#6 OCCENA v JABSON  Under the said subdivision contract, priv.
respondent “guaranteed
GR NO. L-44349
OCT. 29, 1979
By: GUZMAN
Topic: EXTINGUISHMENT OF OBLIGATIONS; LOSS OF THE THING DUE; ART. 1267
Petitioners: JESUS V. OCCENA AND EFIGENIA C. OCCENA
Respondents: HON. RAMON V. JABSON, PRESIDING JUDGE OF THE CFI OF RIZAL
BRANCH XXVI; COURT OF APPEALS AND TROPICAL HOMES, INC.
Ponente: TEHANKEE, J.
RECIT-READY: Tropical Homes, Inc. agreed to develop a subdivision on the land
own by the petitioners. Respondents herein were going to be paid 40% of all
cash receipts from the sale of the lots. On Feb. 25, 1976, priv. respondent, filed
a complaint for modification of the terms and conditions of its subdivision
contract with petitioners. It was alleged that due to the increase of price of oil,
commodities including raw materials required for development of work, the
cost of development has risen to levels which are unanticipated, unimagined
and not within the contemplation of the parties. CFI, rendered judgment
modifying the contract. Petitioner appealed and moved to dismiss the complaint
for lack of cause of action. However, CA, also dismissed the case on the ground
under Art. 1267 of the CC. Petitioner now argue that worldwide increase in
prices cited by the priv. respondent does not constitute sufficient cause of
action for modification of contract. The SC ruled in favor of the petitioner, on
the basis of misapplication of Art. 1267 CC, and therefore, there is no cause of
action.
DOCTRINE: The Civil Code authorizes the release of an obligor when the service has
become so difficult as to be manifestly beyond the contemplation of the parties but
does not authorize the courts to modify or revise the subdivision contract between
the parties or fix a different sharing ratio from that contractually stipulated with
the force of law bet. The parties.
FACTS
 Priv. Respondent, Tropical Homes, Inc. filed a complaint for modification
of the terms and conditions of its subdivision contract with petitioner.
o It was alleged that due to the increase in price of oil and
worldwide spiraling of prices, the cost of such development has
risen which the performance by the plaintiff will result in
situation where defendants would be unjustly enriched at the
expense of plaintiff.
(petitioners as landowners) as the latter’s fixed and sole share and
participation an amount equivalent to 40% of all cash receipts from the
sale of the subdivision lots.
 CFI: render judgment modifying the terms and conditions of the contract
by fixing the proper shares that should pertain to the parties out of the
gross proceeds from the sales of subdivided lots of subject subdivision.
 Petitioner moved to dismiss the complaint for lack of cause of action and
insist that the worldwide increase in prices does not constitute a
sufficient cause of action for modification of the subdivision contract.
 COURT OF APPEALS: affirmed the decision of the CFI and dismissed the
case on the ground under art. 1267 of the CC.
ISSUE
 WON respondents may demand modification of the contract on the basis
that the prestation has become so difficult. (NO)
HELD/RATIO
 NO. THE SC RULED IN FAVOR OF THE PETITIONER AND GRANTED THE
PETITION ON THE BASIS THAT THERE IS NO CAUSE OF ACTION AND
MISAPPLICATION OF ART. 1626 CC.
o While the respondent court correctly cited in its decision the
rationale for Art. 1267 of the CC, it misapplied the same.
o The cited article does not grant the courts this authority to
remake, modify or revise the contract or to fix the division of
shares bet. Parties as contractually stipulated with the force of
law bet. the parties.
o In the case at hand, priv. respondent’s complaint seeks not
release from the subdivision contract but that the court “render
judgment modifying the terms and conditions of the contract
by fixing the proper shares that should pertain to the parties
out of the gross proceeds from the sales of subdivided.
o Therefore, Respondent’s complaints for modification of
contract has no basis in law and therefore states no cause of
action.