OBLICON CASES FINALS

Hernandez-Nievera vs. Hernandez

Hernandez, et al assails the decision of the CA holding the novation of a MOA
between petitioners and respondents in a sale of parcels of land for housing
development. The original MOA had the option of rescission if the vendees
did not exercise their option to buy the properties. However, one of the
siblings, entered into a DAC with the respondents conveying the properties in
exchange for stocks and shares. Supreme Court denied petition, holding the
novation valid and extinguishing the old obligation in favor of the new one,
saying the power of attorney held by Demetrio as an agent, covered the sale
of the land in behalf of his sisters.

Reyna vs. COA
Petitioners are employees of LBP who authorized the prepayment of fees
with the cattle supplier in connection with a credit financing loan program by
the said bank to cooperatives. Upon audit, COA ordered the petitioners to
refund the disallowed transaction after the BSP ordered the debt to be
written-off in the books of the LBP. Supreme Court stated that a write-off is
not a condonation, wherein in the latter, the gratuity of the creditor and
acceptance of the debtor is needed. Such is not the case in a write-off,
wherein a debt is deemed uncollectable in the accounting books of the
creditor and on the occasion that the debtor becomes solvent again, the
former may change the entry on their books to make the debt collectible
even without the approval of the debtor. A write-off does not release the
petitioners from liability for the prepayment of fees, the latter being without
legal basis.

Insurance of PI vs Sps. Gregorio
Petitioners granted loans to the respondents who mortgaged parcels of lands
to the former as security in the event of nonpayment. The spouses gave the
bank tax certificates as proof of ownership, saying the lands were still
untitled. When the respondents failed to pay back the loan, the properties
were foreclosed and were subjected to an auction, wherein the petitioner
was the highest bidder. Upon consolidation of properties, the petitioners
discovered that the parcels of land now belonged to third persons. The
Supreme Court ruled that actions upon injury or for quasi delicts must be
instituted within 4 years upon discovery of the fraud (Art. 1146), which was
done by the petitioners; and laches did not occur because the petitioners
relied on the good faith of the respondents false representations regarding
the properties.

Sandoval Shipyards vs PMMA
The respondent asked the petitioners to build them two boats to be used for
the training of their students. Payment was made in full and the boats were
received by one of the employees of the respondent. However, the boats
were substandard and receipt was made without the authority of the
employee. Furthermore, the petitioners failed to comply with the delivery
even after asking for extensions. The respondents then asked for rescission
of the contract and the amount paid should be restituted plus damages. The
Supreme Court held that rescission only works with mutual restitution that
is, the return of the objects received plus damages. Since the employee was
not authorized to receive, it was as if there was no receipt at all. Hence there
can be no mutual restitution. Petitioners are ordered to return the amount
received plus damages.

Stronghold Insurance vs. Republic Asahi
The respondents asked a construction company to construct roadways and
drainage in their compound, wherein the petitioners took part in the
performance bond. Because of the slow progress, the respondents asked for
rescission and asked another construction company to finish the job.
Thereafter, they filed for damages. However, the petitioners refused to
honor the performance bond because the owner of the construction
company already died, saying their obligation was already extinguished upon
death of the principal obligor. The Supreme Court ruled that the death of the
principal obligor shall not extinguish the obligation and claims may be made
against his estate unless a contrary stipulation is indicated, if it is against the
law or nature of the obligation. Consequently, the obligation of the insurance
company in the performance bond is not extinguished and therefore, they
must pay.



Cacayorin vs AFPMBAI
The petitioners tried to purchase a property of the respondents through a
loan with a rural bank, which then issued a title in their name. However, the
bank closed shop and was brought under receivership with PDIC. Somehow,
the papers regarding the loan and the TCT came into the possession of the
respondents and demanded the payment of the loan. Confused as to where
to tender the payment, the petitioners asked the court for consignation,
which the respondents assailed, saying the HLURB has the jurisdiction over
the case. The Supreme Court ruled that consignation requires judicial
authority so only a court may receive the payment of the loan. The
respondents should not have assailed the jurisdiction of the court if they
wanted the loan to be settled.

Typingco vs. Lim, BPI
Respondents borrowed money from the petitioner and conveyed their house
and lot as dacion in pago (delivery of a thing as an acceptable equivalent of
an obligation, wherein the object is the thing offered and the debt is the
consideration or price) upon delay of the latter. However, the property was
under mortgage with BPI and they refused to deliver the title unless the
family settles their account. The Supreme Court ruled that a mortgage does
not vest the ownership unless it was bought from a public auction.
Surrender of the title will not impair the existing obligation of the family over
the property. Thus, the bank must deliver the title in favor of the respondent
who acquired ownership of the property.

Rockville Excel vs. Sps. Culla
The respondents had a loan with PS Bank and asked the help of the
petitioners to pay that debt. In return, they offered to pay their loan with a
property which was valued more than the amount borrowed. The
petitioners alleged this as dacion in pago while the respondents claim it was
just an equitable mortgage. The Supreme Court ruled that it was only an
equitable mortgage (a contract which lacks the formality but was
nevertheless intended to be a mortgage) because of the granting of
extensions for the payment of the loan and the continued possession of the
property of the respondents even after the perfection of the deed of sale.
Determination of the nature of contract lies with the intention of the parties,
not with the name given to it by them.

Sps. Go Cinco vs. CA
The petitioners owed money with the respondents and secured the loan with
some properties. When they failed to pay the debt, they secured another
loan with PNB and used the same properties as mortgage. When the
petitioner found out about the mortgage during the collection with the bank,
she refused to sign the release of the properties. The Supreme Court ruled
that the respondents refusal to accept the payment of the petitioner was
without valid ground, but such refusal cannot be equated with payment.
Consignation may be used as a remedy. A refusal of payment releases the
debtor from the payment of interest from the time the refusal took place.

Megaworld vs Tanseco
The respondent agreed to buy a condominium unit sold by the petitioner, to
be delivered on a specific date. Having failed to deliver the unit after due
payments made by the respondent, the petitioner was asked to rescind the
contract and return the money paid by the respondent. The Supreme Court
ruled that the failure of the petitioner to deliver the unit, contending the
1997 Asian Financial crisis as a force majeure is untenable as fluctuations of
the stock market are foreseeable especially in the real estate business. The
respondent cannot be compelled to accept the late delivery of the unit and
demand on her part is not needed if it is useless. In reciprocal obligations,
delay on one party begins when the other party had fulfilled his obligation.
Petitioner was made to return the payment plus interests and damages.

Sta Lucia Realty vs Sps. Buenaventura
Respondents bought a lot from a subdivision owned and developed by
petitioner. However, during the building of the house, they found out that
the said lot was also awarded to another person. They nevertheless
continued with the construction by virtue of the permit granted by the
petitioner. The Supreme Court ruled that Art. 1311 is applicable because the
lot was bought from the original owner and the rights attached to that lot
were transmitted to the new owner unless it is contrary to law, to an
expressed stipulation or due to the nature of the contract. Rescission would
be the correct remedy.