1255 : PAYMENT BY CESSION OR ASSIGNMENT,
FACTS
DISTINGUISHED FROM DATION IN PAYMENT
VILLALUZ V. LANDBANK
1256-1261 : TENDER OF PAYMENT AND
CONSIGNATION
PABUGAIS V. SAHIJWANI
BENOS V. LAWILAO
CACAYORIN V. ARMED FORCES AND POLICE
PHILIPPINE NATIONAL BANK V. CHAN
1266-1267 : DOCTRINE OF UNFORESEEN EVENTS IN
OBLIGATIONS TO DO. EFFECTS.REQUISITES
PHILIPPINE NATIONAL CONSTRUCTION V. CA
MAGAT JR. V. CA
TAGAYTAY REALTY V. GACUTAN
COMGLASCO CORP. V. SANTOS
RULING
VILLALUZ executed a SPECIAL POWER OF ATTORNEY for Agbisit to "negotiate for
the sale, mortgage, or other forms of disposition for a parcel of land" and "sign in her
behalf all documents relation to the sale, loan or mortgage, or other disposition of the
property"
SPA : Neither specified conditions under which the SPA may be exercised nor stated
the amounts for which the land may be sold or mortgaged
AGBISIT executed an SPA appointing MILFLORES COOPERATIVE as attorney-in-
fact in obtaining a loan from LBP
MILFLORES, in representative capacity, executed a REM. MILFLORES was unable to
pay = foreclosure sale
VILLALUZ filed a complaint seeking the annulment of the foreclosure
Suspensive Condition: loan proceeds released = obligations under the security
contract
PABUGAIS sold a lot to SAJIHWANI
Para 5. Fails to pay = reservation fee forfeited ; Fails to deliver = return 600k + interest
per annum
PABUGAIS failed to deliver the documents. He retured the 600k reservation fee + he
claimed that he TWICE tendered to SAJIHWANI
SAJIHWANI : Received petitioners letter BUT NO CHECK WAS APPENDED
THERETO, no Valid TENDER OF PAYMENT
RTC : Consignation INVALID for failure of Pabugais to prove that he tendered payment
Pabugais filed an Ex Parte Motion to Withdraw the Consigned Money
CA : Valid consignation = Pabugais CAN NO LONGER WITHDRAW the money
Benos and Lawilao executed a Pacto de Retro Sale : BENOS could redeem the
porperty within 18 months, otherwise, the sale would become irrevocable
LAWILAO paid 150,000 and took possession. Janice Lawilao restructured the LOAN
twice = became due and demandable
BENOS SON paid the bank 159,000.00 representing the PRINCIPAL and INTEREST.
LAWILAO spouses also went to the bank but the bank REFUSED to accept their
payment.
LAWILAO filed for consignation against the bank + deposited 159,000.00
CACAYORIN purchased a property + executed a loan and Mortgage Agreement
(borrowers) and Rural Bank as Lender, under HDMF Financing Program
Rural Bank issued a letter of guaranty = AFPMBAI executed a Deed of Sale
HDMF LOAN DID NOT PUSH THROUGH, Rural Bank closed and placed under
receivership of PDIC = Petitioners were unable to pay the loan/consideration of
the property.
Their papers could not be located, they were left in quandary as to where they should
TENDER FULL PAYMENT of the loan.
Prayer:
a) be allowed to consign 77,418.00
CHAN leased a commercial building to PNB. PNB vacated on March 23 2006.
Meanwhile, Chan obtained a 1.5M from PNB, which was secured by a REM.CHAN also
executed a Deed of Assignment over the RENTAL PAYMENTS in favor of PNB.
PNB had the option to pay monthly rentals OR apply the same as payment for CHAN's
loan with the bank, PNB DID NEITHER
PNB applied the rental proceeds to outstanding loan. A LAMBERTO CHUA claimed
to be the new owner of the leased property and requested that the rental be paid directly
to him.
PNB DEPOSITED the RENTALS in a separate non-drawing savings account for the
benefit of the rightful party.
PNB insisted that CHAN is not entitled to the disputed rental proceeds
Contract of Lease : Lease shall be for 5 years commencing on the date of the issuance Article 1266 : Rebus Sic Stantibus : The purpose of the contract DID NOT
of the INDUSTRIAL CLEARANCE by the Ministry of Human Settlements
Termination : By mutual agreement of the parties + Termination/Expiration
1986: PNCC obtained a TEMPORARY USE PERMIT, valid for 2 years. Respondents Applies only to obligations TO DO and not to obligations TO GIVE.
demanded for the payment of first annual rental. PNCC argued that the payment of
rental would ONLY COMMENCE on the date of the issuance of the INDUSTRIAL
CLEARANCE + expressed its intention to discontinue the rock crushing project due to
financial, as well as, technical difficulties
During Martial Law. LOI of Marcos
Refusal of the Philippine government to issue permit to IMPORT the transceivers
Developer refused to construct the amenities because the homeowners were not yet
building their homes. They just wanted to save on the maintenance costs.
Santos leased out the space to COMGLASCO. Comglasco preterminated the lease
contract.
Comglasco vacated the property and stopped paying further rentals.
Issue: Whether the mortgage contract executed by the SUBSTITUTE is VALID and
BINDING upon the principal
The law creates a presumption that an agent has the power to appoint a substitute. The
substitute becomes the agent of the principal. The principal is BOUND by the acts of the
substitute.
IT IS INCUMBENT UPON THE PRINCIPAL TO PROHIBIT THE AGENT FROM
APPOINTING A SUBSTITUTE. The SPA contains no restrictive language.
ASSIGNMENT : for the express purpose of securing the payment of the Line/Loan,
interest, and charges thereon. Nowhere in the Deed can it reasonably deduced that the
COLLATERALY assigned by Milflores Cooperative were intended to substitutte the
payment of sum of money under the loan. It was an accessory obligaiton to secure the
principal loan obligation.
Assignment = mere security = DID NOT extinguish the obligation. It was not
intended to substitute the payment of money.
Only remedy of Villaluz was is to proceed against the agent and substittue
REQUISITES OF CONSIGNATION
Issue : The existence of a valid tender of payment
1) the check was not attached to the letter
2) the amount was insufficient
Pabugais tender of payment in the form of manager's check is VALID.
The amount was sufficient to extinguish the obligation, consignation is VALID.
PABUGAIS CAN NO LONGER WITHDRAW BECAUSE SAJIHWANI ALREADY
ACCEPTED THE CONSIGNATION = EXTINGUISHED P's OBLIGATION.
THERE WAS NO VALID TENDER OF PAYMENT AND/OR CONSIGNATION
The 159,000.00 deposited was not for the consignation BUT WAS DEPOSITED IN
RELATION TO CIVIL CASE No. 310, earlier dismissed.
Court CANNOT AUTOMATICALLY apply such sum in satisfaction of the aforesaid
DEBT.
Pacto de Retro Sale declared rescinded and petitioners are ordered to return
150,000.00
CACAYORIN, through a representative, made a VERBAL INQUIRY to PDIC regarding
the payment of their loan.
THERE ARE TWO ENTITIES WHICH PETITIONER MUST DEAL WITH IN ORDER TO
FULLY SECURE THE TITLE OF THEIR PROPERTY = Creditor is Unknown
1) Rural Bank
2) AFPMBAI
The lack of PRIOR tender of payment is not fatal to their consignation case. Falls under
the exceptions under Article 1256.
Tender of Payment may be made elsewhere, extrajudicial
Issue : Did PNB properly consign the disputed rental payments? NO.
Failure of any of the requirements is enough ground to render a consignation
ineffective.
PNB's deposit of the monthly rental in a non-drawing savings account IS NOT the
consignation contemplated by law.
PNB's obligation to pay the subject monthly rentals remained SUBSISTING, as the
deposit cannot be considered to have the effect of payment.
PNB's consignation with MeTC on 31 May 2006: After the obligation became due and
demandable. So, PNB's payment can only be considered made on 31 May 2006. Thus,
they defaulted in payment and is liable to pay interest.
Letter "PNCC considered the PERMIT as INDUSTRIAL CLEARANCE"
The suspensive condition has thus been fulfilled
materialize because of an unforeseen event which is the EDSA REVOLUTION +
financial difficulties
TO GIVE : is a prestation which consists in the delivery of a movable or an immovable
thing in order to create a real right, or for the use of the recipient, or for its simple
possession, or in order to return it to its owner
OBLIGATION TO PAY RENTALS is an Obligation to give + unforeseen events are not
the legal or physical impossibilites contemplated in the said article.
Article 1267 : Applies only in exceptional cases/changes/circumstances
Transceivers were not prohibited but merely regulated goods.
The PERMIT to import transceivers from Japan was DENIED by the Radio Control
Board.
Article 167 : Guillermo's inability to secure a letter of credit and to comply with his
obligation was A DIRECT CONSEQUENCE of the denial of the permit to import. He
CANNOT be faulted.
Good faith is presumed
Article 1267 : The developer DID NOT comply with its legal obligation to complete the
construction of the subdivision project. It unilaterally opted to suspend the construction
of the amenities to avoid incurring maintenance expenses.
IT WAS NOT DRIVEN BY AN EXTREMELY DIFFICULT SITUATION THAT WOULD
PLACE IT IN ANY DISADVANTAGE, but its desire to benefit from cost savings, which
dissuaded the buyers to construct their houses.
REQUISITES: The difficulty of the performance SHOULD BE that one party would be
placed at a disadvantage by the unforeseen event
a) the event or cahnge in circumstances could not have been foreseen at the time of the
execution of the contract
b) it makes the performance of the contract extremely difficult but not impossible
c) it must not be due to the act of any of the parties
d) the contract is for a future prestation
REQUISITES DID NOT CONCUR. Mere inconvenience or unexpected impediments or
increased expenses did not SUFFICE to relieve the debtor from a bad bargain.
Comglasco :1997 ASIAN FINANCIAL CRISIS (Under Article 1267), therefore, it was
exempted from its obligation because its business setback is the cause contemplated
under their lease which authorized it to preterminate the same.
ARTICLE 1266 APPLIES IN OBLIGATION TO DO, PAYING RENTALS IS AN
OBLIGATION TO GIVE.
ARTICLE 1267 IS NOT AN ABSOLUTE APPLICATION OF THE PRINCIPLE REBUS
SIC STANTIBUS.
Mere pecuniary inability to fulfill an engagement does not discharge a contractual
obligation, nor does it constitute a defense to an action for specific performance.
COMGLASCO cannot be permitted to blame its difficulties on the said regional
economic phenomenon because it entered the lease more than three years after it
began, so it had known the risks.
 Issue : May respondent be released from its contractual obligation on the ground
of Art. 1174 and Art. 1267?
Rebus Sic Stantibus : The parties stipulate in light of certain prevailing conditions, and
the theory can be made to apply when these conditions cease to exist.
Parties are presumed to have assumed the risks of unfavorable developments. It must
POON leased a building to PRIME SAVINGS BANK for 10 years
only be applied in exceptional cases.
3 years later, BSP placed Prime Savings Bank under the receivership of PDIC
The difficulty of performance should be such that the party seeking to be released from
2000: Prime Savings Bank vacated the leasaed premises and surrendered them to
a contractual obligaiton would be placed at a disadvantage by the unforeseen event.
POON. PDIC issued POON a demand letter asking for the RETURN of the unused
The law speaks of SERVICE.
POON V. PRIME SAVINGS BANK advance rental amounting to 3,480.00 on the ground that Paragraph 24 of the Contract
First and Third elements are lacking (1. The even could not have been forseen and 3.It
became operative because Prime Saving's closure CONSTITUTED a FORCE
must not be due to the act of any of the parties)
MAJEURE.
Why? The contract was for 10-years, the parties had ACTUALLY CONSIDERED the
PDIC : Invoked the principle of rebus sic stantibus under Article 1267 as alternative
possibility of a deterioration or loss of Prime Savings Bank (para 4 and 5 of the
basis for demanding refund
Contract)
- They were worried that the building might be foreclosed since it was under mortgage
- What if the bank will be closed? Mr. Lee said that he will give POON the 6,000,000.00
advances, forfeited in their favor
Closure of bank was not an unforeseen event given that the lease was long-term.

ARTICLE 1267 invovles obligations TO DO and not TO GIVE. Obligation to pay

ILOILO JAR leased a portion of its warehouse building to COMGLASCO's
rentals is an obligation TO GIVE.
2001: COMGLASCO requested for a pretermination. Iloilo Jar did not agree but
Rebus sic stantibus also does not fit in.
Comglasco still removed its stuff
ILOILO JAR V. COMGLASCO Financial struggles due to an economic crisis is not enough reason for the courts to
Comglasco : Article 1267 "the consideration thereof had become so difficult due
grant reprieve from contractual obligations.
to the global and regional economic crisis that had plageued the economy. It did
Economic Crisis : NOT an absolute exceptional change of circumstances that equity
not fail to pay the rents because the contract is DEEMED terminated."
demands assistance for the debtor.