You are on page 1of 20

Rocky Corporation, whose principals were known friends of then president Marcos, leased a piece of property from Balboa.

Rocky Corp. intended to use the land as the site for a rock crushing plant. While still on the planning stage of construction, EDSA 1 happened. Rocky Corp. thereafter refused to pay lease rentals to Balboa citing the ground that due to the change of the political climate it has become impossible for him to determine if his rock crushing plant will be allowed to operate and that since his intended use for the property is uncertain, he is excused from complying with his contract of lease. Is he correct?

Answer: Rocky Corporation still has to pay lease rentals. The change of political climate is not the kind of impossibility as would prevent him from paying lease rentals. Besides, legal or physical impossibility excuses compliance with an obligation only in obligations to do and not to give which is what payment of lease rentals is. (National Construction Corporation v CA, May 5, 1997)

Norman owes Joel P10,000.00 pursuant to a loan. On the other hand Joel owes Norman an Entertainment System approximately worth P10,000.00. For simplicity Norman and Joel agreed that they would deliver to each other their respective obligations on August 20, 2004. On the said date Norman was ready to pay the P10,000.00 but Joel was not ready to deliver the entertainment system. Because of that Norman refused to pay Joel the P10,000 and thereafter demanded that his obligation be rescinded since Joel was not prepared to deliver the Entertainment System. May Norman validly rescind the contract?

Answer: No, different obligations are involved not reciprocal obligations. Therefore the right to rescind is not available in this case.

Sixto committed himself to transfer a parcel of land with many fruit bearing trees to Jerry if the Spurs beat the Suns in the NBA playoffs. Jerry accepted the offer. Sometime in June 2004 the Spurs did beat the Suns in the NBA playoffs. Jerry now claims ownership over the land and demanded that Sixto turn over all fruits earned by the land from the date of the contract because he claims that he is entitled to the same because of the retroactive effect of conditional contracts upon the occurrence of the condition. Sixto did not deliver the fruits. Jerry sued Sixto for specific performance. Who will prevail?

Answer: Sixto. Fruits are not affected by the retroactive effect in unilateral contracts unless otherwise stipulated in the contract or can be inferred from the stipulations of the contract, which is not the case here. Besides, in conditional obligations the creditor is entitled to the fruits only if he had paid for the thing due upon perfection of the contract. Entitlement to the fruits is from the time the obligation to deliver arises.

Judd, was in dire need of money to pay off his loan with PNB. As collateral for the loan he mortgaged a parcel of land in Quezon City. He entered into a contract with Marge, where he committed to sell the parcel of land to Marge if Marge would pay off Judd s debt with PNB. The amount of the payment to PNB would be removed from the final purchase price. Thereafter, and before Marge could do her end of the bargain, Judd won in the lotto. He then, immediately went to the bank and paid off his loan. Marge then demanded that Judd sell the land to him. He said he was under no obligation to do so anymore as Marge was not the one who paid off the loan with PNB. May Marge successfully demand that Judd sell the lot to her?

Judd voluntarily prevented the fulfillment of the condition. This therefore amounts to constructive fulfillment of the obligation. In case of constructive fulfillment, the condition is deemed to have been fulfilled in which case the obligation subject to such condition shall arise.

Rissa entered into a contract to sell with Nat, where Rissa will sell the lot to Nat upon payment of the purchase price. The contract states that the purchase price must be paid by the end of the month otherwise Rissa can unilaterally cancel the contract. In the meantime, Nat was allowed to enter the property to start some construction work. By the end of the month Nat failed to pay. Rissa then demanded that Nat leave the premises and declared that the contract is cancelled. Nat argued that she cannot be required to leave as the termination of the contract is illegal. She said that the proper procedure should have been that Rissa file a case of rescission under Article 1191 of the Civil Code and the provision allowing the unilateral termination is invalid. May Rissa just cancel the contract to sell with Nat even without going to court?

This is a reciprocal obligation where one party failed to perform his part while the other while ready to perform has not yet performed his part. Since the obligations are still to be executed then the failure of one party to perform when the other is ready allows the latter to rescind the contract and not perform his part. Besides, in this case, Rissa was merely enforcing the provision in their contract giving her the right to rescind.

Tabs and Roy are solidary creditors of Joey. Joey failed to pay her debt to them and despite demands continues not to do so. Tabs filed a case against Joey for collection of the sum of money owed plus interest and damages. Joey filed a motion to dismiss saying that Tabs alone cannot file the case as there are two creditors involved. The absence of one creditor would mean that the case could not be adjudicated completely and therefore the case should be dismissed. If you were the judge how would you rule on the motion to dismiss?

One solidary creditor is sufficient to file a case. The rule as to solidary creditors is that ay one of them may undertake such acts as would be beneficial to everyone. Unanimity in action is required only when the act to be done would be detrimental to the solidary creditors.

Joyce hired the services of Laxmi to construct her house. They agreed on the design and Laxmi committed to complete the house in six months. Their contract then stated that failure of Laxmi to finish the house in six months would make her liable for damages in the amount of P10,000 per day of delay. During construction Joyce kept criticizing the work being done and constantly demanded that construction of certain portions of the house be redesigned. After six months Laxmi failed to finish the house. Joyce then demanded the payment of penalty, which Laxmi refused to pay. Joyce filed a case against Laxmi for recovery of damages. May Joyce recover the penalties stated in the contract?

Joyce committed the acts which resulted in the delay. Therefore, she cannot recover the penalty. The creditor in this case caused the delay and should therefore not be allowed to profit therefrom.

Tetu owed BPI P1.0M secured by his house. On due date he failed to pay his loan, in which case BPI foreclosed on the property and sold the same in auction. Since there were no other bidders BPI was the highest bidder and acquired the property for P800,000.00, the value it gave the property. BPI then demanded that Tetu pay the remaining P200,000.00. Tetu refused saying that when BPI foreclosed on the property that already amounted to dation in payment and therefore he no longer owes the bank anything. Is Tetu correct? May BPI collect the remaining P200,000.00?

Tetu is wrong. This is not dation. BPI can collect. Dation in payment is when in payment of a monetary debt, property is paid. Dation in payment or dacion en pago shall be subject to the laws on sales.

Married couple Marcel and Daisy realized that they were no longer happy with each other. They decided that Marcel will file a case of annulment of marriage against daisy. They entered into a contract detailing the manner by which their properties will be distributed in consideration for which Daisy will not oppose the case of Marcel. Thereafter, and after Marcel filed his case, Daisy realized that she got the raw end of the deal under the contract. She demanded that they enter into a different property settlement. Marcel refused. Daisy filed a case asking the courts to declare the contract null and void. Marcel defended that validity of the contract and said that when it was agreed upon both parties knew the consequences of their agreement and there was nothing, which would indicate that the contract was infirm. If you were the judge would you declare the contract null and void?

Yes, the contract is contrary to morals and public policy as marriage must be preserved.

Joseph entered into a lease contract with Ferdie whereby Joseph shall lease the property to Ferdie for a period of one year. Ferdie was able to get Joseph to agree on a stipulation in the contract which states that Ferdie shall have the option to renew the contract for another year upon his option on the lapse of this present contract. After one year passed, Ferdie informed Joseph that he is renewing the lease for another year. Joseph said that the renewal must be along terms still to be agreed upon and refused to renew the lease under the old terms. Joseph then filed a case against Ferdie to eject him from the property. Ferdie refused saying that he had the right to stay since he exercised his right to renew. Joseph countered that such a stipulation is invalid since under the Civil code provisions of contracts must be mutually agreed upon. Since the second contract is a separate lease contract its terms must have been mutually agreed upon for it to be valid. If you were the judge who would you say is correct?

Ferdie is correct. The option to renew is valid and was a consideration for the entry into the contract. Also, the first contract is merely renewed under the old terms