Francisco Guttierez Repide vs. Afzetius and Afzetius 39 Phil.

190
Facts: The subject of specific performance, with reference to its common law and civil law status, is to be considered
on this appeal. The particular action is for the specific performance of a contract for the sale and purchase of seal
estate.
The plaintiff is the owner of a certain parcel of realty, the defendants made a proposition to the plaintiff for the
purchase of this property. The property was to be mortgaged to the plaintiff to rescue the payment of this balance.
The plaintiff proceeded to have survey made of the land and to prepare the deed and mortgage. Expenses where
incurred for these purposes. The deed was ready when the defendants were notified to appear and sign the same
but they failed to this and wrote a letter to plaintiff.
Plaintiff was, and still is, willing to execute the deed in accordance with the terms agreed upon with the defendants.
Accordingly, plaintiff, in his action in the court of First Instance of the City of Manila, asked judgment against the
defendants condemning them to sign the deed and mortgage to the land in question, and to pay the purchase price
stipulated with costs.
Issue: Whether or not the defendants are able to perform the contract is a matter of defense, and there is no special
defense on that subject in the answer.
Ruling: The judgment then was in favor of the defendants, dismissing the plaintiffs complaint, without prejudice to
any other remedy which the plaintiff might have, and without any finding as to the costs.
The plaintiff and appellant bases his argument or articles 1254, 1258, 1278, 1450, and 1279 of the Civil Code. The
provisions of the five articles first cited and others that could be mentioned merely tend to corroborate what is selfevident, namely, the existence of a valid contract between the parties. Indisputably, there has been an offer and an
acceptance, and all that remained to effectuate the contract was the execution of the deed and the mortgage.
Here we have presented a good and valid contract, bilateral in character, and free from all taint of fraud. The stability
or commercial transaction requires that the rights of the seller be protected just as effectively as the right of the buyer.
If this plaintiff had refused to comply with the contract, specific performance of the obligation could have been asked
by the defendants. Just as surely should the plaintiff who has lived up to his bargain and who has been put to
expense to do so, be permitted to coerce the defendant into going through with the contract.
The excuse of the defendants is that they do not now have the money to pay the first installment. In other words, they
plead impossibility of performance. The rule of equity jurisprudence in such a case is that mere pecuniary inability to
fulfill an engagement does not discharge the obligation of the contract, nor does it constitute any defense to a decree
for specific performance.
Judgment reversed.
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OBLIGATIONS AND CONTRACTS | Civil law

TAGUILIG VS. CA
Herce contracted Tanguilig to construct a windmill system for him, for consideration of 60,000.00. Pursuant to the
agreement Herce paid the down payment of 30,000.00 and installment of 15,000.00 leaving a 15,000.00 balance.
Herce refused to pay the balance because he had already paid this amount to SPGMI which constructed a deep well
to which the windmill system was to be connected since the deepwell, and assuming that he owed the 15,000.00 this
should be offset by the defects in the windmill system which caused the structure to collapse after strong winds hit
their place. According to Tanguilig, the 60,000.00 consideration is only for the construction of the windmill and the
construction of the deepwell was not part of it. The collapse of the windmill cannot be attributed to him as well, since
he delivered it in good and working condition and Herce accepted it without protest. Herce contested that the
collapse is attributable to a typhoon, a force majeure that relieved him of liability.
The RTC ruled in favor of Tanguilig, but this decision was overturned by the Court of Appeals which ruled in favor of
Herce

ISSUES OF THE CASE:

Can the collapse of the windmill be attributed to force majeure? Thus, extinguishing the liability of Tanguilig?
HELD:
- Yes, in order for a party to claim exemption from liability by reason of fortuitous event under Art 1174 of the Civil
Code the event should be the sole and proximate cause of the loss or destruction of the object of the contract.
- In Nakpil vs. Court of Appeals, the S.C. held that 4 requisites must concur that there must be a (a) the cause of the
breach of the obligation must be independent of the will of debtor (b) the event must be either unforeseeable or
unavoidable; (c) the event be such to render it impossible for the debtor to fulfill his obligation in a normal manner;
and (d) the debtor must be free from any participation in or aggravation of the injury to the creditor.
- Tanguilig merely stated that there was a strong wind, and a strong wind in this case is not fortuitous, it was not
unforeseeable nor unavoidable, places with strong winds are the perfect locations to put up a windmill, since it needs
strong winds for it to work.
WHEREFORE, the appealed decision is MODIFIED. Respondent VICENTE HERCE JR. is directed to pay petitioner
JACINTO M. TANGUILIG the balance of P15,000.00 with interest at the legal rate from the date of the filing of the
complaint. In return, petitioner is ordered to "reconstruct subject defective windmill system, in accordance with the
one-year guaranty" and to complete the same within three (3) months from the finality of this decision.

OBLIGATIONS AND CONTRACTS | Civil law

Obligations and Contracts Terms:

Fortuitous Events- Refers to an occurrence or happening which could not be foreseen, or even if foreseen, is
inevitable. It is necessary that the obligor is free from negligence. Fortuitous events may be produced by two (2)
general causes: (1) by Nature, such as but not limited to, earthquakes, storms, floods, epidemics, fires, and (2) by the
act of man, such as but not limited to, armed invasion, attack by bandits, governmental prohibitions, robbery,
provided that they have the force of an imposition which the contractor or supplier could not have resisted.

BAYLA vs SILANG TRAFFIC COMPANY

Facts: Petitioner (subscriber) entered into an agreement with respondent (seller) regarding the purchase of fifteen
(15) shares of capital stock by the former from the latter for the sum of P1, 500.00. Said agreement has with it certain
terms and conditions, among which are cases where the subscriber shall fail to pay the installments or to perform the
conditions or if said shares shall be attached or levied upon by creditors of the subscriber, said shares are to be
automatically reverted to the seller and the payments already made are to be forfeited in favor of the seller.
On or before July 31, 1937, petitioners failed to pay the installment due that day resulting for the automatic forfeiture
of the payments they already made. On the other hand, on August1, 1937, the respondent corporation issued a
resolution was authorizing the refund of the installments already paid by their subscribers. Said resolution was issued
by respondent for the purpose of terminating the pending civil case involving the validity of the shares in question
which was subsequently dismissed. Based on the said resolution, the petitioners instituted an action for the recovery
of the sum of money which they have paid severally to the corporation. The corporation set up a defense stating that
said resolution was no longer applicable to the petitioners since their shares was already reverted in favor of the
seller due to their failure to pay on the due date long before the resolution was issued. Moreover, another resolution
was issued by the corporation on August 22, 2937 revoking and cancelling the earlier resolution. The trial court
issued an order against the petitioners; and on appeal, the CA affirmed the decision of the trial court with some
modifications as to the cancellation of the petitioners subscription which was reversed by said appellate court.
Hence, an appeal by both parties for certiorari.
Issues: 1. WON the said contract is a subscription or a sale of stock
2. WON under the contract between the parties the failure of the purchaser to pay any of the quarterly
installments on the purchase price automatically give rise to the forfeitures of the amount already paid and the
reversions of the shares to the corporation.
3. WON the resolution of August 1, 1937 is valid.
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OBLIGATIONS AND CONTRACTS | Civil law

Held: Judgment against the defendant.

Whether a particular contract is a subscription or a sale of stock is a matter of construction and depends upon its
terms and the intention of the parties. It should be noted that the agreement entered into by the parties in this case is
entitled Agreement for Installment Sales of Shares in the Silang Traffic Company, Inc. It also appears that in the civil
case which was earlier dismissed, the CFI mentioned the right of the corporation to sell the shares of stock to the
person named in the resolution, including the petitioner, was impugned by the petitioners in the said case, who
claimed a preferred right to buy said shares. This shows that said contract is simply a contract of purchase and sale.
A purchase is an independent agreement between individual and the corporation to buy shares of stock from it at a
stipulated price; different from that of a subscription which is a mutual agreement of the subscribers to take and pay
for the stock of the corporation.
With regards to the second issue, the provision regarding interest on deferred payments would not have been
inserted if it had been the intention of the parties to provide for automatic forfeiture and cancellation of the contract.
Moreover, the contract did not specifically provide that the failure of the purchaser to pay any installments would give
rise to forfeiture and cancellation without the necessity of any demand from the seller. Under article 1100 of the Civil
Code (Now art. 1169 of the NCC) persons obliged to deliver or do something are not in default until the moment the
creditor demands of them, judicially or extrajudicially, the fulfillment of their obligation, unless the law expressly
provides that demand is no longer necessary in order that default may arise, or if the time of delivery or service is a
controlling motive for the establishment of contract.
As to the third issue, the resolution which was made for the good of the corporation and for the termination of the civil
case benefited other petitioners. It would be an unjust discrimination to deny the same benefit to the herein
petitioners.

La Compaia General de Tabacos deFilipina v. Vicente ArazaGR No. 3019-February 9, 1907

Facts:
Araza (the defendant) has a debt of 8000 pesos to Compania General which is payable by installment (500 pesos on
the30th of June, 1901, and the remainder at the rate of 100 pesos a month, payable on the30th day of each month).
Defendant failed to pay the installment only paying 400pesos. Thus, Compania General Instituted this action seeking
the foreclosure of the mortgage for 8,000 pesos (the entire amount of mortgage). The defendant alleges that the
document, which was the basis of the plaintiff's claim was executed by error on his part and through fraud on the part
of the plaintiff.
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OBLIGATIONS AND CONTRACTS | Civil law

Issue:
Does the creditor hold a right to recover the whole amount of the mortgage on the ground that debtor failed to pay the
installment?
Held:
NO. The case was instituted on the trial court on June 12, 1901. Given that, the only demandable payment is the 100
pesos to complete the first agreed installment. The court gave credit to the 400 pesos which Arza admitted to have
paid and was received by the plaintiff. The Compania General has no right to recover what is not yet demandable nor
due. Likewise, the contract contains no provision that upon the failure of the debtor to pay one of the installment, the
total amount of debt should be paid at once.
Rationale:
We are of the opinion that the obligation can be enforced in this action for only the amount due and payable on
the12th day of June, 1903.

The contract does not provide for the payment of any interest. There is no provision in it declaring expressly that the
failure to pay when due should put the debtor in default. There was therefore no default which would make him liable
for interest until a demand was made. (CivilCode, Art. 1100; Manresa, Com. on CivilCode, vol 8, p. 56.)

OBLIGATIONS AND CONTRACTS | Civil law