digests oblicon 5

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International Hotel Corp. vs Joaquin

Facts:On February 1, 1969, respondentFrancisco B. Joaquin, Jr. submitted aproposal to the Board of Directors of thenternational !otel "orporation #!"$ for him

to render technical assistance in securin% aforei%n loan for the construction of a hotel,to be %uaranteed by the De&elopment Ban'of the (hilippines #DB($.

after submittin% the application to DB(,Joaquin )rote to !" to request thepayment of his fees in the amountof (*++,+++.++ for the ser&ices that he hadpro&ided and )ould be pro&idin% to !" inrelation to the hotel proect that )ereoutside the scope of the technical proposal.

Joaquin intimated his amenability to recei&eshares of stoc' instead of cash in &ie) of!"-s financial situation.!is request )as%ranted.

!e narro)ed the financiers to o%er Dunn/ "ompany and 0aterials !andlin%"orporation. !e recommended that theBoard of Directors consider 0aterials!andlin% "orporation based on the morebeneficial terms it had offered. !isrecommendation )as accepted.1+

e%otiations )ith 0aterials !andlin%"orporation and, later on, )ith its principal,Barnes nternational #Barnes$, ensued.2hile the ne%otiations )ith Barnes )ereon%oin%, Joaquin and Jose 3alero, the45ecuti&e Director of !", met )ith anotherfinancier, the 2eston nternational"orporation #2eston$, to e5plore possiblefinancin%.112hen Barnes failed to deli&er theneeded loan, !" informed DB( that it)ould submit 2eston for DB(-sconsideration.17s a result, DB( cancelled

its pre&ious %uaranty throu%h a letter datedDecember 6, 1981.1

On December 1, 1981, !" entered into ana%reement )ith 2eston, and communicatedthis de&elopment to DB( on June 6, 198.!o)e&er, DB( denied the application for%uaranty for failure to comply )ith the

conditions contained in its o&ember 1,1981 letter.

Due to Joaquin-s failure to secure theneeded loan, !", throu%h its (residentBautista, canceled the 18,+++ shares of

stoc' pre&iously issued to Joaquin anduare; as payment for their ser&ices.


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reliance on 7rticle 11=6 of the "i&il"ode.

2. @nder 7rticle 1>. f the obli%ation hasbeen substantially performed in %oodfaith, the obli%or may reco&er as thou%h

there had been a strict and completefulfillment, less dama%es suffered by theobli%ee.

n order that there may be substantialperformance of an obli%ation,1. theremust ha&e been an attempt in %ood faithto perform, )ithout any )illful orintentional departure therefrom. . or ofthe obli%or, and partly on chance,ha;ard or the )ill of a third person, theobli%ation is mi5ed.>*6

"onsiderin% that the respondents )ereable to secure an a%reement )ith2eston, and subsequently tried tore&erse the prior cancellation of the%uaranty by DB(, )e rule that theythereby constructi&ely fulfilled theirobli%ation.

4. uantum meruit should apply in theabsence of an e5press a%reement onthe fees

@nder the principle of quantummeruit, a contractor is allo)ed toreco&er the reasonable &alue of theser&ices rendered despite the lac' of a)ritten contract.


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MIAA ! A"IC

"acts: n eptember 199+, herein petitioner0anila nternational 7irport 7uthority #077$entered into a contract of lease )ith hereinrespondent 7&ia Filipinas nternational

"orporation #7F"$, )herein 077 allo)ed7F" to use specific portions of land as )ellas facilities )ithin the inoy 7quinonternational 7irport e5clusi&ely for thelatterEs aircraft repair station and charterin%operations. , eries of 19=, )hich )ill effect adecrease or escalation of the monthlyrental or impose ne) and additional feesand char%es, includin% but not limited to%o&ernmentI077 circulars, rules andre%ulation to this effect, shall be deemed

incorporated herein and shallautomatically amend this "ontractinsofar as the monthly rental isconcerned.9!o)e&er, the "ourt a%rees)ith the "7 thatthe abo&equoted pro&ision of the leasecontract should not be read in isolation.ather, it should be read to%ether )ith
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the pro&isions of 7rticle 3, (ara%raph=.1, )hich pro&ide thataGny amendment, alteration ormodification of theG "ontract shall notbe &alid and bindin%, unless and untilmade in )ritin% and si%ned by the

parties thereto.1+t is clear from thefore%oin% that the intention of the partiesis to subect such amendment to theconformity of both petitioner andrespondent. n the instant case, there isno sho)in% that respondent %a&e hisacquiescence to the said amendment ormodification of the contract.

2. 7rticle 1* of the "i&il "ode clearlystates that )Ghen the obli%ee acceptsthe performance 'no)in% its

incompleteness or irre%ularity, and)ithout e5pressin% any protest orobection, the obli%ation is deemed fullycomplied )ith.

t may not be amiss to point out thatdurin% the abo&ementioned period,respondent continued to pay andpetitioner 'ept on recei&in% the ori%inalrental fee of (6,*=+.++ )ithout anyreser&ations or protests from thelatter.1either did petitioner indicate in

the official receipts it issued that thepayments made by respondentconstitute only partial fulfillment of thelatterEs obli%ations.

For failin% to ma'e any protest orobection, petitioner isalready estopped from see'in% reco&eryof the amount claimed.

A#$I%&'( ! "')ICIA%* A%+ &I*%-

"acts: On 0ay 6, 1999, petitioner7quintey filed before


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0anuel, and Fely "irilo in the totalamount of (81,+++.++.

H')+:1. @nder 7rticle 11#b$ of the e)

"i&il "ode, no&ation is enumerated

as one of the )ays by )hichobli%ations are e5tin%uished.Obli%ations may be modified bychan%in% their obect or principalcreditor or by substitutin% the personof the debtor.6


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Felicidad, li'e)ise, unequi&ocablydeclared that "aban% and "irilo nolon%er had any obli%ation to her.

)* ! J! 'C*"*5M6*5

"acts:espondent LJ 4"OAFO02OL ystem (hil., nc. is acorporation en%a%ed in the sale ofsteel scaffoldin%s, )hile petitioneronny H. Ho, doin% business underthe name and style ans4nterprises, is a buildin%contractor. On February , 199+,petitioner ordered scaffoldin%equipments from respondent )orth

(*>+,>*.=+.1G!e paida do)npayment in the amount of(1*+,+++.++. 6.1> from Jomero ealty"orporation.

!o)e&er, )hen respondent tried tocollect the said credit from Jomero

ealty "orporation, the latterrefused to honor the Deed of

7ssi%nment because it claimed thatpetitioner )as also indebted toit. On o&ember 6, 199+,respondent sent a letter8Gtopetitioner demandin% payment of hisobli%ation, but petitioner refused topay claimin% that his obli%ation had

been e5tin%uished )hen theye5ecuted the Deed of 7ssi%nment.


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!ence, it may )ell be that theassi%nment of credit, )hich is in thenature of a sale of personal property,19Gproduced the effects of a dation inpayment )hich may e5tin%uish theobli%ation.+G!o)e&er, as in any

other contract of sale, the &endor orassi%nor is bound by certain)arranties. 0ore specifically, the firstpara%raph of 7rticle 16= of the "i&il"ode pro&ides:


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obli%ations. 0arch ++, Mllas Hendin%"orporation and Jose . Hauraya, in hisofficial capacity as (resident, #respondents$

caused the sheriff of Branch *9 of the trialcourt to ser&e an alias 0rit of sei7ureaainst "+C.

On the same day, FBD" ser&ed on thesheriff an affida&it of title and third partyclaim. FBD" found out that on 8eptember ++1, respondents filed acomplaint for Foreclosure of "hattel0ort%a%e )ith eple&in, a%ainst


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ince ection is not a contract of pled%e,there is nopactum commissorium.

7 pro&ision )hich calls for the forfeiture of

the remainin% deposit still in the possessionof the lessor, )ithout preudice to any otherobli%ation still o)in%, in the e&ent of thetermination or cancellation of the a%reementby reason of the lessees &iolation of any ofthe terms and conditions of the a%reementis a penal clause that may be &alidlyentered into. 7 penal clauseis anaccessory obli%ation )hich the partiesattach to a principal obli%ation for thepurpose of insurin% the performance thereofby imposin% on the debtor a

special prestation #%enerally consistin% inthe payment of a sum of money$ in case theobli%ation is not fulfilled or is irre%ularly orinadequately fulfilled.

!ere, FBD"s forfeitureof


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4quitableEs petition for relief in the


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1. t/at t/ere 0as an officialdeclaration of etraordinarinflation or deflation from t/ean=o !entral n 8ilipinas;!8

2. t/at t/e oliation 0ascontractual in nature> and

3. t/at t/e parties epresslareed to consider t/e effectsof t/e etraordinar inflationor deflation.

n this case, despite the de&aluationof the peso, the B( ne&er declareda situation of e5traordinary inflation.0oreo&er, althou%h the obli%ation inthis instance arose out of a contract,the parties did not a%ree toreco%ni;e the effects ofe5traordinary inflation #or deflation$.


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n case an e5traordinary inflation ordeflation of the currency stipulated shouldsuper&ene, the &alue of the currency at thetime of the establishment of the obli%ationshall be the basis of payment, unless thereis an a%reement to the contrary.

Inflationhas been defined as the sharpincrease of money or credit, or both, )ithouta correspondin% increase in businesstransaction.


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n case an e5traordinary inflation ordeflation of the currency stipulated shouldsuper&ene, the &alue of the currency at thetime of the establishment of the obli%ationshall be the basis of payment, unless thereis an a%reement to the contrary.

'traordinar inflation or deflation, asthe case may be, e5ists )hen there is anunusual increase or decrease in thepurchasin% po)er of the (hilippine peso)hich is beyond the common fluctuation inthe &alue of said currency, and suchincrease or decrease could not ha&e beenreasonably foreseen or )as manifestlybeyond the contemplation of the parties atthe time of the establishment of theobli%ation.1945traordinary inflation can

ne&er be assumed? he )ho alle%es thee5istence of such phenomenon must pro&ethe same.+

n this case, there has been noe5traordinary inflation )ithin the meanin% of

7rticle 1*+ of the "i&il "ode. 7ccordin%ly,there is no plausible reason for orderin% thepayment of an obli%ation in an amountdifferent from )hat has been a%reed uponbecause of the purported super&ention ofe5traordinary inflation.

7s it )ere, respondent )as unable to pro&ethe occurrence of e5traordinary inflationsince it filed its complaint in 19=1. ndeed,the record is bereft of any e&idence,documentary or testimonial, that inflation,nay, an e5traordinary one, e5isted. 4&en ifthe price inde5 of %oods and ser&ices mayha&e risen durin% the inter&enin%period,1 this increase, )ithout more, cannotbe considered as resultin% to ,extraordinaryin!lation, as to ustify the application of

7rticle 1*+.


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deducted from the purchase price of One0illion


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admission, he merely informed respondentspouses of his readiness and )illin%ness topay.


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therein, Francisco paid his monthly rentalsto oco by issuin% chec's of the"ommercial Ban' and , 198* #45hibit K*K$.Ob&iously, these payments by chec'sthrou%h "omtrust )ere recei&ed by ocofrom June, 198* to 7pril, 1988 becauseoco admitted that an rentals due her )erepaid e5cept the rentals be%innin% 0ay,1988. 2hile oco alle%ed in her direct

e5amination that Esince 0ay, 1988 he#meanin% Francisco$ stopped payin% themonthly rentalsE #, 1989$, yet on crosse5amination she admitted that before thefilin% of her complaint in the instant case,she 'ne) that payments for monthly rentals)ere deposited )ith the "ler' of "ourte5cept rentals for the months of 0ay, June,July and 7u%ust, 1988. ...

(ressin% her point, oco alle%ed that E)e

personally demanded from 4n%r. Franciscofor the months of 0ay, June, July and

7u%ust, but 4n%r. Francisco did not pay forthe reason that he had no funds a&ailable atthat time.E #, 1989$.


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creditor to )hom tender of payment )asmade refused to accept it, or because he)as absent or incapacitated, or becausese&eral persons claimed to be entitled torecei&e the amount due #7rt. 1186, "i&il"ode$? #$ that pre&ious notice of the

consi%nation had been %i&en to the personinterested in the performance of theobli%ation #7rt. 1188, "i&il "ode$? #>$ thatthe amount due )as placed at the disposalof the court #7rt. 118=, "i&il "ode$? and #*$that after the consi%nation had been madethe person interested )as notified thereof#7rt. 118=, "i&il "ode$. Failure in any ofthese requirements is enou%h %round torender a consi%nation ineffecti&e.

!ere, respondent lessee has utterly failed to

pro&e the follo)in% requisites of a &alidconsi%nation: First, tender of payment of themonthly rentals to the lessor e5cept thatindicated in the June 9, l988 Hetter, 45hibit1+. n the ori%inal records of the case, 2enote that the certification, 45hibit 11 ofFilemon oon, messen%er of the F7"orporation, certifyin% that the letter ofoledad oco sent last 0ay 1+ by"ommercial Ban' and $requestin% the ban' to issue chec's in fa&orof oco in the amount of (=>+.++ e&ery1+th of each month and to deduct the fullamount and ser&ice fee from his current

account, as )ell as 45hibit *, letter of the3ice (resident a%reein% )ith the request.But scrutini;in% carefully 45hibit >, this is)hat the lessee also )rote: K(leaseimmediately notify us e&erytime you ha&ethe chec' ready so )e may send somebodyo&er to %et it. K 7nd this is e5actly )hat theban' a%reed: K(lease be ad&ised that )eare in conformity to the abo&e arran%ement)ith the understandin% that you shall sendsomebody o&er to pic' up the cashierEschec' from us.K #45hibit >, see p. +,

Ori%inal ecords? 45hibit *, p. 1, Ori%inalecords$4&idently, from this arran%ement, it )as thelesseeEs duty to send someone to %et thecashierEs chec' from the ban' and lo%ically,the lessee has the obli%ation to ma'e andtender the chec' to the lessor. 8=>9 and >89+8 "B


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made, )hich is separate and distinct fromthe notification )hich is made prior to theconsi%nation, is stated in "abanos &s. "alo,C.. o. HA1+98, October +, 19*=, 1+>(hil. 1+*=. thus: K+.>G4ntitledD44D OF 7H4 @D4 (7".* percent a month. *Gt )asfurther a%reed that should the spouses failto pay the monthly interest or to e5ercisethe ri%ht to repurchase )ithin the stipulated

period, the con&eyance )ould be deemedan absolute sale.6G

On July +, 1991, 0yrna amos tenderedto arao the amount of (1,6,+>.+ inthe form of t)o mana%ers chec's, )hich thelatter refused to accept for bein% alle%edlyinsufficient.8G!a&in% refused acceptance ofthe said chec's co&erin% the redemptionprice, on 7u%ust 1, 1991 she came to"ourt to consi%n the chec's #45hs. HA> andHA*$. ubsequently, she proceeded to the

e%ister of Deeds to cause the annotationof lis pendenson >and raffled to Branch 61 of the > )ere later consolidated and ointlytried before Branch 1>* of the said 0a'ati


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due.*1G"onsi%nation is made by depositin%the proper amount to the udicial authority,before )hom the tender of payment and theannouncement of the consi%nation shall bepro&ed.*G7ll interested parties are to benotified of the consi%nation.*G"ompliance

)ith these requisites is mandatory.*>G

ote that the principal loan )as (1,1+,>+plus >.* per cent monthly interestcompounded for si5 months. 45pressin% herdesire to pay in the fifth month, petitionera&erred that the total amount due)as (1,6,+>.19, based on thecomputation of arao herself.*6G.+, petitionercorrectly filed suit and consi%ned theamount in order to be released from the

latters obli%ation.


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third persons and communicated in duetime to the debtor.

,+.++ a%ainst the

unpaid loan account of respondents. "itin%Ban' of the (hilippine slands &. "ourt of

7ppeals,petitioner asserts that they arebound principally as both creditors anddebtors of each other, the debts consistin%of a sum of money, both due, liquidated anddemandable, and are not claimed by a thirdperson. !ence, the


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amount of (+,9+.+ #peso equi&alent ofN>,+.++$ to the loan account of therespondents.

I!!$': 2O petitioner had 7 basis in)ithholdin% and subsequently applyin% in

payment of respondents- o&erdue accountin the tele%raphic transfer in the amount ofu.s.N>,+.++

H')+: Mes.7%reements for compensation of debts orany obli%ations )hen the parties aremutually creditors and debtors are allo)edunder 7rt. 1= of the "i&il "ode e&enthou%h not all the le%al requisites for le%alcompensation are present.

3oluntary or con&entional compensation isnot limited to obli%ations )hich are not yetdue.1, 19==, Del 0onte sent a letter

demandin% the payment of accruedinstallments under (ontract to Sell No.2356*'in the amount of (16*,8*9.6+less (>=,1=.*, representin% the paymentsmade under the restructured contract, or thenet amount of (118,61.+=. Del 0onteallo)ed petitioners a %race period of thirty#+$ days )ithin )hich to pay the amountas'ed to a&oid rescission of the contract.
http://www.lawphil.net/judjuris/juri2010/dec2010/gr_172020_2010.html#fnt31http://www.lawphil.net/judjuris/juri2010/dec2010/gr_172020_2010.html#fnt32http://www.lawphil.net/judjuris/juri2010/dec2010/gr_172020_2010.html#fnt32http://sc.judiciary.gov.ph/jurisprudence/2005/nov2005/152346.htm#_ftn2http://www.lawphil.net/judjuris/juri2010/dec2010/gr_172020_2010.html#fnt31http://www.lawphil.net/judjuris/juri2010/dec2010/gr_172020_2010.html#fnt32http://sc.judiciary.gov.ph/jurisprudence/2005/nov2005/152346.htm#_ftn2


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For failure to pay, Del 0onte notifiedpetitioners on 0arch +, 19=9 that (ontractto Sell No. 2342*'had been cancelled anddemanded that petitioners &acate theproperty.1G

On eptember =, 199+, Del 0onteinstituted an action for eco&ery of(ossession )ith Dama%es a%ainst pousesFabri%as before the


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not the t)o obli%ations can standto%ether, each one ha&in% itsindependent e5istence. f theycannot, they are incompatible andthe latter obli%ation no&ates the first.G

!ere * years.


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defendant 0illin% company, anddismissed the complaint.

digests oblicon 5

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