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Obligations and Contracts Case Digests

CONSIGNATION 240,000 and in case of failure to do so, she


de Guzman v. Court of Appeals shall have only until January 27, 1978 within
G.R. No. 52733|J. Concepcion|July 23, 1985 which to pay the total amount of 250,000,
which shall be treated as complete and final
Subjects: Pilar de Guzman, Rolando & Minerva payment of the consideration in the contract
Gestuvo (seller) to sell
and Leonida Singh (buyer) 2. Immediately upon receipt of either
Prestation: Two Pasay City parcels of land amount within the periods so contemplated,
Juridical tie: Contract to Sell defendants undertake to immediately
Consideration: 133,640 execute the necessary legal instruments to
transfer to plaintiff the title to the parcels of
FACTS: De Guzman, et a., as SELLER, and land
Singh, as BUYER, executed a Contract to Sell 3. That defendants would temporarily desist
covering two parcels of land owned by the from enforcing their right or possession over
petitioners located at Pasay City the properties involved herein until January
- Singh should pay the balance of the purchase 27, 1978, but this shall not be construed as an
price of 133,640 on or before February 17, 1975. abandonment or waiver of its causes of
- Two days before the said date, Singh asked the action
petitioners to furnish her with a statement of 4. Should plaintiff fail to pay either of the
account of the balance due; copies of the amounts within the period herein stipulated,
certificates of title covering the two parcels of the aforesaid Contract to Sell dated February
land subject of the sale; and a copy of the power 17, 1971 shall be deemed rescinded and
of attorney executed by Gestuvo in favor of de plaintiff agrees to voluntarily surrender and
Guzman. Petitioners denied the request. vacate the same without further notice or
- Singh filed a complaint for specific demand;
performance with damages against the 5. That payment of either amounts above-
petitioners before the CFI of Rizal. stated shall take place at CFI Rizal Branch 3
- She said that petitioners committed a breach of at 10:00 a.m. Friday, January 27, 1978 unless
contract, and had also acted unfairly and in payment has been earlier made, in which
manifest bad faith for which they should be held case plaintiff shall produce receipt of the
liable for damages. same at the same time and place
- Petitioners claimed that the complaint failed to 6. Both parties waive and abandon, by
state a cause of action; that the balance due was reason hereof, their respective claims and
already pre-determined in the contract; that the counterclaims as embodied in the Complaint
petitioners have no obligation to furnish Singh and Answer.
with copies of the documents requested; and
that Singh's failure to pay the balance of the - On January 28, 1978, the petitioners filed a
purchase price on the date specified had caused motion for the issuance of a writ of execution,
the contract to expire and become ineffective claiming that Singh had failed to abide by the
without necessity of notice or of any judicial terms of the compromise agreement and pay the
declaration to that effect. amount specified in their compromise
agreement within the period stipulated.
CFI: Approved the compromise agreement - Singh opposed the motion, saying that she had
submitted by the parties wherein they agreed on complied with the terms and conditions of the
the following: compromise agreement and asked the court to
direct the petitioners to comply with the court's
1. Not later than December 18, 1977, plaintiff decision and execute the necessary documents
will pay defendants the total amount of to effect the transfer of ownership of the two
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Obligations and Contracts Case Digests

parcels of land to her.


Since the deposit of the balance of the purchase
- CFI directed the petitioners to immediately
price was made in good faith and that the
execute the necessary documents, transferring to
failure of Singh to deposit the purchase price on
private respondent the title to the properties.
the date specified was due to the petitioners
who also make no claim that they had sustained
CA: Affirmed.
damages because of the two days delay, there
was substantial compliance with the terms and
ISSUE: W/N Singh had complied with the
conditions of the compromise agreement
terms of the compromise agreement. YES.

HELD: Singh had substantially complied with


the terms and conditions of the compromise
agreement. Her failure to deliver to the
petitioners the full amount on January 27, 1978
was not her fault. The blame lies with the
petitioners. The record shows that Singh went to
the sala of Judge Bautista on the appointed day
to make payment, as agreed upon in their
compromise agreement. But, the petitioners
were not there to receive it. Only the petitioners'
counsel appeared later, but, he informed Singh
that he had no authority to receive and accept
payment. Instead, he invited Singh and her
companions to the house of the petitioners to
effect payment. But, the petitioners were not
there either. They were informed that the
petitioner Pilar de Guzman would arrive late in
the afternoon. Singh was assured, however, that
she would be informed as soon as the
petitioners arrived. Singh, in her eagerness to
settle her obligation, consented and waited for
the call which did not come and unwittingly let
the period lapse.

The next day, January 28, 1978, Singh went to


the office of the Clerk of the Court of First
Instance of Rizal, Pasay City Branch, to deposit
the balance of the purchase price. But, it being a
Saturday, the cashier was not there to receive it.
So, on the next working day, Monday, January
30, 1978, Singh deposited the amount of 30,000
with the cashier of the Office of the Clerk of the
Court of First Instance of Rizal, Pasay City
Branch, to complete the payment of the
purchase price of 250,000.

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Obligations and Contracts Case Digests

CONSIGNATION for three annual installments and causing the


Meat Packing Corp. of the Phils. v. cancellation. PIMECO prayed for a declaration
Sandiganbayan that it was not bound by the said payment.
G.R. No. 52733|J. Ynares-Santaigo|June 22, 2001 PCGG paid MPCP two checks amounting to P5
M. The Sandiganbayan set a hearing for the
Subjects: Meat Packing Corp. of the Phils. (MPCP/ declaration and MPCP through a special
Lessor-Vendor) and Philippine Integrated Meat appearance filed its comment. The
Corp. (PIMECO/Lessee-Vendee) Sandiganbayan ruled that MPCP should accept
Prestation: Three (3) parcels of land situated in the P5 M payment made by the PCGG. MPCP
Barrio Ugong, Pasig City with meat processing and filed for a Motion for Reconsideration that was
packing plant denied. The Petition for relief on the other hand
Juridical tie: Lease-Purchase Agreement was dismissed since the P5 M already covered
Consideration: 1,375,563.92 payable over 28 years part of the 7,530,036.21 previously unpaid
(total: 38,515,789.87) rentals thus making it moot and academic. This
gave rise to this petition for certiorari,
FACTS: Meat Packing Corporation of the mandamus, and prohibition.
Philippines (MPCP) is a corporation wholly
owned by the GSIS the MPCP entered an ISSUE 1: W/N MPCPs refusal to accept the
Agreement with the Philippine Integrated Meat payment was unjustified. YES.
at the rate of P1,375,563.92 payable over 28 years ISSUE 2: W/N Sandiganbayan has a
with it totaling P38,515,789.87. jurisdiction to accept the consignation. YES.
-In 1986, PCGG sequestered all the assets,
properties, and records of PIMECO which HELD 1: YES, it is unjustified.
included the meat packing plant and the lease- - The Sandiganbayan already approved the
purchase agreement. MPCP wrote a letter of consignation by the PCGG wherein
rescission of the lease-purchase agreement on consignation is the act of depositing the thing
the ground of non-payment of non-payment of due with the court or judicial authorities
rentals of more than 2,000,000.00 for the year whenever the creditor cannot accept or refuses
1986. to accept payment, and it generally requires a a
-A case was filed in the Sandiganbayan for a prior tender of payment. Tender on the other
Writ of Preliminary Injunction stating that the hand is the antecedent of consignation, an act
transfer of PIMECO to MPCP will result in the preparatory to the consignation, which is the
dissipation of assets and that the PCGG principal, and from which are derived the
committed a grave abuse of authority in its immediate consequences which the debtor
termination of the lease-purchase agreement. desires or seeks to obtain.
The Sandiganbayan issued the writ of
preliminary injunction; it also continued to Tender of payment maybe extrajudicial while
conduct its hearings regarding the validity of consigning is necessarily judicial. The priority of
the turn-over of the meat packing plant to GSIS. tendering payment is to attempt to make a
The Sandiganbayan ruled that the PCGG private settlement before proceeding to the
gravely abused its discretion. solemnities of consignation.
-PIMECO asked for declaratory relief and
remedies. It stated that it has paid rentals from Both tender and consignation validly made
19811985 and prior to the sequestration it was produces the effect of payment and extinguishes
able to pay MPCP 846,269.70, however, since the obligation. Refusal due to the said rescission
the PCGG management took over the plant and of contract is untenable since MPCP accepted
presented the danger of making PIMECO in annual amortizations or rentals, advances,
default in the payment of the rentals to MPCP
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Obligations and Contracts Case Digests

insurance, and taxes from PIMECO. The


acceptance negates the said rescission.

Under the terms of the lease-purchase


agreement, the amount of arrears in rentals or
amortizations must be equivalent to the
cumulative sum of three annual installments,
in order to warrant the rescission of the
contract. Therefore, it must be shown that
PIMECO failed to pay the aggregate amount of
at least 10,038,809.10 before the lease-
purchase agreement can be deemed
automatically cancelled.

Assuming in the extreme that, as alleged by


MPCP, the arrears at the time of tender on
January 30, 1991 amounted to 12,578,171.00,
the tender and consignation of the sum of
5,000,000.00, which had the effect of payment,
reduced the back rentals to only 7,578,171.00,
an amount less than the equivalent of three
annual installments.

Thus, with the Sandiganbayans approval of


the consignation and directive for MPCP to
accept the tendered payment, the lease-
purchase agreement could not be said to have
been rescinded.

HELD 2: YES
- The voluntary appearance in court and its
submission to its authority or by service of
summons gives the courts jurisdiction over the
person. MPCPs appearance in the courts in the
Civil Case already created the said jurisdiction

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Obligations and Contracts Case Digests

IMPOSSIBILITY -And finally, that CASURECO be indemnified


Naga Telephone Co. v. Court of Appeals no less than 100,000 arising out of the poor
G.R. No. 107112|J. Nocon|February 24, 1994 servicing of the ten telephone units which had
caused it great inconvenience and damages.
Subjects: Naga Telephone Co. (NATELCO) and
Camarines Sur II Electric Cooperative CFI: Found in favor of the respondents and
(CASURECO) ordered the reformation of the contract in the
Prestation: Use of Electric Posts in Naga interest of justice and equity. As part of the
Juridical tie: Contract ruling, the court ordered NATELCO to pay
Consideration: Free Use of 10 Telephone Connections respondent a monthly rental of 10 per electric
Special Stipulation: Last as long as NATELCO has post being used from the time of the filing of the
need for the electric posts CASURECO, it being case. On the other and, CASURECO was
understood that this contract shall terminate when ordered by the same trial court to pay
for any reason whatsoever, the CASURECO is forced NATELCO for the use and transfers of its
to stop, abandoned its operation as a public service telephone units at the same rate that the public
and it becomes necessary to remove the electric post are paying. Appeal to the CA was made.

FACTS: Petitioner, Naga Telephone Co., Inc. CA: Affirmed the ruling of the trial court but
(NATELCO), is a telephone company rendering this time not based on the reformation but
local as well as long distance telephone service rather on the operation of Article 1267 of the
in Naga City. On November 1, 1977, it entered Civil Code and on the potestative condition
into a contract with Camarines Sur II Electric with rendered the condition void.
Cooperative, Inc. (CASURECO II), a corporation - The CA held that as reformation only lie or
established for the purpose of operating an may prosper when the contract failed to express
electric power service in the same city, for the the true intentions of the parties due to error or
use by the petitioner in the operation of its mistake, accident, or fraud and there is no
telephone service the electric light posts of the allegation to this effect, the proper basis is the
respondent. In consideration of such use, aforementioned Article.
NATELCO agreed to provide the respondent -The section on the continued use of the electric
with free use of ten telephone connections. post for so long as these are needed by
-The contract between included, among others, NATELCO was considered as being purely
a stipulation to the effect that the contract shall potestative on the part of the petitioner as it
be as long as the party of the first part leaves the continued effectivity of the contract to
(NATELCO) has need for the electric post of the NATELCOs sole and exclusive will. As held in
second part (CASURECO II) it being understood previous jurisprudence, there must be mutuality
that this contract shall terminate when for any and equality in any contract.
reason whatsoever, the party of the second part
is forced to stop, abandoned its operation as a ISSUE: W/N the ruling of the CA is valid. YES.
public service and it becomes necessary to
remove the electric post. HELD: The agreement between the parties has
-After over ten years, the respondent filed on become too one sided in favor of the petitioner
January 2, 1989 with the RTC of Naga City to the great disadvantage of the respondent.
action against the petitioner for reformation of Continuing with the agreement will result in the
the contract on the grounds that it is too one petitioners unjust enrichment at the expense of
sided in favor of the petitioner. The action also the respondent.
prayed that petitioner be ordered to pay for the
use of electric posts which are not covered by
the agreement.
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