BAUTISTA VS BORROMEO FACTS: On Sept 15, 1964, ford truck of petitioner Roberto tan ting driven by Abelardo Bautista,

the other petitioner and the Volkswagen delivery panel truck owned by respondent Federico O Borromeo, Inc. were involved in a traffic accident along EDSA. In said accident, Quintin Delgado, a helper in Borromeos delivery panel truck sustained injuries w/c resulted in his instantaneous death. Borromeo had to pad Delgados widow the sum of P4,444 representing compensation (death benefit) and funeral expenses due Delgado under the Workmens Compensation Act. On June 17, 1965, upon averment that the said accident was caused by petitioners negligence, Borromeo started to suit in the Municipal Court of Mandaluyong, Rizal to recover from petitioners the compensation and funeral expenses it paid to the widow of Quintin Delgado. Petitioners filed a notice of appeal and claimed excusable negligence for the failure of their counsel to appear in the first hearing and asserted that they had a good and substantial defense. Respondents answer contended that the petition for relief was filed out of time. ISSUE: WON there is a need to establish any contractual relationship between Quintin Delgado and herein petitioners? HELD: No. The obligation of the employer to pay death benefits and funeral expenses for his employees death while in the course of employment as sanctioned by Section 2 and 6 of the Workmens Compensation Act is one that arises from law. It is evident that if compensation is claimed and awarded, and the employer pays it, the employer becomes subrogated to and acquires, by operation of law, the workers rights against the tortfeasor. No need then there is to establish any contractual relationship between Delgado and the petitioners. The cause of action if respondent corp is one w/c does not spring from a credit0r-debtor relationship. IT arises by virtue of its subrogation to the right of Delgado to sue the guilty party. Such subrogation is sanctioned by the Workmens Compensation Law aforesaid. MARITIME CO. OF THE PHIL. VS. REPARATIONS COMMISSION FACTS: Plaintiff Maritime Co. of the Phils. would deny that it is controlling in its suit to hold defendant Reparations Comm. liable for the freight charges as the consignee of reparations goods, notwithstanding that under Section 11 of the Reparations Act, ocean freight and other expenses incident to importation shall be paid by the end-user and not by such agency; that defendant is exempt from such

obligation. In plaintiffs complaint, it alleged that shipments of reparation goods were loaded in 3 of its vessels consigned to the defendant w/ freight charges. Then came to allegation that said vessels arrived in Manila and discharged all such shipment of reparations goods w/c were duly received by defendant in good order and condition but defendant failed and refused to pay not withstanding repeated demands. ISSUE: WON the contention of the plaintiff will prosper? HELD: No. it is a fundamental requirement that the contract entered into must be in accordance with, and not repugnant to, an applicable statute. Its terms are embodied herein. The contracting parties need not repeat them and they do not even have to be referred to. Every contract thus contains not only what has been explicitly stipulated, but the statutory provisions that have any bearing on the matter. The principle is thus well-settled that and existing law enters into and forms part of a valid contract w/o the need for the parties expressly making reference to it. Only thus could its validity insofar as some of its provisions are concerned to be assured. E. RAZON, INC VS CA FACTS: Civil Case No. 81460 was filed by respondent Pioneer Insurance as insurer-subrogee,to recover from either or both defendants, jointly and severaly, the invoice value, freight costs and other importation expenses of 3 cases of radio and phonograph parts short-delivered from a total of 86 cases from Japan, shipped aboard the SS Don Jacinto II of the defendant Northern Lines, Inc for the delivery to the consignee MGM Importers Corp. at Manila. The total shipment was insured by Pioneer. On Nov 14, 1969, the shipment was discharged into the custody of E. Razon Inc. one of the arrastre operators in the Port of Manila, charged w/ the obligation of handling, custody and delivery of all cargo discharged at the govt piers of Manila. The shipment was delivered to MGM Importers. On Dec 12, 1969, E. Razon certified that only 83 cases had been delivered to the consignee. Formal claims were filed by MGM Importers to Northern Lines, E Razon as well as Pioneer Insurance where the latter indemnified to lost cargo with the full value of P 21,937.75. ISSUE: WON petitioner can insist on a limitation of its liability under the contract? HELD: No. Having been duly informed of the actual invoice value of the merchandise under its custody and having received payment of arrastre charges based thereon, E. Razon, Inc., as arrastre operator,

cannot in justice insist on a limitation of its liability, under the contract, to less tan the value of each undelivered case or package consigned to MGM Importers, Inc. The lower courts judgment finding the petitioner liable for the full declared value of the 3 undelivered cases in question must be upheld. The purpose of the stipulation requiring a consignee to inform the contractor of arrastre operator and give the advance notice of the actual invoice value of the goods to be put in custody is for the purposed of determining its liability. CRUZADO VS BUSTOS FACTS: Plaintiff, Santiago Cruzado was the owner of a certain rural property in Dolores, Bacolor, Pampanga containing an area of 65 balitas. Estefania Bustos, the administrator of her estate during her lifetime, together w/ Manuel Escaler had been detaining said land since 1906 up unitl 1916(present) and had refused to deliver the possession thereof to plaintiff and to recognize his ownership of the same notwithstanding the repeat demands made upon them; by detention, the plaintiff had suffered losses and damages to the amount of P3,500. He therefore asked for judgment declaring plaintiff to be the owner of the said parcel of land and ordering defendants to return it to plaintiff and to pay the latter for losses, damages and costs. ISSUE:WON the fictitious contract of sale is valid? HELD: A Contract of Sale was simulated for the sole purpose of making it appear that the vendee acquired for the sum of P 2, 200 and became the owner of a piece of real property, w/c was to serve him as security to enable him to hold the office of procurator of a CFI, pursuant to the statutes in force. Such contract was perfect and binding upon both contracting parties, it appearing in the public instrument executed for the purpose that the vendor and the vendee agreed upon the property sold and on the price stipulated but such contract cannot be considered to have been consummated unless it is proved that the purchaser paid the price and took possession of property. The vendee of a piece of real property acquired by means of a simulated purchase, who has neither paid the price of the said property not taken possession of it, cannot convey to his successors in interest any property right r title therein, but only the right to demand in a personal action the fulfillment of the perfected contract of sale and he cannot be permitted to assert any right of ownership nor to bring an action for recovery of possession because said contract of sale was not consummated. The vendee is also entitled to demand them from the moment the obligation arises to deliver him the thing which produces such fruits.

CHAVES VS. GONZALES FACTS: In 1963,the plaintiff, Rosendo Chaves delivered to the defendant, Fructuoso Gonzales, who is a typewriter repairer, a portable typewriter for routine cleaning and servicing. The defendant was not able to finish the job after some time despite repeated reminders made by the plaintiff. The defendant merely gave assurances, but failed to comply with the same. In Oct 1963, the defendant asked the plaintiff the sum of P6 for the purchase of spare parts which was given by the latter. On Oct 26, after getting exasperated w/ the delay of the repair, the plaintiff went to the house and asked for the return of the typewriter which the defendant delivered in a wrapped package. On reaching home, the plaintiff examined the typewriter and found out that the same was in shambles, with the interior cover and some parts and screws missing. Thus, plaintiff formally demanded the return of the missing parts, the interior cover and P6. ISSUE: WON the respondent is liable? HELD: Yes. Under Art 1167 of the Civil Code, a person who is obliged to do something and fails to do it shall be liable for the cost of executing the obligation in a proper manner. In addition, the obligor, under Art 1170 of the Code, is liable for the cost of the missing parts because in his obligation to repair the typewriter, he is bound to return it in the same condition it was when he received it. CUI VS. SUN CHAN No. 16244 March 27, 1921 41Phil 523 Facts: A contract was made which stipulated Sun Chan to not make any construction upon the property without the permission of the lessor. Defendant, without the permission of the plaintiff, made some additions to the property on the rear end consisting of two awnings (a sheet of canvass used to keep the sun or rain off a window, doorway or deck). Hence, a rescission of the contract was then filed by plaintiff upon breach of one of the stipulations agreed upon by the parties. The trial court held that the plaintiff has no right to rescind the lease. Hence this petition. Issue: Whether or not plaintiff has ground for rescission of the contract based on non-compliance of one of the clauses of the aforementioned contract. Held: Yes, in pursuant to Article 1124 of the Civil Code (now 1191), the power to rescind obligations is

implied in reciprocal obligations. The fact that the contracting parties did not expressly state the rescission on account of breach then is governed by Article 1191. What has been lawfully agreed upon is obligatory, hence breach of any of the conditions of a contract of lease is considered as a cause for rescission of contract. BOYSAW VS. INTERPHIL PROMOTIONS, INC G.r. L-22590 March 20, 1987 148 SCRA 635 Facts: A contract has been engaged by Solomon Boysaw and his Manager Willie Ketchum with Interphil Promotions, Inc on May 1, 1961 which stipulated that: 1) Solomon Boysaw would engage in a boxing contest with Gabriel Flash Elorde for junior lightweight championship of the world Where: Rizal Memorial Stadium, Manila When: September 30, 1961 or not later than 30 days 3) Provided: Boysaw would not engage into other boxing contest prior to the stipulated contest without the written consent of Interphil Promotions, Inc

penalty for such violation, this however doesnt lead to the liberty of parties to breach it with impunity. No, since the plaintiff performed what was to be intended for him to not to as stipulated in the contract, he is not entitled to insist upon the performance of the contract by the defendant, or recover damages by reason of his own breach.

MAGAT VS. MEDIALDEA G.r. L-37120 April 20, 1983 121 SCRA 418 Facts: Defendant entered into a contract with the U.s. Navy Exchange for the operation of a fleet of taxicab where it should be provided with the necessary taximeter and radio transceiver. Isidra Q. Aligada acting as agent of the defendant approached plaintiff and proposed to import from Japan thru plaintiff and plaintiffs Japanese business associates all taximeters and radio tranceivers needed by the defendant. Defendant herein and his agent were able to import from Japan with the assistance of the plaintiff and plaintiffs Japanese business associates the necessary taxmeters and radio frequencies. Plaintiff offered the amount of $77,620 for the sale of the goods which will deliver to defendant sixty to ninety days upon receipt of advise from defendant of the radio frequency assigned by the proper authorities. Plaintiff took steps to advise the Japanese manufacturer of goods that defendant had accepted the offer and it has been perfected. Defendant advised plaintiff that the radio frequency 34.2 MHZ had been assigned. That it being normal business practice in case of foreign importation that a buyer opens a letter of credit in favor of the foreign supplier before the delivery of the goods sold, the plaintiff herein awaited the opening of such letter of credit by the defendant. The defendant and his agent assured the financial capability of the defendant to the plaintiff and assured that he even accomplished the necessary application for a letter of credit with his banker but defendant subsequently instructed his banker not to give due course to his application for reasons not known and even fails and refused to open the necessary letter of credit to cover the payment of goods.

2)

However, Boysaw fought and defeated Louis Avila on June 19, 1961 held in Las Vegas, Nevada Boysaw changed managers twice while staging the fight between Boysaw and Flash. The fight contemplated never materialized. As a result Boysaw and His manager sued Interphil, Sarreal Sr, and Nieto, Jr for their refusal to honor their commitments under the boxing contract. After trial court dismissed the case due to the non-participation of and cooperation of the plaintiffs party. Hence this petition, moved by plaintiff. Issue: Whether or not there has been a violation of the fight contract. Whether or not the plaintiff is the proper party to rescind the contract. Held: Yes, in pursuant to Article 1191 of the Civil Code, the power to rescind obligation is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. In the case at bar though the contract did not impose any

Plaintiff found out that defendant has been operating his taxicabs without the required radio frequencies and when pressed as to why he has not fulfilled such requirement by the US navy authorities, he would lay the blame on plaintiff for the delay thus destroying his reputation to said navy whom he transacts business with. Plaintiff wrote a letter thru his counsel to defendant to ascertain if defendant has intentions to fulfill his obligation or would desire to have the contract to be cancelled. Defendant did not answer. Issue: Whether or not defendant should be held liable to the damages incurred by plaintiff. Held: Yes, in pursuant to Article 1170 Those who are in the performance of their obligation are guilty of fraud negligence, or delay and those who in any manner contravene the tenor thereof are liable for damages, the phrase in any manner contravene the tenor in the said article includes any illicit act or omission which impairs the strict and faithful fulfillment of the obligation and every kind of defective performance. In the case at bar, the defendant intentionally refused to open his letter of credit resulting such act to have been acted with bad faith. Hence, defendant should be liable for all damages which may be reasonably attributed to the nonperformance of the obligation. flores vs miranda -respondent ireneo miranda was one of the passengers on a jeepney driven by eugenio luga -while the vehicle was descending the sta. Mesa bridge at an excessive rate of speed, the driver lost control causing it ti swerve and hit the bridge wall -5 of the paseengers were injured including the respondent who suffered fractured of the upper right humerus -at the time of the trial, the respondent had not yet recovered the use of his right arm -driver was charged with serious physical injuries through reckless imprudence and upon the interposing of the lea of guilty was sentenced accordingly (including the moral damages) issue: won moral damages is recoverable

held: moral damages are not recoverable in damage actions predicated on a breach of contract of transportation in view of article 2218 and 2222 of new civil code unless it is proved that the carrier was guilty of malice or bad faith -an action for breach of contract imposes on the carrier a presumption of liability upon mere proof of injury of the passengers; the latter does not have to establish the fault of the carrier or of his employees and the burden is placed on the carrier to prove that it was due to the unforseen event or force majeure. Moreover, the carrier unlike suits for quasi delicts may not escape from liability by proving that it has exercised due diligence in the selection and supervision of its employees. Cangco vs manila Railroad -jose cangco was employed in mAnila railroad company -he was returning home by rail from his work and as the train drew up to the station in san mateo, he arose from his seat in the second class car where he was riding and making exit through the door, took position upon the steps of the coach seizing the upright guardrail with his right hand for support -when the train has proceeded a little, he stepped also but one or both of his feet came in contact with a sack of watermelon with the result that ihis feet slipped from under him and he fell violently in platform issue: won the defendant is liable for negligence in placing the sacks of melon upon the platforms and in leaving them so placed as to be a menace to the security of passengers alighting from company's train? Held; yes.failure to perform a contract cannot be excused upon the ground the the breach was due to the negligence of a servant of the obligor and that the latter exercise due diligence in the selection and control of the servant -it is not negligence per se for a traveler to alight from a slowly moving train OVERSEAS BANK OF MANILA vs. COURT OF APPEALS G.R. No. L-45866 April 19, 1989 NARVASA, J.:

FACTS: In relation to a contract of sale between NAWASA, as vendor and a certain Bonifacio Regalado, as vendee, an amount corresponding to the first and second payment were placed on a time deposit with the Overseas Bank so that a refund could quickly be made to Regalado in the event that his contract with the NAWASA be disapproved by the Office of the President . In1966, NAWASA's Acting General Manager wrote the Bank that as regards the first time deposit which had already matured, NAWASA wished to withdraw it immediately, and with respect to the second time deposit it intended to withdraw it sixty (60) days. The Bank failed to remit to it despite the repeated request, it did however pay to NAWASA, interest on its time deposits. After maturity of the second time deposit, NAWASA again sent a letter to the Bank, demanding remittance of both time deposits twice, giving it five (5) days to remit the deposited sums, and warning that it would seek the intervention of the Central Bank for the protection of its interests. Still no word was received from the bank. NAWASA then wrote to the Central Bank Governor about the matter. The latter replied that it was pursuing a suggestion of the Monetary Board for the Overseas Bank to transfer government deposits in its custody, including those of NAWASA, to the Philippine National Bank (PNB) and/or the Development Bank of the Philippines (DBP). In1967, NAWASA informed the Central Bank that it had received no remittance from the Overseas Bank nor did it appear that the latter had transferred the time deposits to the PNB or the DBP. The Central Bank wrote back that it was pursuing available measures to induce the Overseas Bank to remit the time deposits in question or at least transfer them to either the PNB or DBP. One last letter was written by NAWASA to the Overseas Bank, reiterating its demand for the return of its money. Again the letter went unheeded. NAWASA thus brought suit to recover its deposits and damages. The latter failed to file its answer despite service of summons; it was declared in default. After being served with notice of the judgment, it simply brought the case up to the Court of Appeals who, in its own judgment declared the appeal to be without merit and affirmed the decision against Overseas Bank with the sole modification that the words, "plus legal interest" in the dispositive portion thereof was changed to "plus 4-1/2% interest." The petitioner bank now asks the Supreme Court to reverse the judgment by the Court of First Instance and the Court of Appeals. ISSUE: Is the Overseas Bank liable to pay the legal interest in view of its default in performing its obligation? Held: Yes, the Overseas Bank is liable to pay the legal interest. The claim that the Central Bank, by

suspending the Overseas Bank's banking operations, had made it impossible for the Overseas Bank to pay its debts, whatever validity might be accorded thereto, or the further claim that it had fallen into a "distressed financial situation," cannot in any sense excuse it from its obligation to the NAWASA, which had nothing whatever to do with the Central Bank's actuations or the events leading to the bank's distressed state. Also futile is the petitioner's invocation of this Court's decision in G.R. No. L29352, "Emerita M. Ramos, et al. v. Central Bank," promulgated in 1971 and subsequent resolutions ordering the "rehabilitation, normalization and stabilization of the Overseas Bank of Manila," and allegedly approving the rehabilitation plan and a proposed procedure for the payment of the bank's obligations. Obviously, the failure of the Court of Appeals to apply such a rehabilitation program to the case cannot be error, as the petitioner deposits since the program was approved after the Appellate Court had rendered judgment. Furthermore, that rehabilitation program or procedure of payment does not in any way negate or diminish the indebtedness of the Overseas Bank to the NAWASA nor does it constitute an obstacle to determine the principal and interests of the debts at issue at this time. SWEET LINES, INC. vs. COURT OF APPEALS G.R. No. L-46340 April 28, 1983 MELENCIO-HERRERA, J.: FACTS: Private respondents purchased first-class tickets from petitioner in Cebu City. They were to board petitioner's vessel, M/V Sweet Grace, bound for Catbalogan, Western Samar. Instead of departing at the scheduled hour of about midnight on July 8, 1972, the vessel set sail at 3:00 A.M. of July 9, 1972 only to be towed back to Cebu due to engine trouble, arriving there at about 4:00 P.M. on the same day. Repairs having been accomplished, the vessel lifted anchor again on July 10, 1972 at around 8:00 A.M. Instead of docking at Catbalogan, which was the first port of call, the vessel proceeded direct to Tacloban at around 9:00 P.M. of July 10, 1972. Private respondents had no recourse but to disembark and board a ferryboat to Catbalogan. For having bypassed a port of call without previous notice, petitioner shipping company and the ship captain were sued for damages by four of its passengers, private respondents herein. Hence, this suit for damages for breach of contract of carriage which the Trial Court, affirmed by respondent Appellate Court, holding petitioner liable for moral and exemplary/corrective damages, legal interest, attorneys fees and the cost of the suit against private respondents.

ISSUES: 1) Was there fortuitous event which would extinguish the private respondents right to claim damages, legal interest, attorneys fees and cost of the suit in relation to its having by-passed a port of call without previous notice? 2) Did the petitioner acted in bad faith in the performance of its obligation thereby making them liable for moral damages? HELD: 1) No, there was no fortuitous event or force majeure which prevented the vessel from fulfilling its undertaking of taking private respondents to Catbalogan. Mechanical defects in the carrier are not considered a caso fortuito that exempts the carrier from responsibility. Even granting arguendo that the engine failure was a fortuitous event, it accounted only for the delay in departure. When the vessel finally left the port of Cebu on July 10, 1972, there was no longer any force majeure that justified bypassing a port of call. The vessel was completely repaired the following day after it was towed back to Cebu. In fact, after docking at Tacloban City, it left the next day for Manila to complete its voyage. The reason for by-passing the port of Catbalogan, as admitted by petitioner's General Manager, was to enable the vessel to catch up with its schedule for the next week. The record also discloses that there were 50 passengers for Tacloban compared to 20 passengers for Catbalogan, 3 so that the Catbalogan phase could be scrapped without too much loss for the company. In defense, petitioner cannot rely on the conditions in small bold print at the back of the ticket reading, In case the vessel cannot continue or complete the trip for any cause whatsoever, the carrier reserves the right to bring the passenger to his/her destination at the expense of the carrier or to cancel the ticket and refund the passenger the value of his/her ticket; and that, The sailing schedule of the vessel for which this ticket was issued is subject to change without previous notice. Even assuming that those conditions are squarely applicable to the case at bar, petitioner did not comply with the same. It did not cancel the ticket nor did it refund the value of the tickets to private respondents. Besides, it was not the vessel's sailing schedule that was involved. Private respondents' complaint is directed not at the delayed departure the next day but at the by-passing of Catbalogan, their destination. The "interruption" was not due to fortuitous event or for majeure nor to disability of the vessel. Having been caused by the captain upon instruction of management, the passengers' right to indemnity is evident. The owner of a vessel and the ship agent shall be civilly liable for the acts of the captain. 2) Yes, the petitioner acted in bad faith in the performance of its obligation. Under Article 2220 of the Civil Code, moral damages are justly due in breaches of contract where the defendant acted fraudulently or in bad faith. Both the Trial Court and

the Appellate Court found that there was bad faith on the part of petitioner in that it did not give notice to respondents as to the change of schedule of the vessel; Knowing fully well that it would take no less than fifteen hours to effect the repairs of the damaged engine, it instead made announcement of assurance that the vessel would leave within a short period of time, and when the respondents wanted to leave the port and gave up the trip, its employees would come and say, 'we are leaving, already. And that it did not offer to refund the repondents tickets nor provide them with transportation from Tacloban City to Catbalogan. Thus, petitioner is liable to pay respondents moral damages. VICTORIAS PLANTERS ASSOCIATION, INC. vs.VICTORIAS MILLING CO., INC., G.R. No. L6648 July 25, 1955 FACTS: Petitioners Victorias Planters Association, Inc. and North Negros Planters Association, Inc. are composed of, sugar cane planters in the districts of Victorias, Manapla and Cadiz, respectively, having been established principally as the representative entities of the numerous sugar cane planters in said districts whose sugar cane productions are milled by the respondent corporation. The parties cannot stipulate as to the milling contracts executed by the planters by Victorias, Negros Occidental; a number of them executed such milling contracts with the North Negros Sugar Co., Inc., while a number of them executed milling contracts with the Victorias Milling Co., Inc., which was organized by Ossorio and which had constructed another Central at Victorias, Negros Occidental. Millings took place every successive crop year thereafter, except the 6-year period, comprising 4 years of the last World War II and 2 years of postwar reconstruction of respondent's central at Victorias, Negros Occidental. After the liberation, the North Negros Sugar Co., Inc. did not reconstruct its destroyed central at Manapla, Negros Occidental, and in 1946, it advised the North Negros Planters Association, Inc. that it had made arrangements with the respondent Victorias Milling Co., Inc. for said respondent corporation to mill the sugar cane produced by the planters of Manapla and Cadiz holding milling contracts with it. Beginning with the year 1948, and in the following years, when the planters-members of the North Negros Planters Association, Inc. considered that the stipulated 30year period of their milling contracts executed in the year 1918 had already expired and terminated in the crop year 1947-1948, and the planters-members of the Victorias Planters Association, Inc. likewise considered the stipulated 30-year period of their milling contracts, as having likewise expired and

terminated in the crop year 1948-1949, repeated representation were made with respondent corporation for negotiations regarding the execution of new milling contracts. However, herein respondent has refused and still refuses to accede to the same, contending that under the provisions of the mining contract, "It is the view of the majority of the stockholder-investors, that our contracts with the planters call for 30 years of milling not 30 years in time" and that "as there was no milling during 4 years of the recent war and two years of reconstruction, when these six years are added on to the earliest of our contracts in Manapla, the contracts by this view terminate in the autumn of 1952," and the "the contracts for the Victorias Planters would terminate in 1957, and still later for those in the Cadiz districts," and that "apart from the contractual agreements, the Company believes these war and reconstruction years accrue to it in equity. The trial court rendered judgment in favor of the petitioners. From this judgment the respondent corporation has appealed. The appellant contends that the term stipulated in the contracts is thirty milling years and not thirty calendar years and postulates that the planters fulfill their obligation the six installments of their indebtedness--which they failed to perform during the six milling years from 1941-42 to 1946-47. The reason the planters failed to deliver the sugar cane was the war or a fortuitious event. The appellant ceased to run its mill due to the same cause. ISSUE: May the planters be compelled to deliver sugar cane to the respondents for six more years to make up for what they failed to deliver during those trying years? HELD: No, the palnters may not be compelled to deliver sugar cane to respondents for six more years. Fortuitious event relieves the obligor from fulfilling a contractual obligation. The seventh paragraph of the contract, quoted by the respondents in its brief, where the parties stipulated that in the event of flood, typhoon, earthquake, or other force majeure, war, insurrection, civil commotion, organized strike, etc., the contract shall be deemed suspended during said period, does not mean that the happening of any of those events stops the running of the period agreed upon. It only relieves the parties from the fulfillment of their respective obligations during that time the planters from delivering sugar cane and the central from milling it. In order that the central may be entitled to demand from the other parties the fulfillment of their part in the contracts, the latter must have been able to perform it but failed or refused to do so and not when they were prevented by force majeure such as war. To require the planters

to deliver the sugar cane which they failed to deliver during the four years of the Japanese occupation and the two years after liberation when the mill was being rebuilt is to demand from the obligors the fulfillment of an obligation which was impossible of performance at the time it became due. Nemo tenetur ad impossibilia. The obligee not being entitled to demand from the obligors the performance of the latters' part of the contracts under those circumstances cannot later on demand its fulfillment. The performance of what the law has written off cannot be demanded and required. The prayer that the petitioners be compelled to deliver sugar cane to the respondents for six more years to make up for what they failed to deliver during those trying years, the fulfillment of which was impossible, if granted, would in effect be an extension of the term of the contracts entered into by and between the parties.The period of six years four during the Japanese occupation when the appellant did not operate its mill and the last two during which the appellant reconstructed its mill cannot be deducted from the thirty-year period stipulated in the contracts. Rosepacking Company Inc. vs. CA Facts: On December 12, 1962 respondent bank (PCIB) approved a letter- request by petitioner for the reactivation of its overdraft line of P50,000.00, discounting line of P100,000.00 and a letter of credittrust receipt line of P550,000.00 as wen as an application for a loan of P300,000.00, on fully secured real estate and chattel mortgage and on the further condition that respondent PCIB appoint as it did appoint its executive vice-president Roberto S. Benedicto as its representative in petitioner's board of directors. 2 years thereafter, National Investment & Development Corporation (NIDC), the wholly owned investment subsidiary of the Philippine National Bank, approved a P2.6 million loan application of petitioner with certain conditions. Pursuant thereto, the NIDC released to petitioner on November 7, 1965 the amount of P100,000.00. Subsequently, petitioner purchased five (5) parcels of land in Pasig, Rizal making a down payment thereon. On January 5,1966, the NIDC released another P100,000.00 to petitioner and on January 12, 1966, the aforesaid releases totalling P200,000.00 were applied to the payment of

preferred stock which NIDC subscribed in petitioner corporation to partially implement its P1,000,000.00 investment scheme as per agreement. Thereafter, the NIDC refused to make further releases on the approved loan On August 3, 1966 and October 5, 1966, respondent PCIB approved additional accommodations to petitioner consisting of a P710,000.00 loan for the payment of the balance of the purchase price of those lots in Pasig required to be bought, P500,000.00 loan for operating capital, P200,000.00 loan to be paid directly to petitioner's creditors, while consolidating all previous accommodations at P1,597,000.00all of which were still secured by chattel and real estate mortgages. However, PCIB released only P300,000.00 of the P710,000.00 approved loan for the payment of the Pasig lands and some P300,000.00 for operating capital. On June 29,1967, the Development Bank of the Philippines approved an application by petitioner for a loan of P1,840,000.00 and a guarantee for $652,682.00 for the purchase of can making equipment. January 22, 1968, PCIB gave petitioner notice that it would cause the real estate mortgage to be foreclosed at an auction sale, which it scheduled for February 27,1968. Thus, respondent Sheriff served notice of sheriffs sale. Immediately upon receipt of notice of the approval of the Development Bank of the loan, petitioner advised respondent PCIB of the availability of P800,000.00 to partially pay off its account and requested the release of the titles to the Pasig lots for delivery to the Development Bank of the Philippines. Respondent PCIB verbally advised petitioner of its refusal, stating that all obligations should be liquidated before the release of the titles to the Pasig properties. Following the PCIB's rejection of petitioner's counterproposal, petitioner purchased a parcel of land at Valenzuela, Bulacan with the P800,000.00 DBP loan, with the latter's consent. On January 5, 1968 respondent PCIB filed a complaint against petitioner and Rene Knecht, its president for the collection of petitioner's indebtedness to respondent bank On January 22, 1968, PCIB gave petitioner notice that it would cause the real estate mortgage to be foreclosed at an

auction sale, Thus, respondent Sheriff served notice of sheriffs sale. Subsequently, on July 15, 1968, petitioner filed a complaint docketed to enjoin respondents PCIB and the sheriff from proceeding with the foreclosure sale, to ask the lower court to fix a new period for the payment of the obligations of petitioner to PCIB and for other related matters. Petitioner likewise prayed, pending for the issuance ex-parte of a writ of preliminary injunction enjoining herein respondents from proceeding with the foreclosure sale. Issue: whether or not private respondents have the right to the extrajudicial foreclosure sale of petitioner's mortgaged properties before trial on the merits. Held: The court held in the negative. Petitioner corporation alleges that there had been no demand on the part of respondent bank previous to its filing a complaint against petitioner and Rene Knecht personally for collection on petitioner's indebtedness (Brief for Petitioner, p. 13). For an obligation to become due there must generally be a demand. Default generally begins from the moment the creditor demands the performance of the obligation. Without such demand, judicial or extrajudicial, the effects of default will not arise (Namarco v. Federation of United Namarco Distributors, Inc. 49 SCRA 238 [1973]; Borje v. CFI of Misamis Occidental, 88 SCRA 576 [1979]). Whether petitioner corporation is already in default or not and whether demand had been properly made or not had to be determined in the lower court. The loan agreements between petitioner and respondent Bank are reciprocal obligations (the obligation or promise of each party is the consideration for that of the other Penacio v. Ruaya, 110 SCRA 46 [1981], cited. in Central Bank of the Philippines v. Court of Appeals, 139 SCRA 46 [1985] ). A contract of loan is not a unilateral contract as respondent Bank thinks it is (Brief for the Respondent, p. 19). The promise of petitioner to pay is the consideration for the obligation of respondent bank to furnish the loan (Ibid.). Cetus Development Inc. vs. Court of Appeals Facts: Private respondents, Ederlina Navalta, Ong Teng, Jose Liwanag, Leandro Canlas, Victoria Sudario, and Flora Nagbuya were the lessees of the premises

located at No. 512 Quezon Boulevard, Quiapo, Manila, originally owned by the Susana Realty. Sometime in March, 1984, the Susana Realty sold the leased premises to the petitioner, Cetus Development, Inc. Private respondents continued to pay their monthly rentals to a collector sent by the petitioner. In the succeeding months of July, August and September 1984, the respondents failed to pay their monthly individual rentals as no collector came. On October 9, 1984, the petitioner sent a letter to each of the private respondents demanding that they vacate the subject premises and to pay the back rentals for the months of July, August and September, 1984, within fifteen (15) days from the receipt thereof. Immediately upon the receipt of the said demand letters on October 10, 1984, the private respondents paid their respective arrearages in rent which were accepted by the petitioner subject to the unilateral condition that the acceptance was without prejudice to the filing of an ejectment suit. For failure of the private respondents to vacate the premises as demanded in the letter dated October 9, 1984, the petitioner filed with the Metropolitan Trial Court of Manila complaints for ejectment against the private respondents. In their respective answers, the respondents claim that their non-payment of the rentals for the months of July, August and September, 1984, was due to the failure of the petitioner (as the new owner) to send its collector. that they were at a loss as to where they should pay their rentals; that sometime later, one of the respondents called the office of the petitioner to inquire as to where they would make such payments and he was told that a collector would be sent to receive the same; that no collector was ever sent by the petitioner; and that instead they received a uniform demand letter dated October 9, 1984 The trial court dismissed the said case for lack of merit. The petitioner appealed to the Regional Trial Court of Manila but the same was dismissed for the same reasons. Hence, this petition for review. Issue: whether or not there exists a cause of action for ejectment when the complaints for unlawful detainer were filed considering the fact that upon demand by petitioner from private respondents for

payment of their back rentals, the latter immediately tendered payment which was accepted by petitioner. Held: for the purpose of bringing an ejectment suit, two requisites must concur, namely: (1) there must be failure to pay rent or comply with the conditions of the lease and (2) there must be demand both to pay or to comply and vacate within the periods specified in Section 2, Rule 70, namely 15 days in case of lands and 5 days in case of buildings. The first requisite refers to the existence of the cause of action for unlawful detainer while the second refers to the jurisdictional requirement of demand in order that said cause of action may be pursued. It is very clear that in the case at bar, no cause of action for ejectment has accrued. There was no failure yet on the part of private respondents to pay rents for three consecutive months. As the terms of the individual verbal leases which were on a monthto-month basis were not alleged and proved, the general rule on necessity of demand applies, to wit: there is default in the fulfillment of an obligation when the creditor demands payment at the maturity of the obligation or at anytime thereafter. This is explicit in Article 1169, New Civil Code which provides that "(t)hose obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation." Petitioner has not shown that its case falls on any of the following exceptions where demand is not required: (a) when the obligation or the law so declares; (b) when from the nature and circumstances of the obligation it can be inferred that time is of the essence of the contract; and (c) when demand would be useless, as when the obligor has rendered it beyond his power to perform. The demand required in Article 1169 of the Civil Code may be in any form, provided that it can be proved. The proof of this demand lies upon the creditor. Without such demand, oral or written, the effects of default do not arise. This demand is different from the demand required under Section 2, Rule 70, which is merely a jurisdictional requirement before an existing cause of action may be pursued. The facts on record fail to show proof that petitioner demanded the payment of the rentals when the obligation matured. Coupled with the fact that no collector was sent as previously done in the past, the private respondents cannot be held guilty of mora solvendi or delay in the payment of rentals. Thus, when petitioner first demanded the payment of the

3-month arrearages and private respondents lost no time in making tender and payment, which petitioner accepted, no cause of action for ejectment accrued. Hence, its demand to vacate was premature as it was an exercise of a non-existing right to rescind. ART 1170 Those who in the performance of their obligations are guilty of fraud, negligence or delay and those who in any manner contravene the tenor thereof, are liable for damages PHILIPPINE NATIONAL CORPORATION vs NLRC CONSTRUCTION

January 27 to February 21 is part of the employment contract holding that PNCC, under the contract was obliged to notify the employee two months before the end of the contract whether his contract would be extended or repatriated. Within the said two months, the employer had Sacedas passport and travel documents, thus petitioner is to blame for its failure to obtain Sacedas travel papers within the two month stipulated in the contract. The stand-by compensation which the employer is required to pay the employee while the latter waits for his travel papers, is actually the damages caused to him by the employers delay in getting his travel papers ready. The basis of such Liability is Article 1170 of the Civil Code which provides, Those who in the performance of their obligations are guilty of fraud, negligence or delay and those who in any manner contravene the tenor thereof, are liable for damages. The measure of the damages is the income he couldve earned of he were repatriated promptly in order that he could work again in his country. ART 1191 The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become inpossible. The court shall decree the rescission claimes, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with articles 1385 and 1388 and the Mortgage Law. Pangilinan vs Court of Appeals Facts: Petitioners spouses Pangilinan entered in to a contract to buy and to sell a subdivision lot, with private respondents Jose Canlas and Luis Canlas, payable on installment basis for 120 months. Under said contract, Paragraph 5 provided for the automatic extrajudicial rescission upon default in

payment of three consecutive monthly installments or to comply with any of the terms and conditions, with forfeitures of installments as rents and as payment for damages. On January 1974, 85% of the total price were paid by herein petitioners; the last payment thereof was made on May 14, 1975. The said contract to buy and to sell, as well as the receipts of various payments made by petitioners in favor of private respondents, were given to a certain Mr. Mallari. Mr. Mallari equipped with a Special Power of Attorney dated May 15, 1983 from petitioners spouses Pangilinan went personally to the private respondents and requested them to release the title of the lot as he would pay in full the remaining balance of P1875. He was told to return after two weeks as the private respondents would confer with each other. When he returned, the private respondent Jose R. Canlas told him that they were not in a position to release the title because the same had already been disposed of. Mr. Mallari then discovered that the lot was mortgaged to the Rural Bank of Sta Rita, hence, he instituted a complaint for Specific Peroformance and Damages. The trial court ruled in favor of herein petitioners. Private respondents however, appealed the decision to the Court of Appeals which reversed and set aside the decision of the trial court. Petitioners filed a Motion for Reconsideration butwas denied for lack of merit. Hence, this petition for review. ISSUE: Whether or not a creditor can unilaterally and summarily rescind a contract to sell a subdivision lot HELD: Yes. Though petitioners vigorously argue that automatic rescission of a contract extrajudicially undertaken by a creditor maybe effected only if the defaulter was duly informed of the intention to rescind and will not object to such. If defaulter will object, the rescission will be subjected to judicial determination. The court is nor persuaded. Reiterating Paragraph 5 of the said ontract, This contract shall be considered automatically rescinded and cancelled and of no further force or effect, upon failure of the vendee to pay when due, 3 consecutive monthly installments xxx in which case VENDORS shall have the right to resell said parcel of land to any person or purchase as if this contract has never been entered into. The vendors right in contracts to sell with reserved title to extrajudicially cancel the

Facts: Private respondent Nicanor Saceda was hired by herein petitioner PNCC as HT Driver I in the Kingdom of Saudi Arabia. He was hired at an hourly rate of US$1.55 per hour for 24 months to be effective upon his departure which was January 8, 1982. Two years later, private respondent completed his two years overseas contract but was extended until January 27 by herein petitioner. On February 9, 1984, Saceda was dispatched to Jeddah, Saudi Arabia for immediate repatriation to the Philippines. He was booked for departure on February 21, 1984. However, Saceda refused to depart awaiting a final disposition on a case he filed against herein petitioner for payment of his completion bonus, unused vacations and unpaid wages from December 1, 1983 to January 27, 1984. The Saudi labor authorities ruled on his favor and was paid by herein \petitioner on March 27, 1984. Upon arrival in the Philippines, Saceda found out that the allotment amounting to 70% of his salary from November 16, 1983 to January 15, 1984 was not paid by petitioner PNCC. Despite repeated demands, PNCC failed to pay said claim without justifiable reasons. This prompted private respondent to file a case at the POEA for non-payment of withheld salary/allotment and stand-by pay. The POEA ruled in favor of private respondent ordering PNCC to pay said claims. NLRC later affirmed the said decision. Hence this petition for certiorari. ISSUE: Whether or not the stand-by pay claimed by Saceda was allegedly devoid of legal basis. HELD: No. The petition has no merit. The legal basis of the NLRCs award of stand-by pay to Saceda from

sale upon failure of the vendee to pay has long been recognized by the well established doctrine of 39 years standing, hence such stipulation of automatic rescission upon non payment cannot be doubted. Petitioners argument that there was only a casual breach since only 15% remained unpaid is to proceed from the assumption that the contract is of sale, where non payment is a resolutory condition, which is not the case. The contract entered into was a contract to but and to sell where the applicable provision is Art 1191 of the New civil code, which states The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. The court shall decree the rescission claims, unless there be just cause authorizing the fixing of a period. XXX. The said law makes it available to the injured party alternative remedies such as the power to rescind. There is nothing in this law that prohibits the parties from entering into an agreement that a violation of the terms of the contract would cause its cancellation even without court intervention. Petition is hereby denied.