1. Spouses Guanio v.

Makati Shangrila
1. For their wedding reception on July 28, 2001, spouses Luigi M. Guanio
and Anna Hernandez-Guanio booked at the Shangri-la Hotel Makati.
Scheduled food tastings were made prior to the event. The parties
eventually agreed on a final price at P1,150 per person. On July 27,
2001, the parties finalized and forged their contract. Petitioners claim
that during the reception, respondents representatives, Catering
Director Bea Marquez and Sales Manager Tessa Alvarez, did not show
up despite their assurance that they would; their guests complained of
the delay in the service of the dinner; certain items listed in the
published menu were unavailable; the hotels waiters were rude and
unapologetic when confronted about the delay; and despite Alvarezs
promise that there would be no charge for the extension of the
reception beyond 12:00 midnight, they were billed and paid P8,000 per
hour for the three-hour extension of the event up to 4:00 A.M. the next
day. Petitioners further claim that they brought wine and liquor in
accordance with their open bar arrangement, but these were not
served to the guests who were forced to pay for their drinks.
2. Issue: Whether or not the apology made by Makati Shagri-La is
considered anadmission of breach of contract.
3. Ruling: What applies in the present case is Article 1170 of the Civil
Code which reads: Art. 1170. 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. RCPI
v. Verchez, et al. enlightens: In culpa contractual x x x the mere proof
of the existence of the contract and the failure of its compliance justify,
prima facie, a corresponding right of relief. The law, recognizing the
obligatory force of contracts, will not permit a party to be set free from
liability for any kind of misperformance of the contractual undertaking
or a contravention of the tenor thereof. A breach upon the contract
confers upon the injured party a valid cause for recovering that which
may have been lost or suffered.

2. Nakpil v. CA

The Philippine Bar Association Hired the United Construction Company

to construct a building for the organization using a design obtained
from Nakpil and Sons. However a 7.3 magintude earthquake struck
Manila causing massive damage to the building, and added costs to
the construction and repair. UCC and Nakpil accused each other or
liability but both invoked the act of God defense
This defense is untenable as it was found out that both UCC and Nakpil
have liabilities, with UCC deviating from the design, and Nakpils
design being found to be deficient to survive disasters of such
magnitude (the neighboring structures survived)

3. Sia v. CA
- Plaintiff Luzon Sia rented a safety deposit box of Security Bank and Trust

Co. (Security Bank) at its

Binondo Branch wherein he placed his collection of stamps. The said safety
deposit box leased by the plaintiff was at the bottom or at the lowest level
of the safety deposit boxes of the defendant bank.
- During the floods that took place in 1985 and 1986, floodwater entered
into the defendant banks premises, seeped into the safety deposit box
leased by the plaintiff and caused, according damage to his stamps
collection. Security Bank rejected the plaintiffs claim for compensation for
his damaged stamps collection.
Issue: Whether or not the Bank is liable for negligence.
- The banks negligence aggravated the injury or damage to the stamp
collection. SBTC was aware of the floods of 1985 and 1986; it also knew
that the floodwaters inundated the room where the safe deposit box was
located. In view thereof, it should have lost no time in notifying the
petitioner in order that the box could have been opened to retrieve the
stamps, thus saving the same from further deterioration and loss. In this
respect, it failed to exercise the reasonable care and prudence expected of
a good father of a family, thereby becoming a party to the aggravation of
the injury or loss. As correctly held by the trial court, Security Bank was
guilty of negligence.

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

Luzon Stevedoring cannot claim exception from liability by citing the

said fortuitous event of swelling of the current. For the exception to
apply, the court said that the the event must be impossible to foresee,
not simply difficult Luzon Stevedoring knew very well the risks of going
into Pasig River with the condition at hand. The inadequacy of its
preparation does not exempt it from liability.

5. NPC v. Philipp Brothers

- National Power Corporation

(NAPOCOR) issued invitations to bid for the

supply and delivery of 120,000 metric tons of imported coal for its Batangas
Coal-Fired Thermal

Power

Plant of

which Philipp

Brothers

Oceanic,

Inc.

(PHIBRO) bidded and was accepted.

-On July 10, 1987, PHIBRO told NAPOCOR that disputes might soon plague
Australia that will seriously hamper its ability to supply coal. On July 23 to July
31, 1987, PHIBRO informed NAPOCOR that unless a "strike-free" clause is
incorporated in the charter party or the contract of carriage, the ship owners
are unwilling to load their cargo. In order to hasten the transfer of coal, they
should share the burden of the "strike-free" clause but NAPOCOR refused.
-Consequently, In October 1987: NAPOCOR once more advertised for the
delivery of coal to its Calaca thermal plant of which PHIBRO applied but was
rejected since it was not able to satisfy the demand for damages on its delay.
PHIBRO filed for damages in the RTC alleging that the rejection was tainted
with malice and bad faith.
-After the trial, the trial court rendered a decision in favor of PHIBRO, ordering
the defendant NAPOCOR to reinstate PHIBRO in the defendant National Power
Corporations list of accredited bidders and indemnify the same actual, moral
and exemplary damages. On appeal, the CA affirmed in toto the decision of
RTC.
-ISSUE: Whether the Trial Court erred in awarding moral damages to
PHIBRO.
-RULING: The award of moral damages is improper. To reiterate, NAPOCOR
did not act in bad faith. Moreover, moral damages are not, as a general rule,
granted to a corporation. While it is true that besmirched reputation is
included in moral damages, it cannot cause mental anguish to a corporation,

unlike in the case of a natural person, for a corporation has no reputation in

the sense that an individual has, and besides, it is inherently impossible for a
corporation to suffer mental anguish.

6. Medel v. CA
- Medel obtained several loans from Gonzales totalling P500,000.
These were evidenced by several promissory notes agreeing to an
interest rate of 5.5% per month with additional service charge of 2%
per annum, and penalty charge of 1% per month..
On maturity, Medel failed to pay their indebtedness. Hence, Gonzales
filed with the RTC of Bulacan a complaint for collection of the full
amount of the loan.
Gonzalez filed a case in the RTC of Bulacan for recovery of the entire
amount, however, the RTC found that the usury rate was
unconscionable, at 5.5% per month. It applied the default 12% per
annum rate.
However the court said that the Usury law is not legally inexistent
being Central Bank Circular No. 905 has expressly removed interest
ceiling prescribed by the Usury Law

7. HSBC vs. Spouses Broqueza, November 17, 2010

-Petitioners Gerong and Broqueza are employees of Hongkong and

Shanghai Banking Corporation
(HSBC).
-Petitioner Broqueza obtained a car loan in the amount of Php175,000.00.
She again applied and was granted an appliance loan in the amount of
Php24,000.00. On the other hand, petitioner Gerong applied and was
granted an emergency loan in the amount of Php35,780.00. These loans
are paid through automatic salary deduction.
However, they were terminated due to a labor dispute in which a case
was pending for illegal dismissal before NLRC. They were not able to pay
the monthly amortization thus HSBCL-SRP( HSBC Corp., Ltd.
Staff Retirement Plan) considered them delinquent. And when demands
were made, they failed to pay.
Issue: WON HSBCL-SRP has a right to demand immediate
payment?
The RTC is correct in ruling that since the Promissory Notes do not contain
a period, HSBCL-SRP has the right to demand immediate payment. Article

1179 of the Civil Code applies. The spouses Broquezas obligation to pay
HSBCL-SRP is a pure obligation. The fact that HSBCL-SRP was content with
the prior
monthly check-off from Editha Broquezas salary is of no moment. Once
Editha Broqueza defaulted in her monthly payment, HSBCL-SRP made a
demand to enforce a pure obligation.

8. Santiago vs. Millar, 68 P 39

Geronimo Santiago, Jr. purchased from PCSO ten booklets of tickets for the
sweepstake draw and race held on May 16, 1937. Among the winning
tickets was a ticket bought by the plaintiff.
Tickets for the said sweepstake draw and race contained a condition that
"prizes of tickets sold locally will be paid to holder of ticket upon surrender
of same."
Carmen B. Garcia, an employee in the National Drug Store where the
plaintiff offered for sale his sweepstake tickets, bought two units (or onehalf) of ticket No. 0293020 and, on February 20, 1937, presented the
plaintiff with them on the occasion of the latter's birthday. However, on May
18, 1937, the said two units
were lost.
Santiago then filed a case for the issuance of an injunction to restrain
PCSO from paying the prize money to
any person while at the same time seeking judicial declaration that he is
the owner of the tickets.
Issue: WON PCSO has the obligation to pay Santiago and not
those who are actually holding the tickets?
Two units of tickets for the sweepstakes draw and race were given to
Santiago as a gift for his birthday. However, he lost them along with the
winning ticket that it contained. As the ticket bears the notation prizes
of tickets sold locally will be paid to holder of ticket upon surrender of
same, PCSO is under no obligation to pay Santiago if he is not able to
present the required ticket. This is because the contract is aleatory in
nature (Art. 1790 Civil Code) and the contracting parties may establish any
agreements, terms, and conditions they may deem advisable, provided that
they are not contrary to law, morals, or public order. Obligations arising
from contracts have the force of law between the contracting parties (Art
1091).

9. Patente vs. Omega, 93 P 218

Roman Omega issued a promissory note payable to Patent Health of the

amount of P1,600 . the relevant portion of the promissory note reads: "I
am going to pay debt to her, her heirs, assigns and successors, in
the said sum of P1,600 in Philippine currency, as soon as possible or as
soon as I have money."
A case arose where the primordial issue is whether the obligation is now a
pure obligation as the condition
stipulated is left to the sole will of the debtor.
Issue: WON the obligation is pure or the courts may fix a period?
Omegas promissory note to Patente contained the condition that he will

pay as soon as he has the money. This is a void condition for its fulfillment
is left solely to the will of the debtor. Still, the original intention was to grant
the debtor a deadline for the payment, and to make it a pure and
unconditional obligation is to
impose a completely different approach than agreed upon. Thus, when the
time for payment of an obligation is left to the sole will of the debtor, and
the condition is annulled, the obligation does not become a pure and
unconditional obligation. The recourse of the creditor is to go to court and
ask for setting a time limit for the payment.

10.

Gaite vs. Fonacier, 2 SCRA 831

Fonacier was the owner and/or holder of 11 iron lode mineral claims known
as the Dawahan Group, situated in the province of Camarines Norte.
By a Deed of Assignment, Fonacier constituted and appointed Fernando
Gaite as his true and lawful attorneyin-fact to enter into a contract with any
individual or juridical person for the exploration and development of mining
claims.
After Gaite has finished his worked, Fonacier decided to revoke the
authority he gave to Gaite and the latter agreed, subject the condition
Fonacier will to pay P75,000 where P10,000 will be paid at the signing of
the agreement while the remaining P65,000 will be paid from and out of the
first letter of credit covering the first shipment of iron ores and the first
amount derived from the local sale of iron made by Larap Mines;
To secure the P65,000, a surety bond was delivered by Fonacier to Gaite.
But Gaite wanted to make sure, so Fonacier executed a second surety bond,
with the Far Eastern Surety and Insurance Co., Inc. as additional surety (a
contract that is to expire in one year).
Issue: WON the obligation of Fonacier to pay Gaite is an
obligation with a suspensive term or condition?
The shipment or sale of the iron ore is not a condition or suspensive to the
payment of the balance of P65,000.00, but was only a suspensive period or
term. It was intended Merely to fix the future date of the payment. It is
certain that the payment will be made. What is uncertain is the exact date
at which it will be
made. Nothing is found in the contract that Gaite assumed to run a risk of
losing his right over the ore without getting paid for it. This is proved by the
fact that Gaite insisted on a bond to guarantee the payment of
P65,000.00.

11. Coronel vs. Court of Appeals, Oct 7 1996

On Jan. 19, 1985, Romulo Coronel, et. al. (Coronels) executed a document
entitled " Receipt of Down
Payment" in favor of plaintiff Ramona Patricia Alcaraz (Ramona) upon
payment of the down payment by
Concepcion Alcaraz (Concepcion), mother of Ramona.
The conditions appurtenant to the sale are the following: The Coronels will
cause the transfer in their names of the title of the property registered in
the name of their deceased father upon receipt of the P50,000.00 down
payment. Upon the transfer in their names of the subject property, the

Coronels will execute the deed of absolute sale in favor of Ramona and the
latter will pay them the whole balance of P1,190,000.00.
Title was transferred to the Coronels but then they subsequently offered
the land to a third party for a higher
purchase price for the reason that Alcaraz went to the US and breached
their agreement.
Issue: WON an action for specific performance to execute the sale
between Coronel and Alcaraz is meritorius? YES
Since the condition contemplated by the parties which is the issuance of a
certificate of title in petitioners names was fulfilled on February 6, 1985,
the respective obligations of the parties under the contract of sale became
mutually demandable, that is, petitioners, as sellers, were obliged to
present the transfer certificate of title already in their names to private
respondent Ramona P. Alcaraz, the buyer, and to immediately execute
the deed of absolute sale, while the buyer on her part, was obliged to
forthwith pay the balance of the purchase price amounting to
P1,190,000.00.
It is also significant to note that in the first paragraph in page 9 of their
petition, petitioners conclusively
admitted that: The sale was still subject to a suspensive condition.
(Emphasis supplied.)
The third party is not a buyer in good faith because a notice of a pending
suit was attached in the TCT which was impossible to have been overlooked
by the buyer.

12.Javier vs. Court of Appeals, 183 S 171

Tiro, a timber license holder, executed a deed of assignment in favor of

petitioners, the Javiers, which would transfer his shares of stock in
Timberwealth Corporation in consideration of 120k. He also had a pending
application for an additional forest concession adjoining the area of the
concession subject of the previous deed.
Tiro and petitioners once again entered into an agreement that Tiro would
transfer rights he may acquire for an additional 30k if his pending
application becomes approved by the Bureau of Forestry.
The pending application did not see the light of day, therefore Tiro never
acquired any right over it.
Issue: Whether or not Tiro has a right to demand payment from
petitioners after his failure to acquire
approval from BOF.

The said agreement in this case is a bilateral contract which gave rise to
reciprocal oligations, that is the obligation of Tiro to transfer his rights over
the concession once approved by the BOF to the petitioners and on the
other hand, the petitioners to pay 30,000. The demandability of the
obligation of one depends upon the fulfillment of the other. Tiros non
fulfillment of his end of the deal negates his right to demand from the
Javiers.

13.Heirs of Atienza vs. Espidol, August 11, 2010

The Atienzas owned a parcel of agricultural land which they acquired

through an emancipation patent through the govt land reform program.
They entered into a contract to sell such land with down payment with

Espidol payable in three instalments: upon the signing of the contract, in

December 2002 and in June 2003.
On the second instalment, Espidol was unable to pay the amount.
Atienzas filed a complaint for the annulment of their agreement with
damages, claiming that Espidol breached his obligation by failing to pay the
second installment. Espidol argues that since it was a contract of sale on
installments, failure to pay an installment is not a breach but rather just an
event which justifies the non-conveyance of the title to him.
Issue: WON the Atienzas can validly cancel the contract due to
non-payment of the 2nd installment?
In a contract to sell, the buyers full payment of the price is a positive
suspensive condition to the coming into effect of the agreement.
Admittedly, Espidol was unable to pay the second installment of
P1,750,000.00 that fell due in December 2002. That payment, said both the
RTC and the CA, was a positive suspensive condition failure of which was
not regarded a breach in the sense that there can be no rescission of an
obligation (to turn over title) that did not yet exist since the suspensive
condition had not taken place. since Espidol failed to pay the installment on
a day certain fixed in their agreement, the Atienzas can afterwards validly
cancel and
ignore the contract to sell because their obligation to sell under it did not
arise. Since the suspensive condition did not arise, the parties stood as if
the conditional obligation had never existed. The Court directs petitioner
Heirs of Atienza to reimburse the P130,000.00 down payment to
respondent Espidol.

14.Parks vs. Province of Tarlac, 49 P 142

Concepcion Cirer and James Hill, the owners of parcel of land, donated it
perpetually to the
municipality of Tarlac, Province of Tarlac, under certain conditions specified
in the public document in which they made the donation, to wit: one of the
parcels donated was to be used absolutely and exclusively for the erection
of a central school and the other for a public park.
- The donation was accepted by the municipal council president. However,
subsequently after the land was then sold by Cirer and Hill to a certain
Parks, arguing that the condition was not met thus the land was never
donated to Tarlac.
- Issue: WON the sale to Parks was valid - No
- Parks contends that a condition precedent having been imposed in the
donation and the same not having been complied with, the donation never
became effective. We find no merit in this contention. It is true that this
condition has not been complied with. The allegation, however, that it is a
condition precedent is erroneous. The characteristic of a condition
precedent is that the acquisition of the right is not effected while said
condition is not complied with or is not deemed complied with. In the
present case the condition that a public school be erected and a public park
made of the donated land, work on the same to commence within six
months from the date of the ratification of the donation by the parties,
could not be complied with except after giving effect to the donation. Also,
action to revoke donation has already prescribed.

15.Osmena vs. Rama, 14 P 99

-Rama executed and delivered to Osmena a contract with the ff

stipulations: That in exchange of 200 pesos, Rama will pay Osmena in the
form of sugar with an interest rate of half a cuartillo per month.
- Another loan was given in favor of Rama but sometime after the execution
and delivery of the
contracts, Osmena died and one of his heirs took over.
Rama executed a promissory note with the ff. conditions: Rama will pay her
indebtedness IF HER
HOUSE IS SOLD. However, Rama failed to pay.
- Issue: Is the condition valid?
- It was suggested during the discussion of the case in this court that, in the
acknowledgment abovequoted of the indebtedness made by the defendant,
she imposed the condition that she would pay the obligation if she sold her
house. If that statement found in her acknowledgment of the indebtedness
should be regarded as a condition, it was a condition which depended upon
her exclusive will, and is therefore, void. (Art. 1115, Civil Code.) The
acknowledgment, therefore, was an absolute acknowledgment of the
obligation and was sufficient to prevent the statute of limitation from
barring the action upon the original contract. (In short, she acknowledged
the debt thus the action for its enforcement did not prescribe. May utang pa
rin siya)

16.Trillana vs. Quezon Colleges, 93 P 383

Damasa Crisostomo sent a letter to the Board of Trustees of Quezon

College, Inc. entering her
subscription to 200 shares of the capital stocks of the school. Damasa
Crisostomo further wrote
"Babayaran kong lahat pagkatapos na ako ay makapag-pahuli ng isda, and
that she will pay in
accordance with the rules and regulations of the Quezon College, referring
to the balance to be paid.
- Damasa Crisostomo died. As no payment appears to have been made on
the subscription mentioned in the foregoing letter, the Quezon College, Inc.
presented a claim before the CFI of Bulacan in her testate proceeding.
- The CFI of Bulacan issued an order dismissing the claim of the Quezon
College, Inc. on the ground that the subscription in question was neither
registered in nor authorized by the Securities and Exchange Commission.
- Issue: WON the obligaiton is void
- Indeed, the need for express acceptance on the part of the Quezon
College, Inc. becomes the more imperative, in view of the proposal of
Damasa Crisostomo to pay the value of the subscription after she has
harvested fish, a condition obviously dependent upon her sole will and,
therefore, facultative in nature, rendering the obligation void. It cannot be
argued that the condition solely is void, because it would have served to
create the obligation to pay, unlike a case, exemplified by Osmea vs.
Rama (14 Phil., 99), wherein only the potestative condition was held void
because it referred merely to the fulfillment of an already existing
indebtedness.

17.Hermosa vs. Longara, 93 P 971

Epifanio Longara filed a claim against the estate of Fernando Hermosa, Sr.
for money owed to him by
the deceased.
- Longara presented evidence proving that the intestate had asked for the
said credit advances forhimself and for the members of his family on
condition that their payment should be made by Fernando Hermosa, Sr. as
soon as he receive funds derived from the sale of his property in Spain.
- Upon Hermosas death, the property was sold and the money sent to the
estate in the Philippines.
- Luz Hermosa, as administratrix of the Intestate Estate of the deceased,
contented on appeal that theobligation by the intestate was purely
potestive one and therefore null and void.
- Issue: WON the condition is potestative
- If the condition were "if he decides to sell his house." or "if he likes to pay
the sums advanced," or any other condition of similar import implying that
upon him (the debtor) alone payment would depend, the condition would
be protestativa, dependent exclusively upon his will or discretion. In the
form that the condition was found by the Court of Appeals however the
condition implies that the intestate had already decided to sell his house, or
at least that he had made his creditors believe that he had done so, and
that all that we needed to make his obligation (to pay his indebtedness)
demandable is that the sale be consummated and the price thereof
remitted to the islands. Note that if the intestate would prevent or would
have prevented the consummation of the sale voluntarily, the condition
would be or would have been deemed or considered complied with (article
1119, old Civil Code)

18.

Smith Bell vs Matti, 44 P 875

During the World War, Smith Bell and Sotelo Matti entered into a contract
where in Smith Bell
obligated itself to sell and Sotelo to purchase steel tanks, expellers, electric
motors, each having no definite time to be delivered In the month of
September 1918 or as soon as possible and
"Approximately within 90 days this is not guaranteed
- The goods arrived on April 1919, and Matti refused to receive the goods
due to the "delay".
- Issue: WON a period was fixed making Smith liable for delay
- Under these stipulations, it cannot be said that any definite date was fixed
for the delivery of the goods. As to the tanks, the agreement was that the
delivery was to be made "within 3 or 4 months," but that period was subject
to the contingencies referred to in a subsequent clause. With regard to the
expellers, the contract says "within the month of September, 1918," but to
this is added "or as soon as possible." And with reference to the motors, the
contract contains this expression, "Approximate delivery within ninety
days," but right after this, it is noted that "this is not guaranteed." And as
the export of the machinery in question was, as stated in the contract,
contingent upon the sellers obtaining certificate of priority and permission

of the United States Government, subject to the rules and regulations, as

well as to railroad embargoes, since this was done during the world war,
then the delivery was subject to a condition the fulfillment of which
depended not only upon the effort of the
herein plaintiff, but upon the will of third persons who could in no way be
compelled to fulfill the condition.

19.Lao Lim vs. Court of Appeals, 191 S 150

A lease agreement was made between petitioner Lao Lim and private
respondent Dy for a period of three years, renewable for another three
years for as long as defendant needed the premises. Dy informed Lao Lim
that he wanted to renew his lease for another term despite petitioners
claim that he would no longer do so. Because Dy refuses to vacate the
premises, Lao Lim filed a case in the court against private respondent.
- Issue: WON the condition is potestative
- Contrary to the ruling of respondent court, the disputed stipulation "for as
long as the defendant needed the premises and can meet and pay said
increases" is a purely potestative condition because it leaves the effectivity
and enjoyment of leasehold rights to the sole and exclusive will of the
lessee. It is likewise a suspensive condition because the renewal of the
lease, which gives rise to a new lease, depends upon said condition. The
continuance, effectivity and fulfillment of a contract of lease cannot be
made to depend exclusively upon the free and uncontrolled choice of the
lessee between continuing the payment of the rentals or not, completely
depriving the owner of any say in the matter. Mutuality does not obtain in
such a contract of lease and no equality exists between the lessor and the
lessee since the life of the contract is dictated solely by the lessee.

20.

Catungal vs. Rodriguez, March 23, 2011

Agapita Catungal owned a parcel of land in Cebu City. Agapita, with the
consent of her husband, entered into a Contract to Sell which was later on
upgraded to a Conditional Deed of Sale with Rodriguez. A condition
imposed therein was that the respondent shall successfully negotiate,
secure and provide a road right of way. It was also stated in the contract
that the vendee has the option to rescind the sale. According to Rodriguez,
after he had refused to pay the advance of 5M, he learnedthat the
Catungals were offering said property to third parties. Moreover, a letter
was received by Rodriguez from Jose Catungal stating the contract had
been cancelled and terminated. Rodriguez filed a Complaint contending
that the Catungals' unilateral rescission was unjustified. RTC ruled in favor
of Rodriguez which was later on affirmed by the CA. Hence, this appeal.
- Issue: Was the conditon void for being potestative? No. Was the
rescission valid? No.
- Such a condition is not purely potestative as petitioners contend. It is not
dependent on the sole will of the debtor but also on the will of third persons
who own the adjacent land and from whom the road right of way shall be
negotiated. In a manner of speaking, such a condition is likewise dependent
on chance as there is no guarantee that respondent and the third partylandowners would come to an agreement regarding the road right of way.

This type of mixed condition is expressly allowed under Article 1182 of the
Civil Code.
In sum, Rodriguez's option to rescind the contract is not purely potestative
but rather also subject to the same mixed condition as his obligation to pay
the balance of the purchase price - i.e., the negotiation of a road right of
way. In the event the condition is fulfilled (or the negotiation is successful),
Rodriguez must pay the balance of the purchase price. In the event the
condition is not fulfilled (or the negotiation fails), Rodriguez has the choice
either (a) to not proceed with the sale and demand return of his
downpayment or (b) considering that the condition was imposed for his
benefit, to waive the condition and still pay the purchase price despite the
lack of road access. This is the most just interpretation of the parties'
contract that gives effect to all its provisions.
- After thorough review of the records of this case, we have come to the
conclusion that petitioners failed to demonstrate that the Court of Appeals
committed any reversible error in deciding the present
controversy.

21.Luneta Motor vs. Abad, 67 P 32

Plaintiff sought recovery of the sum of P2,674.05 with accrued stipulated

interest and attorney's fees for balance due on four promissory notes
executed by the defendant on March 12, 1931. The complaint sued for a
writ of attachment which was issued. Luneta Motor filed a suit against
Abad, and asked for a writ to attach Abads properties. The writ was
granted, but Abad asked for its cancellation, and for this purpose offered a
bond, secured by two sureties. The bond contained a statement that in case
Luneta Motor should WIN, the sureties would answer for Abads liability.
Because of this bond, the writ was dissolved. Later, Luneta Motor lost the
case, it having been dismissed since Abad died. Are Abads sureties still
bound?
- No more, because Luneta Motor can never win, the case having been
dismissed. The condition has become a legal impossibility. Therefore, the
obligation dependent upon this condition must be deemed extinguished,
according to article 1116 of our Civil Code. (1183 NCC)

22.

PLDT vs Jeturian, 97 P 981

Before the war, PLDT adopted a pension plan for its employees: All
employees who have reached the age of 50 years and have been in service
for more than 20 years may be retired with pension
After the war, the BOD abrogated the pension plan, causing 60 employees
to file a complaint claiming monetary benefits under the pension plan.
PLDT said: Obligation is subject to a suspensive condition- when the
employees reach 50 years of age, thus the employees are not entitled to
benefits because the conditions have not been fulfilled.
Issue: Were the conditions fulfilled?
When PLDT abrogated the pension plan after the war, it voluntarily
prevented the fulfillment of its obligation to provide pension plans to its
employees, thus, whether or not the employees have reached the age of
50, their rights are reserved for such benefits.

23.

Valencia vs. RFC, 103 P 444

24.

Labayen vs. Talisay, 52 P 440

Valencia made a bid for the installation of plumbing works in a government

building
Valencia was required to put up the required performance bond after his
bid was accepted, but Valencianeither put up the bond nor begun the
plumbing works.
In the case filed against him, he proffered the defense that since he did
not put up the required bond, it follows that there was no contract as the
condition was not fulfilled.
Issue: WON Valencia is liable for damages due to non-compliance
with the contract?
Valencia is liable for damages. The putting up of a performance bond is
not a condition before he could be compelled to make the installation.
Assuming that the bond is a condition, it was he who voluntarily prevented
its fulfillment. In either case, the existence of the contractual relation
between the parties did not depend upon the posting the performance
bond. Although, the latter was essential to the birth of some of the rights
stipulated in favor of petitioner herein, those of respondent were not
conditioned upon the giving of said performance bond.

Labayen, the owner of Dos Hermanos hacienda, and the respondent, a corporation
dedicated to the milling of sugar cane, entered into a contract. It was agreed that
a permanent railroad was to be constructed for the use of the plantations in the
transportation of sugar cane and all other articles as the producer may need for his
estate, provided that the countour of the land, the curves and elevations permit the
same.
The central has not continued its railroad through to the Hacienda Dos Hermanos.
The civil engineer employed in the construction testified that it was possible to
construct and extend the railroad to the hacienda but that to do so would be very
dangerous.

Issue: WON the defendant can excuse itself from constructing the
railroad on the grounds that it would be very dangerous to do so
There is another aspect to the case which has to do with the tenth
paragraph of the mutual obligations of the contract and which concerned
the securing of the right- of-way for the proposed railroad. To get from the
Hacienda Esmeralda No. 2 to the Hacienda Dos Hermanos, the railroad
would have to pass through the haciendas of Esteban de la Rama. But he
would not grant permission to use his land for this purpose in 1920, and
only consented to do so in 1924. Here then was a clear case of such a
condition of affairs as was contemplated by the contract.

25.

Ang vs. Court of Appeals, 170 S 286

Petitioners Ernesto Ang and Rosalinda Ang, brother and sister, (Angs) are
the owners of three (3) parcels of land in Quezon City.
Negotiations were undertaken for the sale of the properties between the
Angs (seller) and private respondent Lee Chuy Realty Corporation (LCRC),
through its president Henry Lee Chuy as buyer.
Subsequently, there was a perfected contract of sale between the Angs
and LCRC as evidenced by the P50k down payment. In the receipt prepared

by LCRC, which was not signed by petitioners, the stated purchase price is
P1.6M. However, the receipt signed by petitioners, which substantially
reproduced the terms and conditions embodied in the original receipt, did
not state the agreed price. Petitioners then refused to proceed with the sale
unless LCRC would pay 2.34 million pesos, which forced LCRC to seek for
the rescission of the contract and the refund of the down payment.
Issue: Was there a breach of contract as to warrant rescission?
While it is true that in reciprocal obligations, such as the contract of
purchase and sale in this case, the power to rescind is implied and any of
the contracting parties may, upon non-fulfillment by the other party of his
part of the obligation, resolve the contract, rescission will not be permitted
for a slight or casual breach of the contract. Rescission may be had only for
such breaches that are so substantial and fundamental as to defeat the
object of the parties in making the agreement. The Court holds that when
petitioners refused to proceed with the sale unless private respondent
agreed to pay the higher price of P2,340,000.00, the petitioners thereby
committed a serious breach of the agreement. Private respondent had the
right to rescind the agreement as petitioners committed a serious breach of
the terms of the same.

26.
Heirs of Gaite vs. The Plaza Inc, January 26, 2011
- Petitioners (Gaite and Rhogen) and respondent (The Plaza) entered into a

contract for the construction of a restaurant building. The Plaza made a

downpayment in favor of Gaite, which signaled the start of the restaurants
construction.
The Plazas obligation to pay the contract price is conditioned on Gaite
and Rhogens performance to complete the works within the stipulated
period and in accordance with the approved plans and other specifications
by the owner. The Plaza faithfully complied with its end of the contract right
before the construction (operated by Gaite and Rhogen) was stopped by
local authorities on account of several violations of the National Building
Code and other regulations of the municipal authorities.
The Plaza then rescinded the contract and told Gaite that it would hold
him and his company liable due to the substantial breach in the contract.
Issue: WON petitioners have breached the contract thereby
leading the respondents to terminate the same - YES
When Rhogen Builders failed to secure a proper and sufficient permit in
due to non-compliance with the provisions of the National Building Code, it
had committed a serious breach in the terms of contract with the Plaza for
the purposes of constructing a restaurant in Makati. Gaites failure to build
the structure in accordance with the approved plans and non-observance of
laws and regulations affecting the construction constitute a substantial
violation of the contract, which entitles The Plaza to terminate the same
without obligation to make further payment to Rhogen.

27.
Lalicon vs. NHA, July 13, 2011
- NHA executed a deed of sale with mortgage over a Quezon City lot in

favor of the Alfaros, with the contidion that the Alfaros could sell the land
within 5 years from the date of release of the mortgage without NHAs

prior consent. The Alfaros were forbidden from selling the property within
the five-year period prescribed by the NHA. However, the Alfaros sold the
lot to their son when the mortgage was not yet released and thereby
committing a substantial breach of the obligation for failure to secure NHAs
consent to selling the lot while the mortgage payments were not yet
completed. This entitled the NHA to
rescind the contract, an action which they filed after 6 years from the date
of the forbidden sale, but the Lalicons were arguing that the action has
already prescribed.
Issue: WON the action has prescribed? - NO
It has been held that Article 1191 speaks of rescission in reciprocal
obligations within the context of Article 1124 of the Old Civil Code which
uses the term resolution. Resolution applies only to reciprocal obligations
such that a breach on the part of one party constitutes an implied
resolutory condition which entitles the other party to rescission. Resolution
grants the injured party the option to pursue, as principal actions, either a
rescission or specific performance of the obligation, with payment of
damages in either case.
Rescission under Article 1381, on the other hand, was taken from Article
1291 of the Old Civil Code, which is a subsidiary action, not based on a
partys breach of obligation. The four-year prescriptive period provided in
Article 1389 applies to rescissions under Article 1381. Here, the NHA sought
annulment of the Alfaros sale to Victor because they violated the five-year
restriction against such sale provided in their contract. Thus, the CA
correctly ruled that such violation comes under Article 1191 where the
applicable prescriptive period is that provided in Article 1144 which is 10
years from the time the right of action accrues. NHA filed the action 6 years
from such time, well within the 10 year limit.

28.
Spouses Fernando vs. Continental Airlines, January 16, 2012
- Fernando purchased for himself and his wife, Lourdes, two (2) round trip

airline tickets from San Diego, California to Newark, New Jersey on board
Continental Airlines. Fernando purchased the tickets from a travel agency
called Holiday Travel and was attended to by a certain Margaret Mager
(Mager). According to Spouses Viloria, Fernando agreed to buy the said
tickets after Mager informed them that there were no available seats at
Amtrak, an intercity passenger train service provider in the United States.
However, when Fernando tried to schedule in Amtrak train he was able to
purchase tickets. So he wanted a refund but the ticket was said to be nonrefundable. He sent a letter demanding a refund where it was denied but he
was told that he can apply the amount of previous ticket for new tickets.
He wanted to replace both of their tickets to a new single round trip ticket
to LA under his name but he was advised that Lourdes ticket cannot be
transferred under his name, and he needs to add additional amount to
cover the full cost of the new ticket. Fernando then demanded for the
refund of the tickets claiming that CAI's acts constituted a breach of its
undertaking.
Issue: WON petitioner has the right to rescind on the ground of substantial
breach - NO

 While CAIs refusal to allow Fernando to use the value of Lourdes ticket as
payment for the purchase of a new ticket is unjustified as the nontransferability of the subject tickets was not clearly stipulated, it cannot,
however be considered substantial. The endorsability of the subject tickets
is not an essential part of the underlying contracts and CAIs failure to
comply is not essential to its fulfillment of its undertaking to issue new
tickets upon Spouses Vilorias surrender of the subject tickets. This Court
takes note of CAIs willingness to perform its principal obligation and this is
to apply the price of the ticket in
Fernandos name to the price of the round trip ticket between Manila and
Los Angeles. CAI was likewise willing to accept the ticket in Lourdes name
as full or partial payment as the case may be for the purchase of any ticket,
albeit under her name and for her exclusive use. In other words, CAIs
willingness to comply with its undertaking under its March 24, 1998 cannot
be doubted, albeit tainted with its erroneous insistence that Lourdes ticket
is non-transferable.
Therefore, CAIs liability for damages for its refusal to accept Lourdes
ticket for the purchase of Fernandos round trip ticket is offset by Spouses
Vilorias liability for their refusal to pay the amount, which is not covered by
the subject tickets. Moreover, the contract between them remains, hence,
CAI is duty bound to issue new tickets for a destination chosen by Spouses
Viloria upon their surrender of the subject tickets and Spouses Viloria are
obliged to pay whatever amount is not covered by the value of the subject
tickets.

29.
F.F. Cruz vs. HR Construction, March 14, 2012
- FFCCI entered into a contract with the DPWH for the construction of the

Magsaysay Viaduct, known as the Lower Agusan Development Project.

FFCCI, in turn, entered into a Subcontract Agreement with HR Construction
Corporation (HRCC) for the supply of materials, labor, equipment, tools and
supervision for the construction of a portion of the said project.
HRCC submitted to FFCCI several progress billings over several months.
However, FFCCI was not able to pay diligently, claiming that it still had to
valuate the works accomplished by HRCC.
HRCC soon enough sent a letter demanding payment from FFCCI in the
amount of 7 million pesos plus interests. Subsequently, HRCC completely
halted construction and issued a work stoppage.
The issue of whether the work stoppage is justified reached the courts,
and the CA held that it actually was justified.
ISSUE: WON there was a valid rescission of the subcontract agreement by
the HRCC? - NO
The right to rescind may be waived, expressly or impliedly. In spite of the
existence of dispute or controversy between the parties during the course
of the Subcontract Agreement, HRCC had agreed, via a stipulation in the
subcontract, to continue the performance of its obligations pursuant to the
Subcontract Agreement. In view of such provision, HRCC is deemed to have
effectively waived its right to effect extrajudicial rescission of its contract
with FFCCI. Accordingly, HRCC, in the guise of rescinding the Subcontract
Agreement, was not justified in implementing a work stoppage.

30.
Tan vs. Court of Appeals, 175 S 656
- Spouses Singson were the owners of a house and lot in Baguio which were
up for sale.
Tan and his agent went on to see the said property and agreed to buy the
same. Tan advanced 200,000 for the cancellation of the mortgage and lien
attached to the title of the property.
They agreed on executing a deed of absolute sale but the clearance
needed from DBP has not yet been accomplished through DBPs delay in
processing the same. Petitioners saw this as a breach on the agreement
therefore cancelled the sale and demanding 200,000 without judicial
notice/authority for rescission.
Issue: WON there was susbstantial breach to merit a rescission? NO
It is a settled principle of law that rescission will not be permitted for a
slight or casual breach of the contract but only for such breaches as are so
substantial and fundamental as to defeat the object of the parties in
making the agreement.
A court, in determining whether rescission is warranted, must exercise its
discretion judiciously considering that the question of whether a breach of a
contract is substantial depends upon the attendant circumstances
Time not being of the essence in the agreement, a slight delay on the part
of the private respondents in the performance of their obligation, is not
sufficient ground for the resolution of the agreement, more so when the
delay was not totally attributable to them. In this case, as to the lot covered
by TCT No. T-13826, it is true that as of June 25, 1984, the date set for the
execution of the final deed of sale, the mortgage lien in favor of DBP
annotated in the title has not yet been cancelled as it took DBP some time
in processing the papers relative thereto. However, just a few days after, or
on July 12, 1984, the cancellation of the DBP mortgage was entered by the
Register of Deeds and duly noted on the title.
Petitioner is given a period of ninety (90) days within which to pay the sum
of one million and five hundred fifty thousand pesos (Pl,550,000.00)
representing the balance of the purchase price, with interest.

31.Heirs of JBL Reyes vs. CA, 338 S 282

- Justice Jose Benedicto L. Reyes (JBL) and Dr. Edmundo Reyes are co-

owners of a parcel of land in Taft Ave. Pasay City. They entered into a lease
contract with Metro Manila Builders at a very low rate of rental. The
condition in the contract: Lessee would cover all present and future
improvements in the property with insurance against risks and maintain
premises in good, sanitary at all times.
In the course of the lease, petitioners found out that respondent had not
properly maintained the premises or covered it with an adequate insurance
policy. WORSE, they have subleased the property to 3rd parties.
Petitioners served on respondent a notice terminating the lease contract
and demanding that they vacate and surrender the premises subject of the
lease.
Respondent questioned the actions of the petitioner, especially the

absence of a judicial rescission of the contract of lease.

Issue: WON there was a need for Judicial rescission in this case? NO
We rule that there is no need for a judicial rescission of the lease contract
between lessors heirs of Justice J. B. L. Reyes, et al. and lessee MMB, Inc.
The contract provides:
"Section 18, paragraph 4 (a) In the event of default or breach of any of the
condition of this contract, the LESSOR may, in his absolute discretion
declare the contract cancelled and terminated and require the TENANT to
vacate the leased premises.
The law on obligations and contracts does not prohibit parties from
entering into agreement providing that a violation of the terms of the
contract would cause its cancellation even without judicial intervention.
This is what petitioners and respondent entered into, a lease contract with
stipulation that the contract is rescinded upon violation of its substantial
provisions, which MMB, Inc. does not deny they violated.

32.
Song Fo vs. Hawaiian Phil, 47 P 82
- Song-Fo entered into an agreement with Hawaiian Phil to supply them

molasses.
A letter revealed the quantity of molasses to be delivered and the date to
be delivered. However, Song-Fo delayed in paying for 20 days.
Hawaiian then alleged that it had to rescind the agreement due to the
delay of Song-Fo's payment.
Issue: WON the delay for 20 days was a valid ground for
rescission? - NO
The general rule is that rescission will not be permitted for a slight or
casual breach of the contract, but only for such breaches as are so
substantial and fundamental as to defeat the object of the parties in
making the agreement. A delay in payment for a small quantity of molasses
for some twenty days is not such a violation of an essential condition of the
contract was warrants rescission for nonperformance. Not only this, but the
Hawaiian-Philippine Co. waived this condition when it arose by accepting
payment of the overdue accounts and continuing with the contract.
Thereafter, Song Fo & Company was not in default in payment so that the
Hawaiian-Philippine co. had in reality no excuse for writing its letter of April
2, 1923, cancelling the contract. the appellant had no legal right torescind
the contract of sale because of the failure of Song Fo & Company to pay for
the molasses within the time agreed upon by the parties.

33.
Filoil vs. Mendoza, 150 S 632
- A contract of lease of a 750 sq. meter lot between Fil-Oil Refinery and

Jesus and Severina Garcia was entered into. FilOil Refinery allegedly
violated the terms of the contract for it subleased the property to FilOil
Marketing and PetroPhil and delayed in a number of times in their payment
of monthly
rentals.
In rescinding the contract of lease between petitioner Filoil Refinery
Corporation and private

respondents, the lower court found that petitioners illegally subleased the
lot to petitioner Filoil
Marketing Corporation and that the latter, in turn, assigned its sublease to
petitioner Petrophil
Corporation.
Issue: WON the rescission was valid? - NO
An examination of the lease contract reveals that there is no express
prohibition against the
assignment of the leasehold right.
Under the law, when there is no express prohibition, the lessee may
sublet the thing leased and all rights acquired by virtue of an obligation are
transmissible, if there has been no stipulation to the contrary. Arguments
are moot and academic for the lease of contract has already expired, and
the petitioners are ordered to vacate the premises.