. Court needs to fix the period first before Buyer can demand specific performance. Buyer filed MR, praying that the court fix a period. MR granted and court fixes a period of 2 years.

Issue: Whether or not Court of First Instance and CA erred in setting the 2-year period.

Courts erred. Court needed to determine whether or not the parties agreed that the petitioner should have reasonable time to perform its part of the bargain, not whether the court should fix the time of performance. If the contract had provided a “reasonable time” for Seller to perform his obligation, and the “reasonable time” had passed after filing the complaint, then the court should just award damages. If “reasonable time” had not passed yet, then the complaint should be dismissed for being premature. But it cannot be held that the court needed to fix the period for performance under Art. 1197, which states that:

Art. 1197. If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended, the courts may fix the duration thereof.

The courts shall also fix the duration of the period when it depends upon the will of the debtor.

In every case, the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by them.

Art. 1197 is applied in a two-step process. (1)The Court must first determine that "the obligation does not fix a period" (or that the period is made to depend upon the will of the debtor)," but from the nature and the circumstances it can be inferred that a period was intended". With that settle, proceed to (2) decide what period was "probably contemplated by the parties". The 2-year period was pulled out of thin air with no supporting circumstances and is therefore not warranted by the Civil Code.

Contract shows that parties were aware of squatters in the area. They know that they must resort to legal processes in evicting the squatters but the duration of the suits to be brought would not be under their control nor could the same be determined in advance. Thus, parties must defer performance until squatters are evicted. CA objected, stating that it would make the period indefinite. This indefiniteness is why the agreement did not specify any exact periods or dates of performance. Therefore, the time for the performance of the obligations Seller is the date that all the squatters in the area are evicted.

8. Chavez v. GonzalesDinah Concepcion

G.R. No. L-27454

Facts: Chavez delivered to Gonzales,(typewriter repairer) a portable typewriter for repair. After several reminders made by Chavez to Gonzales which the latter failed to comply, he personally went to the house of Gonzales and asked for the return of the typewriter. Chavez received the typewriter and found out that parts and screws were missing. The following day Gonzales delivered the missing parts of the typewriter. Chavez went to Freixas Business Machines and had his typewriter repaired which cost him a total of P89.85, including labor and materials. Chavez then filed an action demanding Gonzales to pay P90.00 as actual and compensatory damages, P100.00 for temperate damages, P500.00 for moral damages, and P500.00 as attorney’s fees. RTC held Gonzales shall pay for the missing parts only but not the cost of repair done by Freixas Business Machines. Chavez, not satisfied with RTC's decision elevated the petition directly to the Supreme Court. While Gonzales contended that he should not be liable to pay any damages as his contract with Chavez did not contain any period.

Issue: Whether or not Gonzales can be held liable for the repair done by Freixas Business Machines

Ruling: Contract of servicing the typewriter was perfected although there was no specified date and when the time passed work was not accomplished, instead returned the typewriter to the owner cannibalized which constitute a breach of obligation. Therefore he cannot invoke Article 1197 of the Civil Code for he admitted non-performance by returning the typewriter with missing parts so fixing of period has no purpose. He is liable under Article 1167 of the Civil

Code (for the cost of labor spent) and Article 1170 (for the cost of missing parts). Temperate and moral damages cannot be awarded to Chavez as these were not alleged in the complaint and for having resorted directly to the Supreme Court he is bound by such judgment of the court.

9. Encarnacion v. BaldomarRuth Risma

10. Eleizugui v. Manila Lawn Tennis ClubNo name

Facts: There was a lease of a land by Eleizegui(Lessor) to the MLTC(Lessee) for P25/month and lasts at the will of the lessee. It appeared that the plaintiffs terminated the lease right on the first month. The defendant is in the belief that there can be no other mode of terminating the lease than by its own will, as what they believe has been stipulated. Plaintiff filed a case for unlawful detainer, claiming that article 1569 of the Civil Code provided that a lessor may judicially dispossess the lessee upon the expiration of the conventional term, the one agreed upon by the parties or of the legal term, in defect of the conventional, fixed for leases by articles 1577 and 1581. The plaintiffs argued that the duration of the lease depends upon the will of the lessor on the basis of Art. 1581 which states that, "When the term has not been fixed for the lease, it is understood to be for years when an annual rental has been fixed, for months when the rent is monthly. . . ." The second clause of the contract provides as follows: "The rent of the said land is fixed at 25 pesos per month."

Issue: A. Whether or not the parties have agreed upon the duration of the lease           B. Whether or not the lease depends upon the will of the lessee

Ruling: A. Yes, the parties have agreed upon a term hence Art. 1581 is inapplicable. It appears that there was actually an agreement between the parties as to the duration of the lease, which is implied that the lease is to be dependent upon the will of the lessee. But the contract should not be understood as one stipulated as a life tenancy or a perpetual lease since the terms of the contract express nothing to this effect, even if they implied this idea. If the lease could last during such time as the lessee might see fit, because it has been so stipulated by the lessor, it would last, first, as long as the will of the lessee — that is, all his life; second, during all the time that he may have succession, inasmuch as he who contracts does so for himself and his heirs. The lease in question does not fall within any of the cases in which the rights and obligations arising from a contract cannot be transmitted to heirs, either by its nature, by agreement, or by provision of law. Moreover, being a lease, then it must be for a determinate period by its very nature.

B) No, the duration of the lease does not depend solely upon the will of the lessee. In every contract, as laid down by the authorities, there is always a creditor who is entitled to demand the performance, and a debtor upon whom rests the obligation to perform the undertaking. The term within which performance of the obligations under Art. 1555-1561 is due is what has been left to the will of the debtor. This term it is which must be fixed by the courts. The only action available is the determination of the said period, not the unlawful detainer action, for this presupposes the expiration of the term and makes it the duty of the judge to simply decree an eviction. Since the period has still not been fixed by the courts, there can be no unlawful detainer action, and the lower courts erred in their decision.

11. PNB v. Independent Planters Association

Julius Anthony Ragay

GR No. L -28046

May 16, 1983

Facts: PNB filed an action for the collection of a sum of money against several solidary debtors. One of them (Ceferino Valencia) died during the pendency of the case (PNB has presented evidence).

Contention of Independent Planters Association, Inc., et. al: According to Section 6, Rule 86. Rules of Court, a claim against a deceased solidary debtor shall be filed against the decedent as if he were the only debtor (the estate may recover from the other debtors afterwards)

Contention of PNB: Article 1216 of the Civil Code provides that the creditor may proceed against any one of the solidary debtors or some or all of them simultaneously.

Issue: Against whom may PNB demand payment?

Ruling: Anyone. As provided by Article 1216, the creditor may proceed against any of the solidary debtors or some or all of them simultaneously. Sec. 6, Rule 86 does not prevent the creditor from pursuing any of the surviving solidary debtors. It merely provides how a creditor may demand from a deceased solidary debtor, if he chooses. It is not mandatory or him to have the case dismissed against the surviving debtors and file its claim in the estate of the deceased solidary debtor.

12. Imperial Insurance v. DavidJunn Guazon

13. Lambert v. FoxDominic Lajot

14. Pamintuan v. CaPatrick Amparo

15. Legarda v. SaldanaAlex Cariaso

16. Aranas v. Tutaan

Darrel Torres

127 SCRA 828

FACTS: On May 3, 1971 the lower court declared that Petitioner Luisa Quijencio (and by her spouse Jose Arañas)was the owner of 400 shares including the stock dividends that accrued to said shares, of respondent Universal Textile Mills, Inc. (UTEX) as defendant and Gene Manuel and B. R. Castañeda as co-defendants, and subsequently ordered UTEX to cancel said certificates and issue new ones in the name of Plaintiff and to deliver all dividends appertaining to the same, whether in cash or in stocks. UTEX filed a motion for clarification whether the phrase “to deliver to her all dividends appertaining to the same, whether in cash or in stocks” meant dividends properly pertaining to plaintiffs after the court’s declaration of plaintiff

ownership of said 400 shares of stock. Defendant UTEX has always maintained it would rightfully abide by whatever decision may be rendered since such would be the logical consequence after the ruling in respect to the rightful ownership of said shares of stock. The motion was granted which ruled against UTEX, ordering it to pay plaintiff the cash dividends, which accrued to the stocks in question after rendition of its current decision excluding cash dividends already paid to Gene Manuel and B. R. Castañeda which accrued before its decision. UTEX alleged that the cash dividends had already been paid thereby absolving it from payment thereof.

ISSUE: Was the contention of UTEX, alleging that the cash dividends of stock had already been paid and thereby absolving it from any further payment, valid?

RULING: No. The final and executory judgment against UTEX declared petitioners as the owners of the questioned UTEX shares of stock against its co-defendants. It was further made clear in the motion for clarification that all dividends accruing to the said shares after the rendition of the decision of Aug. 7, 1971 rightfully belonged to petitioners. If UTEX nevertheless chose to pay the wrong parties, notwithstanding its full knowledge and understanding of the final judgment, it was still liable to pay the petitioners as the lawful declared owners of the questions shares of stocks. The burden of recovering the supposed payment of the cash dividends made by UTEX to the wrong parties Castañeda and Manuel falls upon itself by its own action and cannot be passed by it to the petitioner as the innocent parties. It is elementary that payment made by a judgment debtor to a wrong party cannot extinguish the judgment obligation of such debtor to its creditor.

17. Filinvest v. Phil AcetyleneAngel Villahermosa

18. Soco v. MilitanteChristal JavierGR No. L-58961, June 28, 1983

Facts: In 1973, Soco leased her commercial building to Militante. Soco alleged that Militante failed to pay rent beginning May 1977 so he asked Militante to vacate the building. As a practice, Militante paid her by asking his bank, Commercial Bank and Trust Company, to deliver regular checks to her. Soco said that she received the checks except starting May 1977. In reply, Militante said that he actually paid by directing his bank to deliver it to the City Court of Cebu.

The trial court said that Militante substantially complied with the requirements of the Civil Code for consignation*.

Issue: WON Militante complied with the requirements of consignation?

Ruling: No. All requirements for consignation must be complied with. In consignation, the debtor must show that 1) there was a debt due 2) the consignation was made because the creditor to whom tender of payment** was made refused to accept it, was absent or incapacitated, or several people claimed the amount due 3) there was a previous notice before consignation was made 4) the amount due was placed at the disposal of the court and 5) after the consignation was made, another notice was given. First, Militante failed to prove tender of payment. Although his letter on June 1977 could be proof for tender of payment, but it was for that month only. He did not state for what particular months the letter was for. Second, he failed to give prior notice for consignment. That same letter did not say that they will really resort to consignation. Third, he failed to notify Soco after the consignation was made. He only arranged for the bank comptroller to deliver the check to the clerk of court but it he and the comptroller never told Soco of the consignation. Fourth, he

failed to show that consignation was actually made. He was not able to show the receipts from the Clerk of Court except only for two months.

*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 of payment is done before consignation and may be extrajudicial. It is an attempt to make a private settlement before proceeding to the solemnities of consignation.

19. People v. Franklin

People vs Franklin GR no. L-21507, June 7, 1971Gail Borromeo

Facts:Natividad Franklin was charged with estafa. Upon a bail bond posted by the Asian Surety & Insurance Company, Inc. in the amount of P2,000.00, she was released from custody.The Court of First Instance then set her arraignment, on which date she failed to appear. The court postponed the arraignment but the accused failed to appear again, for which reason the court ordered her arrest and required the surety company to show cause why the bail bond posted by it should not be forfeited.

Issue:Should the bail bond be forfeited due to the failure of the surety company to perform its obligations?

Ruling:Yes. By the mere fact that a person binds himself as surety for the accused, he takes charge of, and absolutely becomes responsible for the latter's custody, and under such circumstances it is incumbent upon him, or rather, it is his inevitable obligation not merely a right, to keep the accused at all times under his surveillance, inasmuch as the authority emanating from his character as surety is no more nor less than the Government's authority to hold the said accused under preventive imprisonment as cited in the case of Uy Tuising.

In the eyes of the law a surety becomes the legal custodian and jailer of the accused, thereby assuming the obligation to keep the latter at all times under his surveillance, and to produce and surrender him to the court upon the latter's demand.

That the accused in this case was able to secure a Philippine passport which enabled her to go to the United States was, in fact, due to the surety company's fault because it was its duty to do everything and take all steps necessary to prevent that departure. This could have been accomplished by seasonably informing the Department of Foreign Affairs and other agencies of the government of the fact that the accused for whose provisional liberty it had posted a bail bond was facing a criminal charge in a particular court of the country. Had the surety company done this, there can be no doubt that no Philippine passport would have been issued to Natividad Franklin.

20. Laguna Tayabas v. ManabatKrizza Batulan

21. Occena v. JabsonGR No. L44349

October 29, 1976

June Antonette C. Lacpao

Facts: Respondent Tropical Homes entered into a contract with plaintiffs. In said contract, Tropical Homes would develop a subdivision in the lot owned by plaintiffs and for this, Tropical homes will get “40% of all cash receipts from the sale of the subdivision lots.” Now, Tropical Homes prays for the modification of the terms and conditions of the contract. CA submitted the case for decision, reasoning that respondent has cause of action under Article 1267 of the Civil Code.

Contention of the parties:

Plaintiff: Tropical Homes’ petition should be dismissed due to lack of cause of action.

Respondent: The contract should be reversed and modified because cost of materials needed “has risen to levels which are unanticipated” and further performance of the respondent under the terms of the existing contract would result in the unjust enrichment of the plaintiff.

Issue: Can the court modify or revise the terms and conditions of a contract?

Ruling: No. The courts have no authority “to remake, modify or revise the contract or to fix the division of shares between the parties.” The terms and conditions in the contract have the force of law between the parties. Hence, the Court cannot substitute its own terms for those already stipulated by the parties. Furthermore, the CA misapplied Article 1267 in this case because what respondents seeks is not the release from contract due to service becoming difficult, but the modification of the contract. Such power to modify contracts is not possessed by the courts.

22. Gan Tion v. CABen Benedian

G.R. No. L-22490               May 21, 1969

Facts: Ong Wan Sieng was a tenant of Gan Tion. In 1961 Gan Tion filled an ejectment case against Ong Wan Sieng for non-payment of rents for August and September for a total of P360. Ong Wan Sieng in his defence said the amount should be P160/month and he offered this much but Gan Tion refused to accept it. Gan Tion won in the MC of Manila but CA reversed the judgment and dismissed the complaint, and ordered him to pay the Ong Wan Sieng the sum of P500 as attorney's fees. That judgment became final.

On October 10, 1963 Gan Tion served notice on Ong Wan Sieng that he was increasing the rent to P180 a month, effective November 1st, and at the same time demanded the rents in arrears at the old rate in the aggregate amount of P4,320.00, corresponding to a period from August 1961 to October 1963.(160/month for 27month’s during the first trial)

In the meantime, Ong Wan Sieng was able to obtain a writ of execution of the judgment for attorney's fees in his favor for P500. Gan Tion went on certiorari to the CA, where he pleaded legal compensation, claiming that Ong Wan Sieng was indebted to him in the sum of P4,320 for unpaid rents.

CA ruled that although "respondent Ong Wan Sieng is indebted to the petitioner for unpaid rentals in an amount of more than P4,000.00," the sum of P500 could not be the subject of legal compensation, it being a "trust fund for the benefit of the lawyer, which would have to be turned over by the client to his counsel." , the requisites of legal compensation, that the parties must be creditors and debtors of each other in their own right (Art. 1278, Civil Code) and that each one of them must be bound principally and at the same time be a principal creditor of the

other (Art. 1279), are not present in the instant case, since the real creditor with respect to the sum of P500 was the defendant's counsel.”

Issue: whether or not there has been legal compensation between petitioner Gan Tion and respondent Ong Wan Sieng?

Ruling: This is not an accurate statement of the nature of an award for attorney's fees. The award is made in favor of the litigant, not of his counsel, and is justified by way of indemnity for damages recoverable by the former in the cases enumerated in Article 2208 of the Civil Code. It is the litigant, not his counsel, who is the judgment creditor and who may enforce the judgment by execution. Such credit, therefore, may properly be the subject of legal compensation. Quite obviously it would be unjust to compel petitioner to pay his debt for P500 when admittedly his creditor is indebted to him for more than P4,000.

23. Perez v. CASalesheil Du (sorry daan sa spelling if sayop )

24. Solinap v. del RosarioJosyl Fructuoso

25. Sycip v. CAWiem Bonganciso

G.R. No. L-38711134 SCRA 317

Facts: Shares of stocks were entrusted to Lapuz for him to sell on commission. Sycip offered to sell the shares for him with the assurance that he could sell them at a good price because he had good connections in the Stock Exchange. Before accepting, Lapuz clarified that the shares did not belong to him and were only entrusted to him for sale. Thereafter, the shares were given over to Sycip and he put them in the market. In remitting the full value of the shares sold, Sycip sent a draft to Lapuz but this was dishonored by the bank. When Lapuz tried to collect from him a second time, he gave him another bouncing check. After repeated demands plus a warning that an estafa case will be filed against him if he fails to raise the balance owed, Sycip wired another check which wasn’t honored either. Lapuz had to pay the owner for the value of the stocks himself. Hence, this case for estafa against Sycip and indemnification for full value of the stocks. He was found guilty and indemnification in favour of Lapuz was ordered by the trial court and this was subsequently affirmed by the Court of Appeals.

In his petition for certiorari to review the decision of the Court of Appeals, Sycip, in his third and fourth assigned errors, contends that respondent Court of Appeals erred in not applying the provisions on compensation or setting-off debts under Articles 1278 and 1279 of the New Civil Code, despite evidence showing that Lapuz still owed him an amount of more than P5,000.

Issue: Do the provisions on compensation or setting-off debts under Article 1278 and 1279 of the New Civil Code apply to the case?

Ruling: No. Compensation cannot take place in this case since the evidence shows that Jose K. Lapuz is only an agent of the true owner of the stocks. Compensation takes

place only when two persons in their own right are creditors and debtors of each other, and that each one of the obligors is bound principally and is at the same time a principal creditor of the other. Moreover, as correctly pointed out by the trial court, Lapuz did not consent to the off-setting of his obligation with petitioner’s obligation to pay for the shares.

26. Republic v. delos AngelesTonirose Balasabas

27. Uy Tong v. silvaKrizea Duron

28. Mindanao Portland Cement v. CAGR No L-62169, February 28, 1983Stella Lyn C. Amistad

Facts: Atty. Laquihon (counsel for defendant Pacweld) filed a claim for attorneys fees against Mindanao Portland Cement Corp (MPCC), invoking an earlier court decision where MPCC was adjudged to pay Pacweld P10,000.00 as attorney’s fees. MPCC argued that said amount was offset by the P10,000.00 collectible against Pacweld, also by way of attorney’s fees, in a separate case against the defendant in the same court.CA issued an order dated June 26, 1978 for MPCC to pay attorney’s fees directly to Atty. Laquihon. MPCC filed a motion for reconsideration, citing the Articles 1278, 1279, and 1290 but was denied in the order issued on August 28, 1978.

Issue: W/N the two obligations offset each other, and are extinguished reciprocally by operation of law

Ruling: Both corporations were creditors and debtors of each other, their debts to each other consisting in the final and executory judgements of the CFI in two separate cases, ordering each to pay P10,000.00 as attorney’s fees. The two obligations therefore offset each other, compensation having taken effect by operation of law and extinguished both debts to the concurrent amount of P10,000, pursuant to Art. 1278, 1279 and 1290 of the Civil Code, since the requisites in Art 1279 for automatic compensation were duly present.

Notes: Art. 1278. Compensation shall take place when two persons, in their own right, are

creditors and debtors of each other.

ART. 1279. In order that compensation may be proper, it is necessary:(1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other;(2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated:(3) That the two debts be due;(4) That they be liquidated and demandable;(5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.

ART. 1290. When all the requisites mentioned in Art. 1279 are present, compensation takes effect by operation of law, and extinguishes both debts to the concurrent amount, even though the creditors and debtors are not aware of the compensation.