accordance with the terms of the
MARIA LACHICA VS. GREGORIO
ARANETA
47 OG 5699 August 19, 1949
FACTS:
Gregorio Araneta, Inc. (through
President Jose Araneta) offered for
sale a parcel of land with the
improvements thereon. This
property was bought by Investment
Corporation through Maria Lachica,
the wife of the Esteban Sadang who
was sales agent of defendant
corporation.
The terms of the contract stated
that the price was P20,000, of
which P8,000 was to be paid in
cash and the balance of P12,000 in
installments of –
P 1,000 on or before
December 31, 1943
P 1,000 on or before
December 31, 1944
P 10,000 on or before
December 31, 1945.
What the parties signed was a
contract of exact content as stated,
which however omitted the words
“or before.” Thus, it would appear
that the payment of the installments
would be “on” and not “on or before”
the dates as specified.
The contract further added that “this
same property will be mortgaged to
us to guarantee the unpaid balance,
and the same will bear an interest
of 8 percent per annum; said
interest to be paid monthly in
advance.”
The terms were complied with,
together with some resolved
differences, until on Sept. 5, 1944,
plaintiff Sadang went to see Araneta
to pay the entire balance, including
the interest thereon and ask for the
cancellation of the mortgage, but
Araneta refused to accept the
tender of payment. Araneta gave as
his reason for his non-acceptance
that such payment was not in
deed of sale with mortgage.
Plaintiff, through counsel, deposited
the sum (balance) supposed to be
paid to Araneta with the CFI of
Manila by way of consignation, and
at the same time presented the
complaint.
The defendant alleges that payment
should be on the date specified, not
before; the plaintiffs claim that such
payment may be made on or before
the date specified.
ISSUE:
Should Araneta be compelled to
accept the payment?
RULING:
Yes. The contract does not prohibit
if it is done before (p.5706, no. 2). A
term is fixed and “it is presumed to
have been established for the
benefit of the creditor as sell as that
of the debtor, unless from its tenor
or from other circumstances it
should appear that the terms as
established for the benefit of one or
the other.” (Art. 1127, now 1196
Civil Code). And the contract
specifically provides that “these
periods of payment have been
agreed for the benefit of the vendor
and the vendee.” Such mutual
benefit has been interpreted to
consist of the time granted a debtor
to find means to comply with his
obligation, and the fruits, such as
interest, accruing to the creditor.
From the SC decision in Villaseñor
vs. Javellana, the only impediment
to a debtor making payment before
the term fixed, is the denial to the
creditor of the benefits, such as
interests, accruing to the later by
reason of the fixed term. This,
coupled with the fact that the
contract did not prohibit payment
before the fixed date, justifies the
conclusion that under the terms
signed, plaintiffs could do so. To
hold otherwise, would be virtually
compelling an obligor to assume an
obligation later when he offers to,
and could very well, discharge it
earlier. The law should not be
interpreted as to compel a debtor to
remain so, when he is in a position
to release himself.
Further, the acceleration clause in
the contract signed by the parties
state that “in the event of defaults in
payment of any amount due, either
for capital or interest, the whole
balance shall automatically become
due and payable, and the vendor
shall have the right to foreclose the
mortgage in its entirety.” While the
clause is standard one contained in
most mortgage deeds where the
mortgage loan is payable in several
installments, still we cannot escape
the conclusion, derived from the
clause itself, that payments may be
made by the vendee before the
dates stated in the contract .
PONCE DE LEON VS SYJUCO
90 PHIL. 311
FACTS :
The appellee, Philippine
National Bank, was the owner of
two parcels of land in Negros
Occidental. On March 9, 1936 the
Bank executed a contract to sell the
said properties to Jose Ponce de
Leon for the total price of P26,300.
Subsequently, Ponce de
Leon obtained a loan from Santiago
Syjuco, Inc in the amount of
P200,000 in Japanese Military
Notes, payable within one (1) year
from May 5, 1948. It was also
provided that the Ponce de Leon
could not pay, and Syjuco could not
demand, the payment of said note
except within the aforementioned
period. To secure the payment of
said obligation, Ponce de Leon
mortgaged the parcels of land
which he agreed to purchase from
the Bank. Using the loan, Ponce de
Leon was able to pay the Bank and
a deed of absolute sale was
executed in his name.
Ponce de Leon further
obtained an additional loan from
Syjuco. On several occasions in
October, 1944, Ponce de Leon
tendered to Syjuco the amount of
P254,880 in Japanese military
notes in full payment of his
indebtedness which was refused by
Syjuco which Ponce de Leon
deposited with the Clerk of Court of
the CFI. He then filed a petition with
the CFI for the reconstitution of
transfer of the certificates of the lot
in the name of the Bank which was
granted by the court. Syjuco filed a
second amended answer to Ponce
de Leon's complaint claiming that
Ponce de Leon, by reconstituting
the titles in the name of the Bank,
by causing the Register of Deeds to
have the said titles transferred in his
name, and by subsequently
mortgaging the said properties to
the Bank as a guaranty for his
overdraft account, had violated the
conditions of the morgage which
Ponce de Leon has executed in its
favor during the Japanese
occupation. Syjuco prayed that the
mortgage executed by Ponce de
Leon in favor of the Bank be
declared null and void.
On June 24, 1949, the lower
court rendered a decision absolving
Syjuco from Ponce de Leon's
complaint and condemning Ponce
de Leon to pay Syjuco the total
amount of P23,130 with interest at
the legal rate from May 6, 1949,
until fully paid
ISSUE :
Is the consignation made by
the plaintiff valid in the light of the
law and the stipulations agreed
upon in the two promissory notes
signed by the plaintiff?
RULING :
No. In order that
consignation may be effective, the
debtor must first comply with certain
requirements prescribed by law.
The debtor must show (1) that there
was a debt due; (2) that the
consignation of the obligation had
been made bacause the creditor to
whom tender of payment was made
refused to accept it, or because he
was absent for incapacitated, or
because several persons claimed to
be entitled to receive the amount
due (Art. 1176); (3) that previous
notice of the consignation have
been given to the person interested
in the performance of the obligation
(Art. 1177); (4) that the amount due
was placed at the disposal of the
court (Art 1178); and (5) that after
the consignation had been made
the person interested was notified
thereof (Art. 1178). In the instant
case, while it is admitted a debt
existed, that the consignation was
made because of the refusal of the
creditor to accept it, and the filing of
the complaint to compel its
acceptance on the part of the
creditor can be considered sufficient
notice of the consignation to the
creditor, nevertheless, it appears
that at least two of the above
requirements have not been
complied with. Thus, it appears that
plaintiff, before making the
consignation with the clerk of the
court, failed to give previous notice
thereof to the person interested in
the performance of the obligation. It
also appears that the obligation was
not yet due and demandable when
the money was consigned,
because, as already stated, by the
very express provisions of the
document evidencing the same, the
obligation was to be paid within one
year after May 5, 1948, and the
consignation was made before this
period matured. The failure of these
two requirements is enough ground
to render the consignation
ineffective. And it cannot be
contended that plaintiff is justified in
accelerating the payment of the
obligation because he was willing to
pay the interests due up to the date
of its maturity, because, under the
law, in a monetary obligation
contracted with a period, the
presumption is that the same is
deemed constituted in favor of both
the creditor and the debtor unless
from its tenor or from other
circumstances it appears that the
period has been established for the
benefit of either one of them (Art.
1127). Here no such exception or
circumstance exists.
It may be argued that the creditor
has nothing to lose but everything
to gain by the acceleration of
payment of the obligation because
the debtor has offered to pay all the
interests up to the date it would
become due, but this argument
loses force if we consider that the
payment of interests is not the only
reason why a creditor cannot be
forced to accept payment contrary
to the stipulation. There are other
reasons why this cannot be done.
One of them is that the creditor may
want to keep his money invested
safely instead of having it in his
hands. Another reason is that the
creditor by fixing a period protects
himself against sudden decline in
the purchasing power of the
currency loaned specially at a time
when there are many factors that
influence the fluctuation of the
currency. And all available
authorities on the matter are agreed
that, unless the creditor consents,
the debtor has no right to accelerate
the time of payment even if the
premature tender "included an offer
to pay principal and interest in full."
Buce vs. CA/Tiongco
GR 136913 May 12
2000
FACTS:
BUCE LEASED 56-METER LAND
FOR PERIOD OF 15 YEARS AND
SUBJECT RENEWAL TO 10.
Constructed a building and monthly
rental of P200.
Tiongco demanded increase upto
P1000.
Tiongco gave letter to increase to
P1500 pursuant to Rent Control
Law.
i. Bu
ce already had checks for P400 in
which Tiongco refused to accept.
Filed for complaint asking to have
P200 rental for period of 15 years
plus subject 10 year renewal.
i. Ti
ongco said their actions are justified
due to the Rent Control Law.
ii. Le
ase contract allowing renewal does
not mean automatic renewal, just a
mutual agreement on both parties.
RTC declared lease contract
automatically renewed for 10 years:
Stipulations in contract giving right
to Buce to contruct buildings and
improvements
Filing of Buce one year before the
expiration of 15-year term.
Fixed monthly rent to P400,
continuous increased caused
inevitable novation of their contract.
CA reversed, ordered Buce to
vacate the premises due to contract
expiration and payment of P1000.
Stipulation was unclear as to who
can may exercise option to renew.
Without stipulation on option to
renew must be upon agreement of
parties.
Since Tiongco were not agreeable
to an extension, original term of
lease should end. Their refusal to
accept checks was justifiable.
Because even when original
specified only P200, tender and
acceptance of increased rental
novated contract of lease.
BUCE:
Order to vacate premises is beyond
bounds of authority because the
case she filed was for “specific
performance” and not unlawful
detainer.
Phrase of “renewal for another 10
years at option of both parties”
indicates intention of parties to
renew contract only upon mutal
agreement.
Allowing her to put buildings and
improvements, Tiongco’s
acceptance of increased rental
signify renewal of contract.
TIONGCO:
Subsequent acts do not
automatically indicate renewal of
contracts
ISSUES:
If “this lease shall be for a period of
15 years, subject to renewal for 10
years” make stipulation automatic
and subsequent to parties? NO.
HELD:
PETITION IS GRANTED. CA
REVERSED
NOTHING IN THE CONTRACT
THAT EXPRESSES AUTOMATIC
RENEWAL.
Allowance on improvements and
construction are not indicative of
extension of contract.
NOT INDICATED WHO MAY
EXERCISE OPTION TO RENEW
Thus, period of lease should be set
for the benefit of both parties upon
mutal agreement.
Since private respondents were not
amenable to renewal, they cannot
be compelled to execute new. It is
their prerogative to terminate lease
at its expiration.
Issue of possession was not among
issued agreed by parties nor raised
by respondents.
CA when overboard in ordering
Buce to vacate premises.
ARANETA VS PHIL. SUGAR
ESTATES
DEVELOPMENT CO.
20 SCRA 330
FACTS:
J. M. Tuason & Co., Inc. is the
owner of a big tract
land situated in Quezon City, and
on July 28, 1950,
[through Gregorio Araneta, Inc.]
sold a portion thereof to
Philippine Sugar Estates
Development Co., Ltd.
The parties stipulated, among in the
contract of
purchase and sale with mortgage,
that the buyer will build
on the said parcel land the Sto.
Domingo Church and
Convent while the seller for its part
will construct streets.
But the seller, Gregorio Araneta,
Inc., which began
constructing the streets, is unable to
finish the
construction of the street in the
Northeast side because a
certain third-party, by the name of
Manuel Abundo, who
has been physically occupying a
middle part thereof,
refused to vacate the same;
Both buyer and seller know of the
presence of
squatters that may hamper the
construction of the streets
by the seller. On May 7, 1958,
Philippine Sugar Estates
Development Co., Lt. filed its
complaint against J. M.
Tuason & Co., Inc., and instance,
seeking to compel the
latter to comply with their obligation,
as stipulated in the
above-mentioned deed of sale,
and/or to pay damages in
the event they failed or refused to
perform said obligation.
The lower court and the appellate
court ruled in
favor of Phil. Sugar estates, and
gave defendant Gregorio
Araneta, Inc., a period of two (2)
years from notice hereof,
within which to comply with its
obligation under the
contract, Annex "A".
Gregorio Araneta, Inc. resorted to a
petition for
review by certiorari to this Court.
ISSUES:
Was there a period fixed?
RULING:
Yes. The fixing of a period by the
courts under
Article 1197 of the Civil Code of the
Philippines is sought to
be justified on the basis that
petitioner (defendant below)
placed the absence of a period in
issue by pleading in its
answer that the contract with
respondent Philippine Sugar
Estates Development Co., Ltd. gave
petitioner Gregorio
Araneta, Inc. "reasonable time
within which to comply
with its obligation to construct and
complete the streets."
If the contract so provided, then
there was a period fixed, a
"reasonable time;" and all that the
court should have done
was to determine if that reasonable
time had already
elapsed when suit was filed if it had
passed, then the court
should declare that petitioner had
breached the contract,
Was it within the powers of the
lower court to set the
performance of the obligation in two
years time?
NO. Even on the assumption that
the court should have
found that no reasonable time or no
period at all had been
fixed (and the trial court's amended
decision nowhere
declared any such fact) still, the
complaint not having
sought that the Court should set a
period, the court could
not proceed to do so unless the
complaint included it as
first amended;
Granting, however, that it lay within
the Court's power to
fix the period of performance, still
the amended decision is
defective in that no basis is stated
to support the conclusion that the
period should be set at two years
after
finality of the judgment. The list
paragraph of Article 1197
is clear that the period can not be
set arbitrarily. The law
expressly prescribes that “the Court
shall determine such
period as may under the
circumstances been probably
contemplated by the parties.”
It must be recalled that Article 1197
of the Civil Code
involves a two-step process. The
Court must first
determine that "the obligation does
not fix a period" (or
that the period is made to depend
upon the will of the
debtor)," but from the nature and
the circumstances it can
be inferred that a period was
intended" (Art. 1197, pars. 1
and 2). This preliminary point
settled, the Court must then
proceed to the second step, and
decide what period was
"probably contemplated by the
parties" (Do., par. 3). So
that, ultimately, the Court can not fix
a period merely
because in its opinion it is or should
be reasonable, but
must set the time that the parties
are shown to have
intended. As the record stands, the
trial Court appears to
have pulled the two-year period set
in its decision out of
thin air, since no circumstances are
mentioned to support
it. Plainly, this is not warranted by
the Civil Code.
Does “reasonable time” mean that
the date of performance
would be indefinite?
The Court of Appeals objected to
this conclusion that it
would render the date of
performance indefinite. Yet, the
circumstances admit no other
reasonable view; and this
very indefiniteness is what explains
why the agreement did
not specify any exact periods or
dates of performance.
CENTRAL PHIL UNIV. vs. Court of
Appeals 246 SCRA 511
FACTS:
1. CPU: (1939) Don Ramon Lopez
Sr. executed a deed of donation
Conditions of the donation:
a) Land should be utilized
exclusively for the establishment &
use of medical college.
b) College shall not sell transfer
or convey to any 3rd party.
c) Land shall be called “Ramon
Lopez Campus”
d) Income from that land shall be
put in “Ramon Lopez Campus
Fund” for improvement of the
facility.
 may have acquired shall be lost and
2. HEIRS (LOPEZ): (1989) filed an 1. RESOLUTORY CONDITION: extinguished.
action for annulment of donation, upon fulfillment, terminates an b. More than a reasonable period
reconveyance & damages: enforceable obligation. of fifty (50) years has already been
a) Non-compliance with the a. Rights are lost once the allowed petitioner to avail of the
conditions. condition is fulfilled. opportunity to comply with the
b) Negotiation with the NHA to b. Entitles parties to resort back to condition even if it be burdensome,
exchange the donated property with original positions. to make the donation in its favor
another land. c. Takes effect if either parties do forever valid. But, unfortunately, it
*CPU argued: right to file action not comply with his/her failed to do so. Hence, there is no
has prescribed engagements (in which complaining more need to fix the duration of a
no party may sue for dissolution of term of the obligation when such
violation because did not use contract with damages) procedure would be a mere
property technicality and formality and would
*Lower Court sided with 2. ARTICLE 1181: CONDITIONAL serve no purpose than to delay or
LOPEZ HEIRS. OBLIGATIONS lead to an unnecessary and
Acquisition of rights, expensive multiplication of suits.
ISSUE: extinguishment/loss of acquired, c. Petitioner has slept on its
1. WON CPU failed to comply shall depend on happening event obligation for an unreasonable
conditions given there was no fixed that constitutes the condition. length of time. Hence, it is only just
period? YES a. Donating land to another on the and equitable now to declare the
2. WON there is a need to fix the condition that the latter would build subject donation already ineffective
period for compliance of the upon the land a school is and, for all purposes, revoked so
condition? NO RESOLUTORY IN CONDITION. that petitioner as donee should now
The donation had to be valid before return the donated property to the
HELD: the fulfillment of the condition. If heirs of the donor, private
RTC ILOILO DECISION there was no fulfillment with the respondents herein, by means of
REINSTATED condition such as what obtains in reconveyance.
CA DECISION MODIFIED the instant case, the donation may d. RECONVEYANCE: property
RECONVEYANCE TO LOPEZ be revoked and all rights the donee held by a trustee/mortgage is
HEIRS WITH COSTS returned to its owner on his request.

3. ARTICLE 1197: OBLIGATIONS
WITH NO FIXED PERIOD
GENERAL RULE: Period can be
inferred from its nature or
circumstances.
Court can fix the duration because
the fulfillment of the obligation itself
cannot be demanded until after the
court has fixed the period for
compliance.
a. CASE AT HAND: General rule
cannot be applied in this case
considering the different set of
circumstances existing more than a
reasonable period of 50 years has
already been allowed to petitioner
to avail of the opportunity to comply
but unfortunately, it failed to do so.
b. Hence, there is no need to fix a
period when such procedure would
be a mere technicality & formality &
would serve no purpose than to
delay or load to unnecessary and
expensive multiplication of suits.