Philippine National Construction Corp. vs. CA, G.R. No. 116896, 5 May 1997

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Decisions > G.R. No. 116896 May 5, 1997 - PNCC v. COURT OF
APPEALS, ET AL.:
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THIRD DIVISION
[G.R. No. 116896. May 5, 1997.]
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION,

Petitioner, v. COURT OF APPEALS, MA. TERESA S. RAYMUNDO-
ABARRA, JOSE S. RAYMUNDO, ANTONIO S. RAYMUNDO, RENE S.
RAYMUNDO, and AMADOR S. RAYMUNDO, Respondents.
Government Corporate Counsel for Petitioner.
Ramos Nobleza & Sibal for Private Respondent.
SYLLABUS
1. CIVIL LAW; SPECIAL CONTRACTS; LEASE; PETITIONER ESTOPPED IN

CLAIMING THAT THE TEMPORARY USE PERMIT IS NOT THE INDUSTRIAL
CLEARANCE REFERRED IN THE CONTRACT AFTER RECOGNIZING THE
SAME. — Petitioner is estopped from claiming that the Temporary Use
Permit was not the industrial clearance contemplated in the contract.
The "Industrial Permit" mentioned in petitioners’ letter could only refer
to the Temporary Use Permit issued by the Ministry of Human
Settlements. Petitioner recognized its obligation to pay rentals counted
from the date the permit was issued. Thus, the suspensive condition —
issuance of industrial clearance — has already been fulfilled and that
the lease contract has become operative.
2. ID.; CONTRACTS; EXTINGUISHMENT; LOSS OF THE THING DUE;

ARTICLE 1266; WHEN PRESTATION BECOMES IMPOSSIBLE WITHOUT
FAULT OF OBLIGOR; NOT APPLICABLE IN CASE AT BAR. — It is a
fundamental rule that contracts, once perfected, bind both contracting
parties, and obligations arising therefrom have the force of law between
the parties and should be complied with in good faith. But the law
recognizes exceptions to the principle of the obligatory force of
contracts. One exception is laid down in Article 1266 of the Civil Code,
which reads: "The debtor in obligations to do shall also be released
when the prestation becomes legally or physically impossible without
the fault of the obligor." Petitioner cannot, however, successfully take

Page 2 of 23
refuge in the said article, since it is applicable only to obligations "to
do," and not to obligations "to give." An obligation "to do" includes all
kinds of work or service; while an obligation "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. The obligation to
pay rentals or deliver the thing in a contract of lease falls within the
prestation "to give" ; hence, it is not covered within the scope of Article
1266. At any rate, the unforeseen event and causes mentioned by
petitioner are not the legal or physical impossibilities contemplated in
the said article. Besides, petitioner failed to state specifically the
circumstances brought about by "the abrupt change in the political
climate in the country" except the alleged prevailing uncertainties in
government policies on infrastructure projects.
3. ID.; ID.; ID.; PRINCIPLE OF REBUS SIC STANTIBUS; NOT

APPLICABLE. — The principle of rebus sic stantibus neither fits in with
the facts of the case. Under this theory, the parties stipulate in the light
of certain prevailing conditions, and once these conditions cease to
exist, the contract also ceases to exist. This theory is said to be the
basis of Article 1267 of the Civil Code. This article, which enunciates the
doctrine of unforeseen events, is not, however, an absolute application
of the principle of rebus sic stantibus, which would endanger the
security of contractual relations. The parties to the contract must be
presumed to have assumed the risks of unfavorable developments. It is
therefore only in absolutely exceptional changes of circumstances that
equity demands assistance for the debtor. In this case, petitioner wants
this Court to believe that the abrupt change in the political climate of
the country after the EDSA Revolution and its poor financial condition
"rendered the performance of the lease contract impractical and inimical
to the corporate survival of the petitioner." This Court cannot subscribe
to this argument.
4. ID.; SPECIAL CONTRACTS; LEASE; NOT AFFECTED BY POOR

FINANCIAL CONDITION. — Anent petitioner’s alleged poor financial
condition, the same will neither release petitioner from the binding
effect of the contract of lease. As held in Central Bank v. Court of
Appeals, 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.
5. ID.; ID.; ID.; NOT AFFECTED BY NON-MATERIALIZATION OF

PARTICULAR PURPOSE IN ENTERING CONTRACT. — With regard to the
non-materialization of petitioner’s particular purpose in entering into the
contract of lease, i.e. to use the leased premises as a site of a rock

Page 3 of 23
crushing plant, the same will not invalidate the contract. The cause or
essential purpose in a contract of lease is the use or enjoyment of a
thing. As a general principle, the motive or particular purpose of a party
in entering into a contract does not affect the validity nor existence of
the contract; an exception is when the realization of such motive or
particular purpose has been made a condition upon which the contract
is made to depend. The exception does not apply here.
6. ID.; ID.; ID.; LEASE OF LAND; RIGHTS AND OBLIGATIONS OF THE

LESSOR AND LESSEE; CASE AT BAR. — The temporary permit was valid
for two years but was automatically revoked because of its non-use
within one year from its issuance. The non-use of the permit and the
non-entry into the property subject of the lease contract were both
imputable to petitioner and cannot, therefore, be taken advantage of in
order to evade or lessen petitioner’s monetary obligation. The damage
or prejudice to private respondents is beyond dispute. They
unquestionably suffered pecuniary losses because of their inability to
use the leased premises. Thus, in accordance with Article 1659 of the
Civil Code, they are entitled to indemnification for damages; and the
award of P492,000.00 representing the rent for two years is fair and
just under the circumstances of the case.
7. CONSTITUTIONAL LAW; BILL OF RIGHTS, DUE PROCESS; RIGHT TO

BE HEARD IN COURT PROCEEDINGS, NOT VIOLATED. — Petitioner
submits that the trial court gravely abused its discretion in denying
petitioner the right to be heard. We disagree. The trial court was in fact
liberal in granting several postponements to petitioner before it deemed
terminated and waived the presentation of evidence in petitioner’s
behalf. Likewise, the court was liberal with respect to petitioner’s motion
for reconsideration. It cannot be said that petitioner was deprived of its
day in court. The essence of due process is simply an opportunity to be
heard. To be heard does not only mean oral arguments in court; one
may be heard also through pleadings. Where opportunity to be heard,
either through oral arguments or pleadings, is accorded, there is no
denial of procedural due process.
DECISION
DAVIDE, JR., J.:
This petition for review on certiorari has its roots in Civil Case No. 53444,

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which was sparked by petitioner’s refusal to pay the rentals as stipulated in
the contract of lease 1 on an undivided portion of 30,000 square meters of a
parcel of land owned by private respondents. chanrobles.com : virtual law library
The lease contract, executed on 18 November 1985, reads in part as

follows: chanrob1es virtual 1aw library
1. TERM OF LEASE — This lease shall be for a period of five (5) years,
commencing on the date of issuance of the industrial clearance by the
Ministry of Human Settlements, renewable for a like or other period at the
option of the LESSEE under the same terms and conditions.
2. RATE OF RENT — LESSEE shall pay to the LESSOR rent at the monthly
rate of TWENTY THOUSAND PESOS (P20,000.00), Philippine Currency, in the
manner set forth in Paragraph 3 below. This rate shall be increased yearly by
Five Percent (5%) based on the agreed monthly rate of P20,000.00 as
follows: chanrob1es virtual 1aw library
Monthly Rate Period Applicable
P21,000.00 Starting on the 2nd year
P22,000.00 Starting on the 3rd year
P23,000.00 Starting on the 4th year
P24,000.00 Starting on the 5th year
3. TERMS OF PAYMENT — The rent stipulated in Paragraph 2 above shall be

paid yearly in advance by the LESSEE. The first annual rent in the amount of
TWO HUNDRED FORTY THOUSAND PESOS (P240,000.00), Philippine
currency, shall be due and payable upon the execution of this Agreement
and the succeeding annual rents shall be payable every twelve (12) months
thereafter during the effectivity of this Agreement.
4. USE OF LEASED PROPERTY — It is understood that the Property shall be

used by the LESSEE as the site, grounds and premises of a rock crushing
plant and field office, sleeping quarters and canteen/mess hall. The
LESSORS hereby grant to the LESSEE the right to erect on the Leased
Property such structure(s) and/or improvement(s) necessary for or
incidental to the LESSEE’s purposes.
x x x

Page 5 of 23
11. TERMINATION OF LEASE — This Agreement may be terminated by
mutual agreement of the parties. Upon the termination or expiration of the
period of lease without the same being renewed, the LESSEE shall vacate
the Leased Property at its expense.
On 7 January 1986, petitioner obtained from the Ministry of Human

Settlements a Temporary Use Permit 2 for the proposed rock crushing
project. The permit was to be valid for two years unless sooner revoked by
the Ministry.
On 16 January 1986, private respondents wrote petitioner requesting

payment of the first annual rental in the amount of P240,000 which was due
and payable upon the execution of the contract. They also assured the latter
that they had already stopped considering the proposals of other aggregates
plants to lease the property because of the existing contract with petitioner.
3
In its reply-letter, petitioner argued that under paragraph 1 of the lease

contract, payment of rental would commence on the date of the issuance of
an industrial clearance by the Ministry of Human Settlements, and not from
the date of signing of the contract. It then expressed its intention to
terminate the contract. as it had decided to cancel or discontinue with the
rock crushing project "due to financial, as well as technical, difficulties." 4
Private respondents refused to accede to petitioner’s request for the

pretermination of the lease contract. They insisted on the performance of
petitioner’s obligation and reiterated their demand for the payment of the
first annual rental. 5
Petitioner objected to private respondents’ claim and argued that it was

"only obligated to pay . . the amount of P20,000.00 as rental payments for
the one-month period of lease, counted from 07 January 1986 when the
Industrial Permit was issued by the Ministry of Human Settlements up to 07
February 1986 when the Notice of Termination was served" 6 on private
respondents.
On 19 May 1986, private respondents instituted with the Regional Trial Court
of Pasig an action against petitioner for Specific Performance with Damages.
7 The case was docketed as Civil Case No. 53444 at Branch 160 of the said
court. After the filing by petitioner of its Answer with Counterclaim, the case
was set for trial on the merits.
What transpired next was summarized by the trial court in this wise: chanrob1es virtual 1aw library
Plaintiffs rested their case on September 7, 1987 (p. 87 rec.). Defendant

Page 6 of 23
asked for postponement of the reception of its evidence scheduled on
August 10, 1988 and as prayed for, was reset to August 25, 1988 (p. 91
rec.) Counsel for defendant again asked for postponement, through
representative, as he was presently indisposed. The case was reset,
intransferable to September 15 and 26, 1988 (p. 94 rec.) On September 2,
1988, the office of the Government Corporate Counsel entered its
appearance for defendant (p. 95, rec.) and the original counsel later
withdrew his appearance. On September 15, 1988 the Government
Corporate Counsel asked for postponement, represented by Atty. Elpidio de
Vega, and with his conformity in open court, the hearing was reset,
intransferable to September 26 and October 17, 1988. (p. 98, rec.) On
September 26, 1988 during the hearing, defendant’s counsel filed a motion
for postponement (urgent) as he had "sore eyes", a medical certificate
attached.
Counsel for plaintiffs objected to the postponement and the court considered
the evidence of the government terminated or waived. The case was
deemed submitted for decision upon the filing of the memorandum. Plaintiffs
filed their memorandum on October 26, 1988. (p. 111, rec.).
On October 18, 1988 in the meantime, the defendant filed a motion for
reconsideration of the order of the court on September 26, 1988 (p. 107,
rec.) The motion was not asked to be set for hearing (p. 110 rec.) There was
also no proof of notice and service to counsel for plaintiff . The court in the
interest of justice set the hearing on the motion on November 29, 1988. (p.
120, rec.) but despite notice, again defendant’s counsel was absent (p. 120-
A, dorsal side, rec.) without reason. The court reset the motion to December
16, 1988, in the interest of justice. The motion for reconsideration was
denied by the court. A second motion for reconsideration was filed and
counsel set for hearing the motion on January 19, 1989. During the hearing,
counsel for the government was absent. The motion was deemed abandoned
but the court at any rate, after a review of the incidents and the grounds
relied upon in the earlier motion of defendant, found no reason to disturb its
previous order. 8
On 12 April 1989, the trial court rendered a decision ordering petitioner to

pay private respondents the amount of P492,000 which represented the
rentals for two years, with legal interest from 7 January 1986 until the
amount was fully paid, plus attorney’s fees in the amount of P20,000 and
costs. 9
Petitioner then appealed to the Court of Appeals alleging that the trial court
erred in ordering it to pay private respondent the amount of P492,000 and
in denying it the right to be heard. chanrobles law library : red

Page 7 of 23
Upon the affirmance of the trial court’s decision 10 and the denial of its
motion for reconsideration, petitioner came to this Court ascribing to
respondent Court of Appeals the same alleged errors and reiterating their
arguments.
First. Petitioner invites the attention of this Court to paragraph 1 of the lease
contract, which reads: "This lease shall be for a period of five (5) years,
commencing on the date of issuance of the industrial clearance by the
Ministry of Human Settlements . . ." It then submits that the issuance of an
industrial clearance is a suspensive condition without which the rights under
the contract would not be acquired. The Temporary Use Permit is not the
industrial clearance referred to in the contract; for the said permit requires
that a clearance from the National Production Control Commission be first
secured, and besides, there is a finding in the permit that the proposed
project does not conform to the Zoning Ordinance of Rodriguez, (formerly
Montalban), Rizal, where the leased property is located. Without the
industrial clearance the lease contract could not become effective and
petitioner could not be compelled to perform its obligation under the
contract.
Petitioner is now estopped from claiming that the Temporary Use Permit was
not the industrial clearance contemplated in the contract. In its letter dated
24 April 1986, petitioner states: chanrob1es virtual 1aw library
We wish to reiterate PNCC Management’s previous stand that it is only

obligated to pay your clients the amount of P20,000.00 as rental payments
for the one-month period of the lease, counted from 07 January 1986 when
the Industrial Permit was issued by the Ministry of Human Settlements up to
07 February 1986 when the Notice of Termination was served on your
clients. 11 (Emphasis Supplied).
The "Industrial Permit" mentioned in the said letter could only refer to the
Temporary Use Permit issued by the Ministry of Human Settlements on 7
January 1986. And it can be gleaned from this letter that petitioner has
considered the permit as industrial clearance; otherwise, petitioner could
have simply told private respondents that its obligation to pay rentals has
not yet arisen because the Temporary Use Permit is not the industrial
clearance contemplated by them. Instead, petitioner recognized its
obligation to pay rentals counted from the date the permit was issued.
Also worth noting is petitioner’s earlier letter, thus: chanrob1es virtual 1aw library
[P]lease be advised of PNCC Management’s decision to cancel or discontinue

with the rock crushing project due to financial as well as technical
difficulties. In view thereof, we would like to terminate our Lease Contract

Page 8 of 23
dated 18 November, 1985. Should you agree to the mutual termination of
our Lease Contract, kindly indicate your conformity hereto by affixing your
signature on the space provided below. May we likewise request Messrs.
Rene, Jose and Antonio, all surnamed Raymundo and Mrs. Socorro A.
Raymundo as Attorney-in-Fact of Amador S. Raymundo to sign on the
spaces indicated below. 12
It can be deduced from this letter that the suspensive condition — issuance
of industrial clearance — has already been fulfilled and that the lease
contract has become operative. Otherwise, petitioner did not have to solicit
the conformity of private respondents to the termination of the contract for
the simple reason that no juridical relation was created because of the non-
fulfillment of the condition.
Moreover, the reason of petitioner in discontinuing with its project and in

consequently cancelling the lease contract was "financial as well as technical
difficulties," not the alleged insufficiency of the Temporary Use Permit.
Second. Invoking Article 1266 and the principle of rebus sic stantibus,
petitioner asserts that it should be released from the obligatory force of the
contract of lease because the purpose of the contract did not materialize due
to unforeseen events and causes beyond its control, i.e., due to the abrupt
change in political climate after the EDSA Revolution and financial
difficulties.
It is a fundamental rule that contracts, once perfected, bind both contracting

parties, and obligations arising therefrom have the force of law between the
parties and should be complied with in good faith. 13 But the law recognizes
exceptions to the principle of the obligatory force of contracts. One
exception is laid down in Article 1266 of the Civil Code, which reads: "The
debtor in obligations to do shall also be released when the prestation
becomes legally or physically impossible without the fault of the obligor." cralaw virtua1aw library
Petitioner cannot, however, successfully take refuge in the said article, since
it is applicable only to obligations "to do," and not to obligations "to give."
14 An obligation "to do" includes all kinds of work or service; while an
obligation "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. 15
The obligation to pay rentals 16 or deliver the thing in a contract of lease 17

falls within the prestation "to give" ; hence, it is not covered within the
scope of Article 1266. At any rate, the unforeseen event and causes
mentioned by petitioner are not the legal or physical impossibilities

Page 9 of 23
contemplated in the said article. Besides, petitioner failed to state
specifically the circumstances brought about by "the abrupt change in the
political climate in the country" except the alleged prevailing uncertainties in
government policies on infrastructure projects.
The principle of rebus sic stantibus 18 neither fits in with the facts of the
case. Under this theory, the parties stipulate in the light of certain prevailing
conditions, and once these conditions cease to exist, the contract also
ceases to exist. 19 This theory is said to be the basis of Article 1267 of the
Civil Code, which provides: chanrob1es virtual 1aw library
ART. 1267. When the service has become so difficult as to be manifestly

beyond the contemplation of the parties, the obligor may also be released
therefrom, in whole or in part.
This article, which enunciates the doctrine of unforeseen events, is not,

however, an absolute application of the principle of rebus sic stantibus,
which would endanger the security of contractual relations. The parties to
the contract must be presumed to have assumed the risks of unfavorable
developments. It is therefore only in absolutely exceptional changes of
circumstances that equity demands assistance for the debtor. 20
In this case, petitioner wants this Court to believe that the abrupt change in
the political climate of the country after the EDSA Revolution and its poor
financial condition "rendered the performance of the lease contract
impractical and inimical to the corporate survival of the petitioner." cralaw virtua1aw library
This Court cannot subscribe to this argument. As pointed out by private

respondents: 21
It is a matter of record that petitioner PNCC entered into a contract with

private respondents on November 18, 1985. Prior thereto, it is of judicial
notice that after the assassination of Senator Aquino on August 21, 1983,
the country has experienced political upheavals, turmoils, almost daily mass
demonstrations, unprecedented, inflation, peace and order deterioration, the
Aquino trial and many other things that brought about the hatred of people
even against crony corporations. On November 3, 1985, Pres. Marcos, being
interviewed live on U.S. television announced that there would be a snap
election scheduled for February 7, 1986.
On November 18, 1985, notwithstanding the above, petitioner PNCC entered

into the contract of lease with private respondents with open eyes of the
deteriorating conditions of the country.
Anent petitioner’s alleged poor financial condition, the same will neither

Page 10 of 23
release petitioner from the binding effect of the contract of lease. As held in
Central Bank v. Court of Appeals, 22 cited by private respondents, 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.
With regard to the non-materialization of petitioner’s particular purpose in

entering into the contract of lease, i.e., to use the leased premises as a site
of a rock crushing plant, the same will not invalidate the contract. The cause
or essential purpose in a contract of lease is the use or enjoyment of a thing.
23 As a general principle, the motive or particular purpose of a party in
entering into a contract does not affect the validity nor existence of the
contract; an exception is when the realization of such motive or particular
purpose has been made a condition upon which the contract is made to
depend. 24 The exception does not apply here.
Third. According to petitioner, the award of P492,000.00 representing the

rent for two years is excessive, considering that it did not benefit from the
property. Besides, the temporary permit, conformably with the express
provision therein, was deemed automatically revoked for failure of petitioner
to use the same within one year from the issuance thereof. Hence, the rent
payable should only be for one year.
Petitioner cannot be heard to complain that the award is excessive. The

temporary permit was valid for two years but was automatically revoked
because of its non-use within one year from its issuance. The non-use of the
permit and the non-entry into the property subject of the lease contract
were both imputable to petitioner and cannot, therefore, be taken advantage
of in order to evade or lessen petitioner’s monetary obligation. The damage
or prejudice to private respondents is beyond dispute. They unquestionably
suffered pecuniary losses because of their inability to use the leased
premises. Thus, in accordance with Article 1659 of the Civil Code, 25 they
are entitled to indemnification for damages; and the award of P492,000.00
is fair and just under the circumstances of the case.
Finally, petitioner submits that the trial court gravely abused its discretion in
denying petitioner the right to be heard.
We disagree. The trial court was in fact liberal in granting several

postponements 26 to petitioner before it deemed terminated and waived the
presentation of evidence in petitioner’s behalf.
It must be recalled that private respondents rested their case on 7

September 1987 yet. 27 Almost a year after, or on 10 August 1988 when it
was petitioner’s turn to present evidence, petitioner’s counsel asked for

Page 11 of 23
postponement of the hearing to 25 August 1988 due to conflict of schedules,
28 and this was granted. 29 At the rescheduled hearing, petitioner’s counsel,
through a representative, moved anew for postponement, as he was
allegedly indisposed. 30 The case was then reset "intransferable" to
September 15 and 26, 1988. 31 On 2 September 1988, the Office of the
Government Corporate Counsel, through Atty. Elpidio J. Vega, entered its
appearance for the petitioner, 32 and later the original counsel withdrew his
appearance. 33 On 15 September 1988, Atty. Vega requested for
postponement to enable him to go over the records of the case. 34 With his
conformity, the hearing was reset "intransferable" to September 26 and
October 17, 1988. 35 In the morning of 26 September 1988, the court
received Atty. Vega’s Urgent Motion for Postponement on the ground that he
was afflicted with conjunctivitis or sore eyes. 36 This time, private
respondents objected; and upon their motion, the court deemed terminated
and waived the presentation of evidence for the petitioner. 37 Nevertheless,
before the court considered the case submitted for decision, it required the
parties to submit their respective memoranda within thirty days. 38 But
petitioner failed to comply.
Likewise, the court was liberal with respect to petitioner’s motion for
reconsideration. Notwithstanding the lack of request for hearing and proof of
notice and service to private respondents, the court set the hearing of the
said motion on 29 November 1988. 39 Upon the denial of the said motion
for lack of merit, 40 petitioner filed a second motion for reconsideration. But
during the hearing of the motion on a date selected by him, Atty. Vega was
absent for no reason at all, despite due notice. 41
From the foregoing narration of procedural antecedents, it cannot be said

that petitioner was deprived of its day in court. The essence of due process
is simply an opportunity to be heard. 42 To be heard does not only mean
oral arguments in court; one may be heard also through pleadings. Where
opportunity to be heard, either through oral arguments or pleadings, is
accorded, there is no denial of procedural due process. 43
WHEREFORE, the instant petition is DENIED and the challenged decision of

the Court of Appeals is AFFIRMED in toto. cdtech
No pronouncements as to costs.
SO ORDERED.
Narvasa, C.J., Melo, Francisco and Panganiban, JJ., concur.
Endnotes:

Page 12 of 23
1. Exhibit "A," Original Record (OR), 68.
2. Exhibit "C," OR, 77; Rollo, 57.
3. Exhibit "B," OR, 76.
4. Exhibit "D," OR, 78.
5. Exhibit "E," Id., 80.
6. Exhibit "F," Id., 81-82.
7. Id., 1-7.
8. Order of 19 January 1989, OR, 129-130; Decision, 2-3.
9. OR 134-137; Rollo, 53-56. Per Judge Mariano M. Umali.
10. Rollo, 24-31. Per then Associate Justice Justo P. Torres, Jr.
(now Associate Justice of the Supreme Court), with the
concurrence of then Associate Justice Bernardo P. Pardo and
Associate Justice Corona Ibay-Somera.
11. Exhibit "F-1," OR, 82.
12. Exhibit "D," Id., 78-79.
13. Articles 1159, 1308, 1315, and 1356 of the Civil Code.
14. DESIDERIO P. JURADO, Comments and Jurisprudence on

Obligations and Contracts 292 (10th revised ed. 1993) (hereafter
JURADO).
15. IV ARTURO M. TOLENTINO, Commentaries and Jurisprudence

on the Civil Code of the Philippines 57 (1991) (hereafter IV
TOLENTINO).
16. JURADO, 283.
17. IV TOLENTINO 57.
18. At this point of affairs; in these circumstances. A name given

to a tacit condition, said to attach to all treaties, that they shall
cease to be obligatory so soon as the state of facts and

Page 13 of 23
conditions upon which they were founded has substantially
changed. (Black’s Law Dictionary, 1139 [5th ed., 1979]).
19. Naga Telephone Co. v. Court of Appeals, 230 SCRA 351, 365
[1994] citing IV TOLENTINO 347.
20. IV TOLENTINO 347.
21. Memorandum for the Private Respondents, 17; Rollo, 160.
22. 139 SCRA 46 [1985], citing Repide v. Afzelius, 39 Phil. 190

[1918].
23. V TOLENTINO 206 [1992]; V EDGARDO E. PARAS, Civil Code

of the Philippines, 307 [1995].
24. V TOLENTlNO 535.
25. It provides: chanrob1es virtual 1aw library
Art. 1659. If the lessor or the lessee should not comply with the
obligations set forth in Articles 1654 and 1657, the aggrieved
party may ask for rescission of the contract and indemnification
for damages, or only the latter, allowing the contract to remain in
force.
26. Ocampo v. Arboleda, 153 SCRA 374, 381 [1987].
27. OR, 87.
28. OR, 89.
29. Id., 91.
30. Id., 94.
31. Id.
32. Id., 95.
33. Id., 99.
34. Id., 98.
35. Id.

Page 14 of 23
36. Id., 101.
37. Id., 106.
38. Id.
39. Id., 120.
40. Id., 128.
41. Id., 127.
42. Roces v. Aportadera, 243 SCRA 108, 114 [1995]; Vallende v.

NLRC, 245 SCRA 662, 666-667 [1995]; Navarro III v. Damasco,
246 SCRA 260, 265 [1995].
43. Mutuc v. Court of Appeals, 190 SCRA 43, 49 [1990].
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EMPLOYEES ASSN.-SPFL, ET
AL. v. NLRC, ET AL.
G.R. No. 116896 May 5,

1997 - PNCC v. COURT OF
APPEALS, ET AL.
G.R. Nos. 118131-32 May

PHIL. v. EMILIO RABUTIN
G.R. No. 121490 May 5,

1997 - NAGKAKAISANG
MANGGAGAWA SA SONY, ET
AL. v. NLRC, ET AL.
G.R. No. 121863 May 5,

1997 - UP, ET AL. v.
ELPIDIO M. CATUNGAL, ET
AL.
G.R. No. 94705 May 6,

PHIL. v. ROLANDO RONCAL
G.R. No. 100468 May 6,

1997 - LAUREANO
INVESTMENT &
DEVELOPMENT CORP. v.
G.R. No. 106831 May 6,

1997 - PEPSI-COLA
DISTRIBUTORS OF THE
PHIL., v. NLRC, ET AL.
G.R. No. 108869 May 6,

1997 - REPUBLIC OF THE
PHIL. v. SALVADOR
SILERIO, ET AL.
G.R. No. 118357 May 6,

Page 17 of 23
1997 - PNB v. COURT OF
APPEALS, ET AL.
G.R. No. 120549 May 6,

PHIL. v. ENRIQUITO
UNARCE
Adm. Matter No. P-96-

1210 May 7, 1997 - RONA
S. QUIROZ v. CRISTETA D.
ORFILA
G.R. No. 111890 May 7,

1997 - CKH INDUSTRIAL
AND DEV. CORP., ET AL. v.
G.R. No. 112986 May 7,

PHIL. v. ANSELMO O.
BUTRON
G.R. No. 113721 May 7,

1997 - ARC-MEN FOOD
INDUSTRIES, INC. v. NLRC,
ET AL.
G.R. No. 118080 May 7,

PHIL. v. REYNALDO DATUN,
ET AL.
G.R. No. 118504 May 7,

PHIL. v. JOEL SOL
Adm. Case No. 4539 May

14, 1997 - ROMANA R.
MALIGSA v. ARSENIO FER
CABANTING
Adm. Matter No. P-97-

1247 May 14, 1997 -
NARITA RABE v. DELSA M.
FLORES
G.R. No. 111858 May 14,

1997 - TROPICAL HOMES,
INC. v. COURT OF APPEALS,
ET AL.
G.R. Nos. 112620-21 May

PHIL. v. NOLI PAGAL, ET AL.
G.R. No. 117897 May 14,

Page 18 of 23
1997 - ISLAMIC
DIRECTORATE OF THE
PHILS., ET AL. v. COURT OF
APPEALS, ET AL.
G.R. No. 118408 May 14,

1997 - THE ABACA CORP.
OF THE PHIL. v. MARTIN O.
GARCIA, ET AL.
G.R. No. 114291 May 14,

PHIL. v. JACINTO SALAZAR
G.R. No. 120851 May 14,

1997 - NAIA AUTHORITY, ET
AL. v. COURT OF APPEALS,
ET AL.
G.R. No. 121176 May 14,

PHIL. v. MARLON PARAZO
G.R. No. 119197 May 16,

1997 - TABACALERA
INSURANCE CO., ET AL. v.
NORTH FRONT SHIPPING,
ET AL.
G.R. No. 82036 May 22,

1997 - TRAVELLERS
INSURANCE & SURETY
CORP. v. COURT OF
APPEALS, ET AL.
G.R. No. 103052 May 23,

1997 - MOBIL OIL PHIL.,
INC., ET AL. v. COURT OF
APPEALS, ET AL.
G.R. No. 112584 May 23,

1997 - DOMINGO INGCO,
ET AL. v. SANDIGANBAYAN
G.R. No. 118349 May 23,

1997 - PNCC v. COURT OF
APPEALS, ET AL.
G.R. No. 118432 May 23,

1997 - CONRADO COSICO,
JR. v. NLRC, ET AL.
G.R. No. 118978 May 23,

1997 - PHIL. TELEGRAPH
AND TELEPHONE CO. v.
NLRC, ET AL.

Page 19 of 23
G.R. No. 83326 May 27,
PHIL. v. FEDERICO DELA
TORRE, ET AL.
G.R. Nos. 95682-83 May

PHIL. v. PEDRO ONDALOK,
ET AL.
G.R. No. 101830 May 27,

PHIL. v. ARTHUR BUNDANG
G.R. No. 111722 May 27,

1997 - ALPHA
INVESTIGATION &
SECURITY AGENCY, INC. v.
NLRC, ET AL.
G.R. No. 114331 May 27,

1997 - CESAR E. A. VIRATA
v. SANDIGANBAYAN, ET AL.
G.R. No. 115569 May 27,

1997 - GUINNUX
INTERIORS, INC., ET AL., v.
NLRC, ET AL.
G.R. No. 121907 May 27,

PHIL. v. NORMA S. FERRER
G.R. Nos. 90933-61 May

29, 1997 - NAPOCOR v.
NLRC, ET AL.
G.R. No. 95386 May 29,

1997 - MIGUELA CAMPOS
ONG v. COURT OF APPEALS,
ET AL.
G.R. No. 112650 May 29,

1997 - PAMPANGA SUGAR
DEV. CO., INC. v. NLRC, ET
AL.
G.R. No. 114791 May 29,

1997 - NANCY GO, ET AL. v.
G.R. No. 114901 May 29,

PHIL. v. LITO S. SORIANO
G.R. No. 115763 May 29,

1997 - PIO Q. PATERNO v.

Page 20 of 23
G.R. No. 116721 May 29,

PHIL. v. NEMESIO BALANO,
ET AL.
G.R. No. 117495 May 29,

1997 - NELLY ACTA
MARTINEZ v. NLRC, ET AL.
G.R. No. 119714 May 29,

1997 - SALVADOR S.
ESQUIVIAS, ET AL. v.
G.R. No. 126175 May 29,

PHIL. v. ARMANDO ROMUA
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Home Law Firm Law Library Laws Jurisprudence

May 1997 - Philippine Supreme Court Decisions/Resolutions

Philippine Supreme Court

http://www.chanrobles.com/cralaw/1997maydecisions.php?id=335 1/15/20, 3:11 AM

[G.R. No. 116896. May 5, 1997.]

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION,

Government Corporate Counsel for Petitioner.

Ramos Nobleza & Sibal for Private Respondent.

1. CIVIL LAW; SPECIAL CONTRACTS; LEASE; PETITIONER ESTOPPED IN

2. ID.; CONTRACTS; EXTINGUISHMENT; LOSS OF THE THING DUE;

http://www.chanrobles.com/cralaw/1997maydecisions.php?id=335 1/15/20, 3:11 AM

3. ID.; ID.; ID.; PRINCIPLE OF REBUS SIC STANTIBUS; NOT

4. ID.; SPECIAL CONTRACTS; LEASE; NOT AFFECTED BY POOR

5. ID.; ID.; ID.; NOT AFFECTED BY NON-MATERIALIZATION OF

http://www.chanrobles.com/cralaw/1997maydecisions.php?id=335 1/15/20, 3:11 AM

6. ID.; ID.; ID.; LEASE OF LAND; RIGHTS AND OBLIGATIONS OF THE

7. CONSTITUTIONAL LAW; BILL OF RIGHTS, DUE PROCESS; RIGHT TO

DAVIDE, JR., J.:

http://www.chanrobles.com/cralaw/1997maydecisions.php?id=335 1/15/20, 3:11 AM

The lease contract, executed on 18 November 1985, reads in part as

Monthly Rate Period Applicable

P21,000.00 Starting on the 2nd year

P22,000.00 Starting on the 3rd year

P23,000.00 Starting on the 4th year

P24,000.00 Starting on the 5th year

3. TERMS OF PAYMENT — The rent stipulated in Paragraph 2 above shall be

4. USE OF LEASED PROPERTY — It is understood that the Property shall be

http://www.chanrobles.com/cralaw/1997maydecisions.php?id=335 1/15/20, 3:11 AM

On 7 January 1986, petitioner obtained from the Ministry of Human

On 16 January 1986, private respondents wrote petitioner requesting

In its reply-letter, petitioner argued that under paragraph 1 of the lease

Private respondents refused to accede to petitioner’s request for the

Petitioner objected to private respondents’ claim and argued that it was

Plaintiffs rested their case on September 7, 1987 (p. 87 rec.). Defendant

http://www.chanrobles.com/cralaw/1997maydecisions.php?id=335 1/15/20, 3:11 AM

On 12 April 1989, the trial court rendered a decision ordering petitioner to

http://www.chanrobles.com/cralaw/1997maydecisions.php?id=335 1/15/20, 3:11 AM

We wish to reiterate PNCC Management’s previous stand that it is only

[P]lease be advised of PNCC Management’s decision to cancel or discontinue

http://www.chanrobles.com/cralaw/1997maydecisions.php?id=335 1/15/20, 3:11 AM

Moreover, the reason of petitioner in discontinuing with its project and in

It is a fundamental rule that contracts, once perfected, bind both contracting

The obligation to pay rentals 16 or deliver the thing in a contract of lease 17

http://www.chanrobles.com/cralaw/1997maydecisions.php?id=335 1/15/20, 3:11 AM

ART. 1267. When the service has become so difficult as to be manifestly

This article, which enunciates the doctrine of unforeseen events, is not,

This Court cannot subscribe to this argument. As pointed out by private

It is a matter of record that petitioner PNCC entered into a contract with

On November 18, 1985, notwithstanding the above, petitioner PNCC entered

http://www.chanrobles.com/cralaw/1997maydecisions.php?id=335 1/15/20, 3:11 AM

With regard to the non-materialization of petitioner’s particular purpose in

Third. According to petitioner, the award of P492,000.00 representing the

Petitioner cannot be heard to complain that the award is excessive. The

We disagree. The trial court was in fact liberal in granting several

It must be recalled that private respondents rested their case on 7

http://www.chanrobles.com/cralaw/1997maydecisions.php?id=335 1/15/20, 3:11 AM

From the foregoing narration of procedural antecedents, it cannot be said

WHEREFORE, the instant petition is DENIED and the challenged decision of

Narvasa, C.J., Melo, Francisco and Panganiban, JJ., concur.

http://www.chanrobles.com/cralaw/1997maydecisions.php?id=335 1/15/20, 3:11 AM

2. Exhibit "C," OR, 77; Rollo, 57.

3. Exhibit "B," OR, 76.

4. Exhibit "D," OR, 78.