CLAUDINA VDA. DE VILLARUEL, ET AL. VS.

MANILA MOTOR CO., INC.

104 PHIL. 926

FACTS:

On May 31, 1940, the plaintiffs Villaruel and defendant Manila Motor Co. Inc. entered into a
contract whereby the defendant agreed to lease plaintiffs building premises. On October 31, 1940, the
leased premises were placed in the possession of the defendant until the invasion of 1941.The Japanese
military occupied and used the property leased as part of their quarters from June, 1942 to March,1945, in
which no payment of rentals was made. Upon the liberation of the said city, the American forces occupied
the same buildings that were vacated by the Japanese. When the United States gave up the occupancy
of the premises, defendant decided to exercise their option to renew the contract, in which they agreed.
However, before resuming the collection of rentals, Dr. Alfredo Villaruel upon advice demanded payment
of rentals corresponding to the time the Japanese military occupied the leased premises, but the
defendant refused to pay. As a result, plaintiff gave notice seeking the rescission of the contract and the
payment of rentals from June, 1942 to March, 1945; this was rejected by the defendant. Despite the fact
the defendant under new branch manager paid to plaintiff the sum of P350 for the rent, the plaintiff still
demanded for rents in arrears (unfinished duty) and for the rescission of the contract of lease. The plaintiff
commenced an action before the CFC of Negros Occidental against defendant company. During the
pendency of the case, the leased building was burned down. Because of the occurrence, plaintiffs
demanded reimbursement from the defendants, but having been refused, they filed a supplemental
complaint to include a 3rd cause of action, the recovery of the value of the burned building . The trial court
rendered judgment in favor of the plaintiff. Hence the defendants appeal.

ISSUE:
Is Manila Motor Co. Inc. liable for the loss of the leased premises?

RULING:
No. Clearly, the lessor's insistence upon collecting the occupation rentals for 1942-1945 was unwarranted
in law. Hence, their refusal to accept the current rentals without qualification placed them in default (mora
creditoris or accipiendi) with the result that thereafter, they had to bear all supervening risks of accidental
injury or destruction of the leased premises. While not expressly declared by the Code of 1889, this result
is clearly inferable from the nature and effects of mora. In other words, the only effect of the failure to
consign the rentals in court was that the obligation to pay them subsisted and the lessee remained liable
for the amount of the unpaid contract rent, corresponding to the period from July to November, 1946; it
being undisputed that, from December 1946 up to March 2, 1948, when the commercial buildings were
burned, the defendants/appellants have paid the contract rentals at the rate of P350 per month. But the
failure to consign did not eradicate the default (mora) of the lessors nor the risk of loss that lay upon them.

The pertinent articles of the Civil Code of Spain of 1889 provide:

ART. 1554. It shall be the duty of the lessor;

1. To deliver to the lessee the thing which is the subject matter of the contract;

2. To make thereon, during the lease, all repairs necessary in order to keep it in serviceable
condition for the purpose for which it was intended;

3. To maintain the lessee in the peaceful enjoyment of the lease during the entire term of the
contract.

ART. 1560. The lessor shall not be liable for any act of mere disturbance of a third person of the use
of the leased property; but the lessee shall have a direct action against the trespasser.

It the third person, be it the Government or a private individual, has acted in reliance upon a right, such
action shall not be deemed a mere act of disturbance.

TENGCO V. CA
PADILLA, J. / 1989

Review on certiorari
FACTS:

1942, Tengco entered into a verbal lease agreement with Lutgarda Cifra over a house in Navotas which
belonged to the latter. Aside from the amount of rentals, no other condition or term was agreed upon. The
rentals were collected from Tengco by Lutgarda’s collector from time to time, with no fixed frequency.

1976, Cifra, Jr., claimed to be the owner the house in Navotas which was leased to Emilia Tengco. He
filed an action to evict Tengco, from the said premises for her alleged failure to comply with the terms and
conditions of the lease contract by failing and refusing to pay the stipulated rentals despite repeated
demands. Judgment was rendered against Tengco. She has appealed.
ISSUES: Whether or not Cifra Jr. is guilty of mora accipiendi?

HELD and RATIO:

NO. The non-acceptance of the rentals is justified because they were tendered to someone who had no
authority to accept them in the first place due to achange in ownership. Tengco could have released
herself from responsibility by judicial deposit of the rentals, or actually paying them to Cifra Jr.
NOTES:

MORA ACCIPIENDI
– unreasonable and unexplained delaying or defaulting on acceptance of a prestation out of negligence of
the enforcement of one’s right/s
LACHES
- unreasonable and unexplained delay in bringing a cause of action before the courts.

CENTRAL BANK V. COURT OF APPEALS

MAKASIAR, C. J. / OCTOBER 3, 1985
FACTS:

 On April 28, 1965, Island Savings Bank approved the loan application for P80,000.00 of Sulpicio
Tolentino, who, as a security for the loan, executed a real-estate mortgage over his 100 hectare
land.

 On May 22, 1965, a mere P17,000.00 partial release of the loan was given to Tolentino. He and
his wife signed a promissory note for P17,000.00 at 12% annual interest payable within 3 years
from the date of the execution of the contract at semi-annual installments. However, the
remaining P63,000.00 was not released.

 On August 13, 1965, the Monetary Board of the Central Bank issued Resolution 1409 prohibiting
Island Savings Bank from making new loans and investments after finding out that the bank is
suffering from liquidity problems.

 On August 1, 1968, Island Savings Bank, in view of the non-payment of the P17,000.00 covered
by the promissory note, filed for the extrajudicial foreclosure of the real estate mortgage.

 On January 1969, Tolentino filed for specific performance or rescission and damages, alleging
that the bank failed to deliver the remaining P63,000 and that he is entitled to the delivery of the
P63,000 or if the balance can’t be delivered, the real estate mortgage be rescinded.

 The trial court ordered that the bank be enjoined from continuing the foreclosure of the mortgage.
However, it rules for the dismissal of Tolentino’s petition, ordering him to pay the P17,000 plus
legal charges and interest, and allowed for the foreclosure of the property.

 Upon the appeal of Tolentino, the CA affirmed the trial court decision of dismissal of Tolentino’s
petition. However, it ruled that the bank may neither foreclose the mortgage nor collect the
P17,000.00

ISSUE/S:

1.Can the petition of Tolentino for specific performance prosper?

2.Is Tolentino liable for the P17,000.00
debt covered by the promissory note?
3.Can his real estate be foreclosed to satisfy the amount, if he is to pay?

HELD:
1.
No. When Island Savings Bank and Tolentino entered into the P80,000.00 loan agreement, they
undertook reciprocal obligations. In reciprocal obligations, the obligation or promise of each party is the
consideration for that of the other; and when one party has performed or is ready and willing toper form
his part of the contract, the other party who has not performed or is not ready and willing to perform incurs
in delay (Art. 1169 of the Civil Code). Since Island Savings Bank was in default in fulfilling its reciprocal
obligation under their loan agreement, Tolentino, under Article 1191 of the Civil Code, may choose
between specific performance or rescission with damages in either case. But since Island Savings Bank
is now prohibited from doing further business by Monetary Board Resolution No. 967, specific
performance in favor of Tolentino can’t be granted. Rescission is the only alternative remedy left. However
rescission is only for the P63,000.00 balance of theP80,000.00 loan, because the bank is in default only
insofar as such amount is concerned, as there is no doubt that the bank failed to give the P63,000.00.

2.
Yes. As for the P17,000.00 covered by the promissory note, the bank has already complied with the
obligation to give it. Since Tolentino has not complied with his obligation to pay the amount when it was
due, the right to rescind belongs to the bank. Since both parties were in default in the performance of their
respective reciprocal obligations, they are both liable for damages, which offset each other. But the
liability of Tolentino to pay the P17,000.00 is not included in offsetting the liabilities of both parties, hence
he is to pay the amount with interest.
3.
No, Tolentino’s real estate cannot be foreclosed to satisfy the amount. Since Island Savings Bank failed to
furnish the P63,000.00 balance of theP80,000.00 loan, the real estate mortgage of Sulpicio M. Tolentino
became unenforceable to
To such extent. P63,000.00 is 78.75% of P80,000.00,hence the real estate mortgage covering
100hectares is unenforceable to the extent of 78.75hectares. The mortgage covering the remainder of
21.25 hectares subsists as a security for theP17,000.00 debt. 21.25 hectares is more than sufficient to
secure a P17,000.00 debt.