cjtancases6

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OCCEÑA V COURT OF APPEALS TEEHANKEE; October 29, 1976

NATUREAppeal from resolution of CA

FACTS Tropical Homes !le" complaint for mo"i!cation of terms an" con"itions of its

sub"i#ision contract $it% petitioners "ue to increase in price of oil $&c are not $&in

control' Acc"( to t%em, it $ill result in situation $%ere "efen"ants $oul" be un)ustl*

enric%e" at e+pense of plainti'

T%e* are in#o-in( Art 1267 of Ci#il Co"e $&c states t%at a positi#e ri(%t is create"

in fa#or of obli(or to be release" fr performance $%en its performance %as become

so "i.cult as to be manifestl* be*on" t%e contemplation of t%e parties

ISSUE

/ON t%e (roun" cite" )usti!es mo"i!cation of t%e sub"i#ision contract

HELDNO 0elease coul" %a#e been (rante"' Ho$e#er, t%e complaint see-s not release fromcontract but t%at t%e court mo"if* t%e terms an" con"itions' Court "oes not %a#e aut%orit* to rema-e, mo"if*, re#ise contract' o"i!cation %asno basis in la$'Disposition 0esolution is re#erse" an" certiorari is (rante"'

NAGA TELEPHONE V COURT OF APPEALS

NOCON; ebruar* 23, 1993

NATURE4ET5T5ON for a re#ie$ of t%e "ecision of t%e CA'

FACTS 4etitioner, Na(a Telep%one Co', 5nc' NATECO8, is a telep%one compan* ren"erin(local as $ell as lon( "istance telep%one ser#ice in Na(a Cit*' On No#ember 1, 1977,it entere" into a contract $it% Camarines ur 55 Electric Cooperati#e, 5nc'CA:0ECO 558, a corporation establis%e" for t%e purpose of operatin( an electricpo$er ser#ice in t%e same cit*, for t%e use b* t%e petitioner in t%e operation of itstelep%one ser#ice t%e electric li(%t posts of t%e respon"ent<' 5n consi"eration of

suc% use, NATECO a(ree" to pro#i"e t%e respon"ent $it% free use of ten telep%oneconnections' T%e contract bet$een inclu"e", amon( ot%ers, a stipulation to t%e eect t%at t%econtract s%all be as lon( as t%e part* of t%e !rst part NATECO8 %as nee" for t%eelectric post of t%e secon" part CA:0ECO 558 it bein( un"erstoo" t%at t%is contracts%all terminate $%en for an* reason $%atsoe#er, t%e part* of t%e secon" part isforce" to stop, aban"one" its operation as a public ser#ice an" it becomesnecessar* to remo#e t%e electric post<'



After o#er ten *ears, t%e respon"ent !le" on =anuar* 2, 19>9 $it% t%e 0TC of Na(aCit* action a(ainst t%e petitioner for reformation of t%e contract on t%e (roun"s t%atit is too one si"e" in fa#or of t%e petitioner' T%e action also pra*e" t%at petitioner beor"ere" to pa* for t%e use of electric posts $%ic% are not co#ere" b* t%e a(reement'An" !nall*, t%at CA:0ECO be in"emni!e" no less t%an 41??,??? arisin( out of t%epoor ser#icin( of t%e ten telep%one units $%ic% %a" cause" it (reat incon#enience

an" "ama(es' T%e trial court foun" in fa#or of t%e respon"ents an" or"ere" t%e reformation of t%e contract in t%e interest of )ustice an" e@uit*' As part of t%e rulin(, t%e courtor"ere" NATECO to pa* respon"ent a mont%l* rental of 41?'?? per electric postbein( use" from t%e time of t%e !lin( of t%e case' On t%e ot%er an", CA:0ECO $asor"ere" b* t%e same trial court to pa* NATECO for t%e use an" transfers of itstelep%one units at t%e same rate t%at t%e public are pa*in(' Appeal to t%e CA $as ma"e an" t%e CA a.rme" t%e rulin( of t%e trial court butt%is time not base" on t%e reformation but rat%er on t%e operation of Article 1267 of t%e Ci#il Co"e an" on t%e potestati#e con"ition $it% ren"ere" t%e con"ition #oi"' T%e CA %el" t%at as reformation onl* lie or ma* prosper $%en t%e contract faile" toe+press t%e true intentions of t%e parties "ue to error or mista-e, acci"ent , or frau"

an" t%ere is no alle(ation to t%is eect, t%e proper basis is t%e aforementione"Article' T%e section on t%e continue" use of t%e electric post for so lon( as t%ese arenee"e" b* NATECO $as consi"ere" as bein( purel* potestati#e on t%e part of t%epetitioner as it lea#es t%e continue" eecti#it* of t%e contract to NATECOs solean" e+clusi#e $ill' As %el" in pre#ious )urispru"ence, t%ere must be mutualit* an"e@ualit* in an* contract' Hence t%e appeal'

ISSUE/ON t%e rulin( of t%e CA is #ali"

HELD Bes' T%e a(reement bet$een t%e parties %as become too one si"e" in fa#or of t%epetitioner to t%e (reat "isa"#anta(e of t%e respon"ent' Continuin( $it% t%ea(reement $ill result in t%e petitioners un)ust enric%ment at t%e e+pense of t%erespon"ent'

PNCC V COURT OF APPEALSAD5E; a* , 1997

NATURE 4etition for re#ie$ on certiorari'

FACTS T%e lease contract e+ecute" b* petitioner an" pri#ate respon"ents 0a*mun"os onNo#ember 1>, 19>, rea"s in part as follo$sF1'TE0 O EAE *ears, commencin( on t%e "ate of issuance of t%e in"ustrialclearance b* t%e inistr* of Human ettlements H8, rene$able for *ears orot%er perio" at t%e option of t%e essee un"er t%e same terms an" con"itions'



2'0ATE O 0ENT mont%l* rate of 42?,???, to be increase" *earl* b* G base" ont%e a(ree" mont%l* rate of 42?,???'?? as follo$sF 421,??? startin( on t%e 2n" *ear;422,??? startin( on t%e r" *ear; 42,??? startin( on t%e 3t% *ear; 423'??? startin(on t%e t% *ear'TE0 O 4ABENT T%e rent stipulate" s%all be pai" *earl* in a"#ance' T%e !rstannual rent of 423?,???'?? s%all be "ue an" pa*able upon t%e e+ecution of t%is

A(reement an" t%e succee"in( annual rents s%all be pa*able e#er* 12 mont%st%ereafter "urin( t%e eecti#it* of t%is A(reement'3':E O EAE 40O4E0TB 4ropert* s%all be use" as t%e site, (roun"s an"premises of a roc- crus%in( plant an" !el" o.ce, sleepin( @uarters an"canteen&mess %all' + + + + + + + + +11'TE05NAT5ON O EAE T%is A(reement ma* be terminate" b* mutuala(reement of t%e parties' :pon t%e termination or e+piration of t%e perio" of lease$it%out t%e same bein( rene$e", t%e essee s%all #acate t%e ease" 4ropert* at itse+pense' On 7 =anuar* 19>6, petitioner obtaine" from t%e H a Temporar* :se 4ermit fort%e propose" roc- crus%in( pro)ect, #ali" for 2 *ears unless sooner re#o-e" b* H'

On 16 =anuar* 19>6, pri#ate respon"ents $rote petitioner re@uestin( pa*ment of t%e !rst annual rental in t%e amount of 423?,??? $%ic% $as "ue an" pa*able upont%e e+ecution of t%e contract' T%e* also assure" t%e latter t%at t%e* %a" alrea"*stoppe" consi"erin( t%e proposals of ot%er a((re(ates plants to lease t%e propert*because of t%e e+istin( contract $it% petitioner' 4etitioner ar(ue" t%at un"er para(rap% 1 of t%e lease contract, pa*ment of rental$oul" commence on t%e "ate of t%e issuance of an in"ustrial clearance b* t%e H,an" not from t%e "ate of si(nin( of t%e contract' 5t t%en e+presse" its intention toterminate t%e contract, as it %a" "eci"e" to cancel or "iscontinue $it% t%e roc-crus%in( pro)ect I"ue to !nancial, as $ell as tec%nical, "i.culties'I 4ri#ate respon"ents refuse" to acce"e to petitionerJs re@uest for t%epretermination of t%e lease contract' T%e* insiste" on t%e performance of

petitionerJs obli(ation an" reiterate" t%eir "eman" for t%e pa*ment of t%e !rstannual rental' 4etitioner ob)ecte" to pri#ate respon"entsJ claim an" ar(ue" t%at it $as Ionl*obli(ate" to pa* t%e amount of 42?,???'?? as rental pa*ments for t%e onemont%perio" of lease, counte" from =anuar* 7, 19>6 $%en t%e 5n"ustrial 4ermit $as issue"b* t%e H up to ebruar* 7, 19>6 $%en t%e Notice of Termination $as ser#e" onpri#ate respon"ents' On 19 a* 19>6, pri#ate respon"ents institute" an action a(ainst petitioner forpeci!c 4erformance $it% ama(es' On 12 April 19>9, t%e trial court ren"ere" a "ecision or"erin( petitioner to pa*pri#ate respon"ents t%e amount of 4392,??? $%ic% represente" t%e rentals for t$o*ears, $it% le(al interest from =anuar* 7,19>6 until t%e amount $as full* pai", plusattorne*Js fees in t%e amount of 42?,??? an" costs' :pon appeal b* petitioner, t%e CA a.rme" t%e trial courts "ecision'

ISSUES1' /ON t%e Temporar* :se 4ermit is t%e 5n"ustrial Clearance referre" to in t%econtract2' /ON t%e suspensi#e con"ition issuance of an in"ustrial clearance %as beenful!lle"



' /ON Article 1266 an" t%e principle of rebus sic stantibus appl* to t%is case3' /ON t%e a$ar" of 4392,???'?? representin( t%e rent for t$o *ears is e+cessi#e,consi"erin( t%at 4NCC "i" not bene!t from t%e propert*

HELD1' NO

T%e Temporar* :se 4ermit is not t%e in"ustrial clearance referre" to in t%econtract, for t%e sai" permit re@uires t%at a clearance from t%e National 4ro"uctionControl Commission be !rst secure"' However, petitioner is estoppe" from claimin(t%at t%e Temporar* :se 4ermit $as not t%e in"ustrial clearance contemplate" in t%econtract' 5n its letter "ate" 23 April 19>6, petitioner statesF/e $is% to reiterate 4NCC ana(ementJs pre#ious stan" t%at it is onl* obli(ate" topa* *our clients t%e amount of 42?,???'?? as rental pa*ments for t%e onemont%perio" of t%e lease, counte" from =anuar* 7, 19>6 $%en t%e Industrial Permit $asissue" b* t%e H up to ebruar* 7, 19>6 $%en t%e Notice of Termination $asser#e" on *our clients<' T%e Industrial Permit mentione" in t%e sai" letter coul" onl*refer to t%e Temporar* :se 4ermit issue" b* t%e H =anuar* 7, 19>6' An" it can be(leane" from t%is letter t%at petitioner has considered the permit as industrial

clearance; ot%er$ise, petitioner coul" %a#e simpl* tol" pri#ate respon"ents t%at itsobli(ation to pa* rentals %as not *et arisen because t%e Temporar* :se 4ermit is nott%e in"ustrial clearance contemplate" b* t%em' 5nstea", petitioner reco(nie" itsobli(ation to pa* rentals counte" from t%e "ate t%e permit $as issue"'2' BE Asi"e from t%e letter mentione" in no' 1, it can be "e"uce" from anot%er letter b*petitioner t%at t%e suspensi#e con"ition issuance of in"ustrial clearance %asalrea"* been ful!lle" an" t%at t%e lease contract %as become operati#e' T%e letterstatesF 4lease be a"#ise" of 4NCC ana(ementJs "ecision to cancel or "iscontinue$it% t%e roc- crus%in( pro)ect "ue to !nancial as $ell as tec%nical "i.culties' 5n#ie$ t%ereof, $e $oul" li-e to terminate our ease Contract "ate" 1> No#ember,19>' %oul" *ou a(ree to t%e mutual termination of our ease Contract, -in"l*

in"icate *our conformit* %ereto b* a.+in( *our si(nature on t%e space pro#i"e"belo$'< 5f petitioner t%ou(%t ot%er$ise, it "i" not %a#e to solicit t%e conformit* of pri#ate respon"ents to t%e termination of t%e contract for t%e simple reason t%at no

)uri"ical relation $as create" because of t%e nonful!llment of t%e con"ition' oreo#er, t%e reason of petitioner in "iscontinuin( $it% its pro)ect an" inconse@uentl* cancellin( t%e lease contract $as I!nancial as $ell as tec%nical"i.culties,I not t%e alle(e" insu.cienc* of t%e Temporar* :se 4ermit'' NO T%e fun"amental rule t%at contracts, once perfecte", bin" bot% contractin(parties, an" obli(ations arisin( t%erefrom %a#e t%e force of la$ bet$een t%e partiesan" s%oul" be compile" $it% in (oo" fait%, reco(nies e+ceptions' One e+ception islai" "o$n in Article 1266 of t%e Ci#il Co"e, $%ic% rea"sF 'The debtor in obligations todo shall also be released when the prestation becomes legally or physically impossible without the fault of the obligor.’ However, petitioner cannot successfull*ta-e refu(e in t%e sai" article, since it is applicable onl* to obli(ations Ito "o,I an"not to obli(ations Ito (i#eI' T%e obli(ation to pa* rentals or "eli#er t%e t%in( in acontract of lease falls $it%in t%e prestation Ito (i#eI; %ence, it is not co#ere" $it%int%e scope of Article 1266' At an* rate, t%e unforeseen e#ent an" causes mentione"b* petitioner are not t%e le(al or p%*sical impossibilities contemplate" in t%e sai"article' Lesi"es, petitioner faile" to state speci!call* t%e circumstances brou(%t



about b* Jt%e abrupt c%an(e in t%e political climate in t%e countr*I e+cept t%ealle(e" pre#ailin( uncertainties in (o#ernment policies on infrastructure pro)ects' T%e principle of rebus sic stantibus neit%er !ts in $it% t%e facts of t%e case' :n"ert%is t%eor*, t%e parties stipulate in t%e li(%t of certain pre#ailin( con"itions, an"once t%ese con"itions cease to e+ist, t%e contract also ceases to e+ist' T%is t%eor* issai" to be t%e basis of Article 1267 of t%e Ci#il Co"e, $%ic% pro#i"esF When the

service has become so dicult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part. T%is article,$%ic% enunciates t%e "octrine of unforeseen e#ents, is not, %o$e#er, an absoluteapplication of t%e principle of rebus sic stantibus, $%ic% $oul" en"an(er t%esecurit* of contractual relations' T%e parties to t%e contract must be presume" to%a#e assume" t%e ris-s of unfa#orable "e#elopments' 5t is t%erefore onl* inabsolutel* e+ceptional c%an(es of circumstances t%at e@uit* "eman"s assistancefor t%e "ebtor' T%is Court cannot subscribe to t%e ar(ument t%at t%e abrupt c%an(e in t%e politicalclimate of t%e countr* after t%e EA 0e#olution an" its poor !nancial con"itionIren"ere" t%e performance of t%e lease contract impractical an" inimical to t%ecorporate sur#i#al of t%e petitioner'I 4NCC entere" into t%e contract of lease $it%

pri#ate respon"ents $it% open e*es of t%e "eterioratin( con"itions of t%e countr*' Anent petitionerJs alle(e" poor !nancial con"ition, t%e same $ill neit%er releasepetitioner from t%e bin"in( eect of t%e contract of lease' ere pecuniar* inabilit*to ful!ll an en(a(ement "oes not "isc%ar(e a contractual obli(ation, nor "oes itconstitute a "efense to an action for speci!c performance' /it% re(ar" to t%e nonmaterialiation of petitionerJs particular purpose in enterin(into t%e contract of lease, i'e', to use t%e lease" premises as a site of a roc-crus%in( plant, t%e same $ill not in#ali"ate t%e contract' T%e cause or essentialpurpose in a contract of lease is t%e use or en)o*ment of a t%in(' As a (eneralprinciple, t%e moti#e or particular purpose of a part* in enterin( into a contract "oesnot aect t%e #ali"it* nor e+istence of t%e contract; an e+ception is $%en t%erealiation of suc% moti#e or particular purpose %as been ma"e a con"ition upon

$%ic% t%e contract is ma"e to "epen"'23 T%e e+ception "oes not appl* %ere'3' NO 4etitioner cannot be %ear" to complain t%at t%e a$ar" is e+cessi#e' T%e temporar*permit $as #ali" for t$o *ears but $as automaticall* re#o-e" because of its nonuse$it%in one *ear from its issuance' T%e nonuse of t%e permit an" t%e nonentr* intot%e propert* sub)ect of t%e lease contract $ere bot% imputable to petitioner an"cannot, t%erefore, be ta-en a"#anta(e of in or"er to e#a"e or lessen petitionerJsmonetar* obli(ation' T%e "ama(e or pre)u"ice to pri#ate respon"ents is be*on""ispute' T%e* un@uestionabl* suere" pecuniar* losses because of t%eir inabilit* touse t%e lease" premises' T%us, in accor"ance $it% Article 169 of t%e Ci#il Co"e,t%e* are entitle" to in"emni!cation for "ama(es; an" t%e a$ar" of 4392,??? is fairan" )ust un"er t%e circumstances of t%e case'Disposition 4etition is EN5E'

Case TitleF EATE0N TEECO 4H55445NE, 5NC' D EATE0N TEECOE4OBEE :N5ON

ate of ecisionF EL0:A0B >, 2?11M'0' NumberF M'0' No' 1>66



actsF Eastern Telecom 4%ilippines, 5nc' ET458 plans to "efer pa*ment of t%e 2??13t%, 1t% an" 16t% mont% bonuses sometime in April 2??3' T%e compan*Js main(roun" in postponin( t%e pa*ment of bonuses is "ue to alle(e continuin("eterioration of compan*Js !nancial position $%ic% starte" in t%e *ear 2???'Ho$e#er, ET45 $%ile postponin( pa*ment of bonuses sometime in April 2??3, suc%pa*ment $oul" also be sub)ect to a#ailabilit* of fun"s'

T%e union stron(l* oppose" t%e "eferment in pa*ment of t%e bonuses b* !lin( apre#enti#e me"iation complaint $it% t%e NCL on =ul* , 2??, t%e purpose of $%ic% complaint is to "etermine t%e "ate $%en t%e bonus s%oul" be pai"'

5n t%e conference %el" at t%e NCL, ET45 reiterate" its stan" t%at pa*ment of t%ebonuses $oul" onl* be ma"e in April 2??3 to $%ic% "ate of pa*ment, t%e uniona(ree"' ubse@uentl*, t%e compan* ma"e a su""en turnaroun" in its position b*"eclarin( t%at t%e* $ill no lon(er pa* t%e bonuses until t%e issue is resol#e" t%rou(%compulsor* arbitration'

T%us, on April 26, 2??3, t%e union !le" a Notice of tri-e on t%e (roun" of unfair

labor practice for failure of ET45 to pa* t%e bonuses in (ross #iolation of t%eeconomic pro#ision of t%e e+istin( CLA'

On a* 19, 2??3, t%e ecretar* of abor an" Emplo*ment, !n"in( t%at t%ecompan* is en(a(e" in an in"ustr* consi"ere" #ital to t%e econom* an" an* $or-"isruption t%ereat $ill a"#ersel* aect not onl* its operation but also t%at of t%eot%er business rel*in( on its ser#ices, certi!e" t%e labor "ispute for compulsor*arbitration'

Actin( on t%e certi!e" labor "ispute, a %earin( $as calle" on =ul* 16, 2??3 $%ereint%e parties %a#e submitte" t%at t%e issues for resolution' T%ereafter, t%e* $ere"irecte" to submit t%eir respecti#e position papers an" e#i"ence in support t%ereof

after $%ic% submission, t%e* a(ree" to %a#e t%e case consi"ere" submitte" for"ecision'

On April 2>, 2??, t%e N0C issue" its 0esolution "ismissin( ETE:Js complaint an"%el" t%at ET45 coul" not be force" to pa* t%e union members t%e bonuses for t%e*ear 2?? an" t%e 13t% mont% bonus for t%e *ear 2??3 inasmuc% as t%e pa*ment of t%ese a""itional bene!ts $as basicall* a mana(ement prero(ati#e, bein( an act of (enerosit* an" muni!cence on t%e part of t%e compan* an" contin(ent upon t%erealiation of pro!ts'

T%e CA "eclare" t%at t%e i"e A(reements of t%e 199> an" 2??1 CLA create" acontractual obli(ation on ET45 to confer t%e sub)ect bonuses to its emplo*ees$it%out @uali!cation or con"ition' 5t also foun" t%at t%e (rant of sai" bonuses %asalrea"* ripene" into a compan* practice an" t%eir "enial $oul" amount to"iminution of t%e emplo*eesJ bene!ts'

5ssueF /%et%er or not ET45 is liable to pa* 13t%, 1t% an" 16t% mont% bonuses fort%e *ear 2?? an" 13t% mont% bonus for t%e *ear 2??3 to t%e members of respon"ent union'



ecisionF rom a le(al point of #ie$, a bonus is a (ratuit* or act of liberalit* of t%e(i#er $%ic% t%e recipient cannot "eman" as a matter of ri(%t' T%e (rant of a bonusis basicall* a mana(ement prero(ati#e $%ic% cannot be force" upon t%e emplo*er$%o ma* not be obli(e" to assume t%e onerous bur"en of (rantin( bonuses'Ho$e#er, a bonus becomes a "eman"able or enforceable obli(ation if t%e a""itionalcompensation is (rante" $it%out an* con"itions impose" for its pa*ment' 5n suc%

case, t%e bonus is treate" as part of t%e $a(e, salar* or compensation of t%eemplo*ee'

5n t%is case, t%ere is no "ispute t%at Eastern Telecommunications 4%ils', 5nc' an"Eastern Telecoms Emplo*ees :nion a(ree" on t%e inclusion of a pro#ision for t%e(rant of 13t%, 1t% an" 16t% mont% bonuses in t%e 199>2??1 CLA i"e A(reement,as $ell as in t%eir 2??12??3 CLA i"e A(reement, $%ic% containe" no @uali!cationfor its pa*ment' T%ere $ere no con"itions speci!e" in t%e CLA i"e A(reements fort%e (rant of t%e bonus' T%ere $as not%in( in t%e rele#ant pro#isions of t%e CLA$%ic% ma"e t%e (rant of t%e bonus "epen"ent on t%e compan*Js !nancial stan"in(or contin(ent upon t%e realiation of pro!ts' T%ere $as also no statement t%at if t%ecompan* "eri#es no pro!ts, no bonus $ill be (i#en to t%e emplo*ees' 5n !ne, t%e

pa*ment of t%ese bonuses $as not relate" to t%e pro!tabilit* of businessoperations' Conse@uentl*, t%e (i#in( of t%e sub)ect bonuses cannot be peremptoril*$it%"ra$n b* Eastern Telecommunications 4%ils', 5nc' $it%out #iolatin( Article 1??of t%e abor Co"e, $%ic% pro%ibits t%e unilateral elimination or "iminution of bene!ts b* t%e emplo*er' T%e rule is settle" t%at an* bene!t an" supplement bein(en)o*e" b* t%e emplo*ees cannot be re"uce", "iminis%e", "iscontinue" oreliminate" b* t%e emplo*er'

YAM V COURT OF APPEALSENOA; ebruar* 11, 1999

FACTS On a* 1?, 1979, t%e parties in t%is case entere" into a oan A(reement $it%Assumption of oli"ar* iabilit* $%ereb* petitioners $ere (i#en a loan of 4??,???'?? b* pri#ate respon"ent' T%e contract pro#i"e" for t%e pa*ment of 12Gannual interest, 2G mont%l* penalt*, 1 1&2G mont%l* ser#ice c%ar(e, an" 1?Gattorne*s fees' enominate" t%e !rst 5n"ustrial Muarantee an" oan un" 5M8,t%e loan $as secure" b* a c%attel mort(a(e on t%e printin( mac%iner* inpetitioners establis%ment' 4etitioners subse@uentl* obtaine" a secon" 5M loan of 4??,???'?? e#i"ence" b* t$o promissor* notes, "ate" =ul* , 19>1 an" eptember?, 19>1' or t%is purpose, a ne$ loan a(reement $as entere" into b* t%e partiescontainin( i"entical pro#isions as t%e !rst one, e+cept as to t%e annual interest$%ic% $as increase" to 13G an" t%e ser#ice c%ar(e $%ic% $as re"uce" to 1G perannum' T%e "ee" of c%attel mort(a(e $as amen"e" correspon"in(l*' L* April 2,19>, petitioners %a" pai" t%eir !rst loan of 4??,???'??' On No#ember 3, 19>,pri#ate respon"ent $as place" un"er recei#ers%ip b* t%e Central Lan- an" 0icar"oirio an" Cristina esta)o $ere appointe" as recei#er an" in%ouse e+aminer,respecti#el*' On a* 17, 19>6, petitioners ma"e a partial pa*ment of 4?,???'?? on t%e secon"loan' T%e* later $rote pri#ate respon"ent a letter, "ate" =une 1>, 19>6, proposin( tosettle t%eir obli(ation' On =ul* 2, 19>6, pri#ate respon"ent, t%rou(% its counsel,



replie" $it% a counteroer, namel*, t%at it $oul" re"uce t%e penalt* c%ar(es up to413?,???'??, pro#i"e" petitioners can pa* t%eir obli(ation on or before =ul* ?,19>6' As of =ul* 1, 19>6, petitioners total liabilit* to pri#ate respon"ent $as4727,??1', bro-en "o$n as follo$sF4rincipal 429,369'37

5nterest 16,>'??4enalties 23,>2?'er#ice C%ar(es 11,26'

TOTA 4 727,??1' On t%is "ate, petitioners pai" 431?,>3'37 b* means of a 4ilipinas Lan- c%ec-,receipt of $%ic% $as ac-no$le"(e" b* esta)o' T%e correspon"in( #ouc%er for t%ec%ec- bears t%e follo$in( notationF full pa*ment of 5M OAN'< T%e amount of 431?,>3'37 $as t%e sum of t%e principal 429,369'378 an" t%einterest 416,>'??8 less t%e partial pa*ment of 4?,???'??' T%e pri#aterespon"ent sent t$o "eman" letters to petitioners, "ate" eptember 3, 19>6 an"eptember 2, 19>6, see-in( pa*ment of t%e balance of 4266,136'>>' Aspetitioners "i" not respon", pri#ate respon"ent !le" t%is case in t%e 0e(ional Trial

Court of etro anila for t%e collection of 4266,136'>> plus interests, penalties,an" ser#ice c%ar(es or, in t%e alternati#e, for t%e foreclosure of t%e mort(a(e"mac%ineries' 5n t%eir Ans$er, petitioners claime" t%at t%e* %a" full* pai" t%eir obli(ation topri#ate respon"ent' T%e* conten"e" t%at some time after recei#in( pri#aterespon"ents letter of =ul* 2, 19>6 concernin( t%e con"itional oer to re"uce t%eirpenalt* c%ar(es8, petitioner Dictor Bam an" %is $ife, Elena Bam, met $it% Carlosobrepeas, presi"ent of respon"ent corporation, "urin( $%ic% t%e latter a(ree" to$ai#e t%e penalties an" ser#ice c%ar(es in s%ort, t%ere alle(e"l* $as con"onation8,pro#i"e" petitioners pai" t%e principal an" interest, compute" as of =ul* 1, 19>6,less t%e earlier pa*ment of 4?,???'??' T%is is t%e reason $%* accor"in( to t%emt%e* onl* pai" 431?,>3'37' 4etitioners a""e" t%at t%is fact of full pa*ment is

rePecte" in t%e #ouc%er accompan*in( t%e 4ilipinas Lan- c%ec- t%e* issue", $%ic%bore t%e notation full pa*ment of 5M loan'<

ISSUE/ON petitioners are liable for t%e pa*ment of t%e penalties an" ser#ice c%ar(es ont%eir loan $%ic%, as of =ul* 1, 19>6, amounte" to 4266,136'>>

HELD BE Art' 127?, par' 2 of t%e Ci#il Co"e pro#i"es t%at e+press con"onation must compl*$it% t%e forms of "onation' Art' 73>, par' pro#i"es t%at t%e "onation an"acceptance of a mo#able, t%e #alue of $%ic% e+cee"s 4,???'??, must be ma"e in$ritin(, ot%er$ise t%e same s%all be #oi"' 5n t%is connection, un"er Art' 317, par' 1,obli(ations, actuall* referrin( to cre"its, are consi"ere" mo#able propert*' 5n t%ecase at bar, it is un"ispute" t%at t%e alle(e" a(reement to con"one 4266,136'>> of t%e secon" 5M loan $as not re"uce" in $ritin('Disposition t%e "ecision of t%e Court of Appeals is A50E'

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