MCLAUGHLIN V CA

FACTS:
Mclaughlin and private respondent Flores entered into a contract of conditional
sale of real property with a total purchase price of P140,000 + 1% monthly
interest
Because of failure of private respondent to pay the balance due on said date,
petitioner filed for rescission of the deed of conditional sale.
Parties entered a Compromise Agreement, wherein respondent is indebted to
petitioner in a amount of P119, 050.71.
For failure to pay on said date, petitioner filed a Motion for Writ of Execution to
rescind the contract (all payments forfeited in favor of her), payment of back
rentals since June 1980, as well as eviction of private respondent.
Trial court granted the petition.
Issue:
WoN CA erred in not rescinding the Compromise Agreement by reason of delay
of payment of private respondent
Ruling + Ratio:
No.
In the case at bar, McLaughlin wrote Flores on October 15, 1980 demanding that
Flores pay the balance of P69,059.71 on or before October 31, 1980. Thus, it is
undeniable that despite Flores failure to make the payment for the 1st
installment which was due on June 1980, McLaughlin waived whatever right she
had under the compromise agreement as incorporated in the decision of
respondent court, to demand rescission
CORTES V CA
FACTS:
For the purchase price of 3.7M, Villa Esperanza Development Corporation
(vendee) and Antonio Cortes (vendor) entered into a contract of sale over the
lots located in Paraaque.
The Corporation advanced to Cortes the total sum of P1,213,000.00. In
September 1983, the parties executed a deed of absolute sale with the following
conditions:
o 2.2 million advance, TCT of three lots will be delivered
o 1.5 million will be payable within the rest of the year
The Corporation filed the instant case for specific performance seeking to
compel Cortes to deliver the TCTs and the original copy of the Deed of Absolute
Sale.
According to the Corporation, despite its readiness and ability to pay the
purchase price, Cortes refused delivery of the sought documents.
Cortes claimed that the owners duplicate copy of the three TCTs were
surrendered to the Corporation and it is the latter which refused to pay in full
the agreed down payment.
RTC rendered a decision rescinding the sale.
CA reversed RTCs decision

ISSUE:
WoN there is delay in the performance of the parties obligations that would
justify the rescission of the contract of sale.
RULING + RATIO:
Yes. Both parties were in delay.
There are two aspects to the deed of sale, Cortes delivery of the TCTs to the
Corporation, and the Corporation paying the amount.
It was found that Cortes did not deliver the TCTs to the corporation.
In cases of reciprocal obligations, mutual inaction of both parties gives rise to a
compensation morae or default in both parties, which has the effect of nullifying
the effects of default, such that it is as if no one is guilty of delay.
YAO V MATELA
FACTS:
Yao contracted the services of Matela, a licensed architect, to manage and
supervise the construction of a two-unit townhouse at a total cost of P5M.
As agreed by the parties, Matela will construct the townhouses in accordance
with the Specification while spouses Yao will pay Matela the agreed construction
cost based on progress billings.
The spouses Yao will not pay Matela the agreed price in full unless the latter has
fully complied with and has discharged his obligations as specified in the
contract.
Yao paid a total of P4.6M, but failed to pay the balance.
Spouses Yao denied that the project was completed and instead alleged Matela
abandoned the project without notice.
As such, the amount already paid should be considered sufficient payment
payment.
The RTC and CA both ruled in favor of Matela since the item was already
delivered.
ISSUE:
WoN Matela is entitled to the additional construction costs.
RULING + RATIO:
No. Matela is not entitled to the remaining balance of P741,482 since both
parties are guilty of breach.
In reciprocal obligations, if it cannot be determined which of the parties first
violated the contract, the same shall be deemed extinguished, and each shall bear
his own damages.
PHIL EXPORT V EUSEBIO
FACTS:
The State Organization of Buildings (SOB), Ministry of Housing and Construction,
Baghdad, Iraq awarded the construction of the Institute of Physical TherapyMedical Rehabilitation Center in Iraq to Ayjal Trading and Contracting Company
for a total contract price of about $18M

Ayjal seeked help with the respondents in setting up a joint venture in order to
build this project.
Layout of Joint Agreement: Ayjal would be building the project, respondent
would secure the funds, SOB would oversee the project and would repay the
respondent throughout the project. SOB would repay 25% in Iraqi Dinars and
75% in US Dollars.
Petitioner had a Guarantee (Only if necessary) with Al Ahli bank for US$876,564.
SOB did not want to deal with Al Ahli, so Al Ahli would have to send it to Rafidain
bank first before the US$876,564 could be accepted.
The project was delayed again and again and was only 50% of the way through
when the deadline passed
Al Ahli bank then informed the parties that it had paid the Guarantee to Rafidain,
and in effect to SOB, because SOB demanded payment. Al Ahli was thus
demanding reimbursement.
The parties did not pay, due to the fact that there was no demand from SOB.
Eventually, petitioner caved and paid Al Ahli the Guarantee.

ISSUE:
WoN SOB could validly demand payment
RULING + RATIO:
No. SOB could not validly demand payment.
While it is true that the project was only 50% done when the deadline passed,
because SOB had also violated its own promise that it would repay 25% in Iraqi
Dinars and 75% in US Dollars.
In reciprocal obligations, neither party incurs a delay if the other does not
comply or is not ready to comply in a proper manner with what is incumbent
upon him.
JUNTILLA V FONTANAR
FACTS:
Roberto Juntilla was a passenger of the jeepney on the trip from Danao City to
Cebu City. Said jeep was driven by Camoro, registered under Fontanars
franchise, but owned by Banzon
When the jeep reached Mandaue City, the right tire exploded and caused the jeep
to turn turtle. Juntilla was thrown out of the vehicle, wounding him and also lost
consciousness.
He went back to Danao City because of his shock and injuries, and discovered
that he had lost his Omega wrist watch.
Juntilla then filed a civil case for breach of contract before the City Court of Cebu,
and judgment was rendered in his favor. On appeal to the CFI of Cebu, the
decision was reversed and absolved respondents from any liability, finding that
the accident was due to a fortuitous event.
ISSUE:
WoN the CFI erred when it absolved the carrier from liability upon finding that
the tire blow-out is a fortuitous event.

RULING + RATIO:
YES. The CFI erred in absolving carrier from liability due to such circumstance.
In the present case, there are acts of negligence on respondents part.
o The jeepney was running at a very fast speed before the accident.
o It was also overloaded at the time of the accident with 14 passengers in
the rear and 3 in front.
Essential characteristics of a fortuitous event:
o Cause of unforeseen/unexpected occurrence, or failure of debtor to
comply with his obligation, must be independent of human will
o Must be impossible to foresee the event, or if it can be foreseen, it must be
impossible to avoid
o Occurrence must make it impossible for the debtor to fulfill his obligation
in a normal manner
o Obligor must be free from participation in the aggravation of the injury to
the creditor
ACE-AGRO CORP V CA
FACTS:
Cosmos Bottling Corp. is engaged in the manufacture of soft drinks. Ace-Agro
Development Corporation had been cleaning soft drink bottles and repairing
wooden shells for Cosmos, rendering its services within the company premises
in San Fernando, Pampanga.
Cosmos had earlier contracted the services of Aren Enterprises given that
petitioner could not cope with Cosmos daily production of 8,000 cases. Unlike
Ace-Agro, Aren Enterprises rendered service outside private respondent's plant.
On April 25, 1990, fire broke out in private respondent's plant, destroying,
among other places, the area where petitioner did its work. As a result,
petitioner's work was stopped.
Petitioner asked private respondent to allow it to resume its service, but
petitioner was advised that private respondent was terminating their contract.
Cosmos then advised petitioner that the latter could resume work but it had to
be done outside the company premises. Petitioner refused the offer.
Cosmos advised petitioner that the latter could then resume its work inside the
plant in accordance with its original contract with Cosmos. Petitioner rejected
Cosmos offer, citing the fact that there was a pending labor case.
Ace-Agro brought a case against private respondent for breach of contract and
damages
ISSUE:
WON COSMOS BOTTLING IS LIABLE FOR BREACH
RULING + RATIO:
NO.
The real reason for refusing to resume work with the appellant was, as in its
previous refusal, because it wanted an extension of the period or duration of the
contract beyond December 31, 1991, to cover the period within which it was
unable to work.

The stipulation that in the event of a fortuitous event or force majeure the
contract shall be deemed suspended during the said period does not mean that
the happening of any of those events stops the running of the period the contract
has been agreed upon to run. It only relieves the parties from the fulfillment of
their respective obligations during that time.

PHILCOMSAT V GLOBE
FACTS:
Philcomsat & Globe entered into an agreement whereby Philcomsat obliged itself
to establish, operate & provide an IBS standard B earth station for the exclusive
use of US defense communications Agency (USDCA).
The term was for 60 months or 5 yrs In turn, Globe promised to pay Philcomsat
monthly rentals.
At the execution of the agreement, both parties knew that military Bases
Agreement was to expire in 1991. Subsequently, Philcomsat installed the earth
station & USDCA made use of the same.
The senate passed a resolution expressing its decision not to concur in the
ratification of the treaty of friendship. So the RP-US Military bases Agreement
terminate it on Dec. 31, 1992.
Globe notified Philcomsat its instruction to discontinue effective Nov. 8, 1992, in
view of the withdrawal of US military personnel. Philcomsat sent a reply to pay
the stipulated rentals even after Globe shall have discontinued the use of earth
station after Nov. 8 1992.
After the US military force left Subic, Philcomsat sent a letter demanding
payment. However, Globe refused to heed Philcomsat s demand because the
termination of the US military bases agreement.
ISSUE:
WON the termination of the RP-US Military Bases Agreement is a fortuitous
event?
RULING + RATIO
YES.
Philcomsat and Globe had no control over the non-renewal of the term of the RPUS Military Bases Agreement when the same expired in 1991, because the
prerogative to ratify the treaty extending the life thereof belonged to the Senate.
Article 1174, which exempts an obligor from liability on account of fortuitous
events or force majeure, refers not only to events that are unforeseeable, but also
to those, which are foreseeable, but inevitable.