OBLICON

Case Ticklers

I. DEFINITION AND CONCEPT

A. Definition
Art. 115 in relation to Art. 2236
B. Distinguished from natural obligation
Art. 1156 in relation to 1423
C. Elements
D. Sources of Obligation
Sagrada Orden Vs Nacoco Kinuha ng Hapon
ang lupa.
Action to recover parcel of land owned by P, and
then because of Japanese war was acquired by
other parties, then possessed by the US govt thru its
custodian then possessed by the defendant without
agreement with the US or with the plaintiff, and def
then leased a part of the land.
Issue: WON defendant is liable to Sagrada and must
pay the rentals.
Held: No. If liable at all must arise from any of the
four sources of obligations. APA was a trustee of the
US and if def liable, not to plaintiff but to US govt.
But defendant not liable for rentals bec no express
agreement bet the APA and Nacoco. Existence of
implied agreement is contrary to the circumstances.
Source: Contract. But there was none.
Pelayo vs. Lauron husband vs. in-laws
1906-Pelayo complained against Lauron and Abella.
Pelayo a doctor, rendered service to daughter-in-law
then demanded P500 from def.
Issue: WON Lauron is liable.

Held: No. Husband liable. Art. 142 and 143 or Family

Code. Rendering medical assistance, mutual oblig.
Oblig not presumed. Those expressly determined in
the Code or in special laws are the only demandable
ones.
Source: Laws. Family Code.
Leung Ben vs. OBrien - Gambling
O Brien filed an action in the court of CFGI of Manila
to recover from Leung Ben the sum of P15,000
alleged to have been lost by OBrien to Leung Ben in
a series of gambling, banking and percentage
games:
Issue: WON OBrien can recover the money from
Leung Ben.
Held: Yes. Upon general principles, recognized both
in the civil and common law, money lost in gambling
and voluntary paid by the loser to the winner
cannot, in the absence of statute, be recovered in a
civil action. But Act. No. 1757 of the Phil. Comm,
which defines and penalized different forms of
gambling contains numerous provisions recognizing
the right to recover money lost in gambling. It must
therefore be assumed that the action of plaintiff was
based upon the right to recovery given by section 7
of said Act, which declares that an action may be
brought against the banker by any person losing
money at a banking or percentage game.
Source: Law. Phil Comm and Civil Code.
Peoples Car Inc. vs. Commando Security
Service Agency. Sekyu nangarap magdrive ng
kotseng hindi kanya, naaksidente.
P and D entered into a contract where D was hired
to render security services to P and safeguard and
protect business premise. One of the guards of D
took one of the cars under custody of P and drove it
and lost control. The owner demands damages from
P but P claims D should be liable, solely.

Issue: WON P is liable to owner.

Held: Yes. Owner has no privy or contract with D
only with P. Owner can demand from P and P can
demand from D liabilities.
Source: Contract.
Pichel vs Alonzo coconut fruits.
Board of Liquidators filed annulment of Deed of Sale
of Alonzo to Pichel. Accdg to the law which awarded
the land to Alonzo, RA 477, the land cannot be
encumbered to anybody. Alonzo sold the coconut
fruits of the coconut land.
Issue: WON there was a violation of the law which
gave the land to Alonzo.
Held. No. It was not the land that was encumbered
but the coconut fruits. Possession of the coconut
trees cannot be said to be the possession and
enjoyment of the land itself. Accessory vs.
Principal=transfer of accessory not transfer of
principal. Accessory follows principal and not the
other way around. Law does not prohibit the
disposition of industrial or natural fruits.
Source: Law
**What are the essential elements of a contract to
make it valid?
Del Rio vs. Palanca Hindi naman ikaw ang
tatay, bakit ka nagbibigay.
Del Rio wanted to recover money which he
furnished to the family of defendant for the support
and subsistence of the defs 5 children.
Issue: WON P can recover money.
Held: No. There are qualifications: a) support given
to dependent of one who is bound to give support
but fails to do so b) support supplied by a stranger

c) support was given without the knowledge of the

person charged with the duty. 3rd req lacking. Def
knew about support and even disagrees with it.
Source: Law. Article 1894 of CC which gives
qualifications.
People vs. Ritter Rape!
Rape of a 12-yr-old girl allegedly by Appellant who
inserted a foreign into her vagina causing her death.
Criminal case and civil case was filed against the
defendant.
Issue: WON def liable on both cases.
Held: No. Only with regard to the civil case. Crim
case requires evidence beyond reasonable doubt.
While civil cases require only preponderance of
evidence.
Source: Criminal offenses.
punished by the law.

Acts

or

omission

**Institution of Civil Case while pending criminal

case, is reservation to the right to file the former
necessary or can file anytime within the pendency
of the criminal case?
Andamo vs IAC Water Overflow
P owner of parcel of land adjacent to the land of
Missionaries of our Lady of Lasalletta. Latter
constructed waterpaths and contrivances which
eroded petitioners land and damaged crops, plans.
Criminal action was instituted and then filed a civil
action.
Issue: WON filing of the civil case was proper.
Held: Yes. Art. 2176, by fault or negligence.
Separate civil action lies against the offender in a
criminal act whether or not he is criminally
prosecuted and found guilty or not. Only that the

offended party not allowed to recover damages on

both scores.

b. WON agreement bet Planters and Victorias were

permissible under RA 809

Source: Quasi-Delict, Law.

Held: a. NO. Legal basis is that arising from law

which does not impose upon Centrals any liability,
whether expressly or impliedly, any joint and
several liability. No contract bet sugar mill and the
laborers. Principal liability on Planters and
secondarily on Dept or Labor.

** Distinguish civil liability arising from crime and

that from quasi-delict.
Federation
Increase

of

Free

Farmers

vs.

CAPalay

There are 4 parties in this case: a. FFF (union

representing the farmers) b. Planters (the group
which harvests the lands where the farmers work) c.
Santos and Tikol (individual planters) d. Central or
Victorias (milling corp, Planters bring their harvest
here to be milled).
The law, Sugar Act of 1952 - RA 809 stipulates that
any increase in the share of proceeds of milled
sugarcane and derivatives obtained by planters
from the Central, 60% of said increase should be
paid by planters to their respective laborers.
1. FFF alleged that they have not been paid
from 1952-53 despite the 10% increase and
from 1953-1974 with the 4% increase. CA
ruled planters and Victorias jointly and
severally liable. FFF claimed too that Planters
and Victorias entered into an agreement
when they have no legal right bec the law
has already provided the ratio of division.
2. Victorias claimed that they should not be
held jointly and severally liable. The action
filed was not founded on torts but on either
an obligation created by a contract or by law,
and even if on torts, the action has
prescribed. They have paid the Planters so
the Planters should only be the one sued.
3. Planters claim they have freedom to stipulate
ration as they might agree. And that they
have paid the laborers.
Issue: a. WON Planters and Victorias should be
severally liable

b. YES. RA 809 applicable only in the absence of a

written milling agreement or in the absence of any
stipulation on the benefits which the laborers are
entitled.
Source: Law and Contract
**Brinas vs.
Konduktor

People

Maling

Sigaw

ng

Brinas convicted for double homicide thru reckless

imprudence but acquitted Bunecamino (asst
conductor) and Millan (engineman), Brinas was the
conductor. Brinas told the passengers that they are
near the town but before the victims were able to
alight, train already caught up speed. During the
pendency of the criminal action, the heirs of
deceased filed separate civil action against Manila
Railroad Company.
Issue: WON the civil action can be pursued on the
pendency of the civil action.
Held: Yes. Source of obligation is that of a culpacontractual and not an act or omission punishable
by law. Two different sources of oblig. Institution of
criminal action on the case does not interrupt the
separate civil action for damages based on quasidelict for the same accident. Reckless Imprudence
vs. Quasi-Delict. Reckless imprudentPrincipal, Art.
2176 person who caused the crime liable, Art. 2180
solidary liability of employer.
Source: Culpa-Contractual.

**Tan
vs.
Nifatan
Isa-isa
namamatay, na-acquit pa.

na

silang

Lim of a wealthy family was shot dead by the Tan

brothers. But the Tan brothers one by one died
before the instant petition could be filed. The wife of
Lim with the children instituted an action for
damages against charged 10 years from the
happening of the crime. Tans filed motion to
dismiss because of acquittal.
ISSUE: a. WON the action has prescribed.
b. WON civil action would still prosper even when
the accused were acquitted.
Held: a. No. Action for prescription for liabilities and
charges of crimes is 20 years.
b. Yes. The reason for acquittal was not stated or
explained and Art. 33 allows independent civil
action in case of physical injuries including death.
(ROC?).
10 years prescription for actions when source is
created by law. 5 years when not fixed by the Code
or other laws. 20 years for crimes or delicts as
source of obligations.
Source: Delict or Crimes.
People vs Abungan namatay yung kriminal
Abungan convicted of murder sentenced to RP and
ordered to pay indemnity of P50,000. Abungan died.
Issue: WON death of Abungan extinguishes his
criminal and civil liability
Held: Yes. Extinguised based on delicts. Art. 89(1) of
RPC, death of convict occurs before final judgment,
extinguished.
But only criminal
liability is
extinguished and also the civil liability directly
arising from and based solely on offense. Claim for

Civil liability survives if the same may also be

predicated on a source of oblig other than delict.
Source: Crimes or Delicts. Acts or omission.
DBP vs CA Restructuring of Debt
DBP granted PHUMACO and PHILICO an industrial
loan for P2.5M, 2M in bonds and 500k in cash.
Promissory note executed and a mortgage over their
present and future properties. DBP granted another
loan of 1.7M reflected in the amended mortgage
contract. After 7 yrs the outstanding balance was
restructured bec Resp failed to pay. Resp still failed
to pay under the restructured payment. DBP
refinanced the matured obligation and granted 3
foreign currency denominated loans. Apart from
interest, there are additional charges and penalties
in case of default. After 10 years, DBP initiated for
forclosure of mortgaged prop and the balance shoot
up to P63M. Resp claim that reason for non-payment
is because financial rehabilitation from a contract
with the military didnt push thru.
Issue: WON the resp can claim without fault in
default of the non-happening of the contract with
the military.
Held: NO. DBP is no party to resp and AFPs
contract. Resp can claim from AFP but without
prejudice to its contract with DBP. DBP has given
Resp all the possible options for payment.
Source: Contract
II. NATURE AND EFFECTS OF OBLIGATION
A. Obligation to give
1. Determinate Thing
Equatorial vs. MayfairRight of First Refusal
Carmelo owned a parcel of land with 2-storey
building and leased said portions to Mayfair. On
their contract, stipulation that Mayfair has 30-day

exclusive option to purchase the same should the

lessor decide to sell the leased premises. But
Carmelo wanted to sell the whole property. He sold
entire prop to Equatorial. Mayfair filed for annulment
of sale bec of lack of consideration. Mayfair claimed
that he told Carmelo that it is willing to purchase the
same and that it has the right of first refusal.
Issue: WON the sale can be nullified because of
Mayfairs action
Held: The contract is deemed rescinded. Rescission
a relief allowed for protection of
one of the
contracting parties and even 3rd persons from injury
or to protect some incompatible and preferred right
by the contract. Mayfair has the opportunity to
negotiate.
Determinate Thing: There is a problem because
determination cannot be made bec prop is
indivisible. You cannot pinpoint which is the 25% of
the property. Determination of the exact portion of
the building.
De Leon vs. Sorianobigyan ng palay si nanay.
Natural children of Soriano agreed that they are to
deliver certain number of cavanes of palay each
year to Soriano and shall only cease upon death of
mother. But deliveries were of 3,400 cavanes and
children claimed that due to Huk troubles in Central
Luzon.
Issue: WON inability to deliver was permissible due
to force majeure
Held: No. The object to be delivered was generic
and set no bounds or limits to the palay to be paid.
Any palay of the same quality can replace.
Impossibility must consist in the nature of the thing
to be done and not the inability of the party to do it.

Norkis vs. CAAko ang bumili ng motor iba

ang gumamit.
Nepales bought a motorcycle from Norkis and
issued a chattel mortgage in favor of DBP. Invoice
was issued and motorcycle was registered by Norkis
evidenced by receipts of registration. Motor was
delivered to a certain Julian Nepales and an accident
happened while being driven by a certain Payba.
Norkis claims it cannot be held liable since
ownership was already transferred to Nepales
evidenced by the receipts and the invoice.
Issue: WON ownership was transferred to Nepales.
Held: No. No actually delivery nor constructive one.
The receipts of reg fees and the invoice is nothing
but a detailed statement of the nature and quantity
sold and not a bill of sale. Intent considered. Intent
was not to transfer ownership but to facilitate
execution of chattel mortgage.
Determinate Thing: The motorcycle was a generic
thing. (?)
Heirs of Juan San Andres vs. RodriguezBinili
ko na ang nakapaligid na lupa.
JSA sold 345 sqm lot to Rodriguez. There was a deed
of sale. JSA died and Rodriguez appointed
administrator. The heirs engaged services of a
geodetic engg and found out that resp has
encroached the lot by 509 sqm. They sent letter to
vacate. Resp claimed they bought the said portion
of the lot the ff day when they first bought the 345
sqm lot. Proof of sale was attached and that payable
in 5 years. Resp deposited the balance in court.
Issue: WON there was a contract of sale.
Held: Yes. There was a contract of sale which
transferred the ownership to resp. Pet claimed that
the object cannot be determined with sufficient
certainty. Court held that it is capable of being
determined w/o need for new contract and the

receipts showed that payment was to the lot

adjoining the prev paid lot on three sides thereof.
The land is determinate or determinable. Ownership
transferred by constructive delivery which is the
execution of public document.
Determinate Thing: The lot.
2. Generic Thing
Norkis vs. CA
Generic thing: motorcycle
PLDT vs. JeturianPension bago gera.
PLDT adopted in 1923 a Plan for Emloyees Pension.
In 1945 the BOD adopted a resolution discontinuing
the pension plan. Hence this action of Resp.
Issue: WON the pre-war employees are entitled to
the pension.
Held: Yes. But with the exception of those who died
or left before the outbreak of the war. The pension
plan was not a gratuity but an inducement for
employees to continue indefinitely in service. The
plan ripened into a binding contract upon its implied
acceptance of the employees. Acceptance is
inferred from their entering the employ of the
company and staying after the plan was made
known. PLDT argues that it can only be held liable
under the conditions expressly set in the pension
plan. But the Court held that the Company that
violated the contract with its employees, by
discontinuing the plan without their consent, is not
in the position to insist upon the terms of the very
contract they have breached.
CO vs. CApinagawa kong kotse, na-carnap.
Pet entrusted his car to Resp to make same job
repair services and supply of parts which was to be
returned after 3 days as per the contract. Pet paid in
full. After 3 days the vehicle cant still be released

due to failed battery so pet bought battery. When

Pet was about to get it, resp said the car was
carnapped while being road-tested. Resp claims
force majeure.
Issue: WON Resp will be liable for the carnapping.
Held: Yes. It was due to negligence premised on
delay which is the basis of the complaint.
Carnapping cannot be considered as fortuitous. It
must be proved and established that it is an act of
God. No other evidence but the police report. Even
when Pet agreed to resked repair, cant be taken as
waiver bec he really has no other choice but to
leave it since he cant have it run.
3. Effect of Loss
Bunge vs. CamenforteCopra ko sayo binenta
ko.
Plaintiffs filed to recover certain damages from the
def bec of the latters failure to deliver Phil copra
they agreed to deliver. A contract was entered into
where the VPC sold 500 tons of Phil Copra to BC.
The vendor would ship the copra to USA but even
with demands, failed to do so. The vendee however
believed in good faith that it shall be delivered so it
sold the expected copra to EDOW. Bec vendor failed,
vendee suffered damages. VPC denies contract and
said that Vicente, the manager who contracted had
no authority to do so. Force majeure is also claimed
since a storm destroyed the bodega.
Issue: WON VPC is held liable.
Held: Yes. Subject matter is Phil Copra, does not
refer to any particular or specific copra. Since
generic, obligation cant be deemed extinguished by
the destruction/disappearance. Obligation subsists
as long as commodity is available. Pet can also sell
the copra which they expect to acquire in the future
for purposes of speculation.

Effect: Subsistence
object.

of obligation

since

generic

Ocena vs. Jabsonsubdivision na kontrata,

maling akala.
Resp filed a complaint for modification of the terms
and conditions of its subdivision contract with
petitioners. Allegations are that price in oil and
derivatives have increased, not within the control of
the plaintiff. It will cause unjust enrichment to the
pet. In the contract, the pet are guaranteed as
landowners and that they will receive 40% of all
cash receipts from the sale of the subdivision lots.
Resp hinged their argument on 1267 when the
service
has
become
so
difficult
beyond
contemplation, release from obligation.
Issue: WON there is a sufficient cause of action for
modification of the subdivision contract.
Held: No. Cited article does not grant the courts this
authority to remake, modify or revise the contract.
Their contract has a force of law and should there
be substitution or modification, it should be
amongst the parties themselves. A showing of mere
inconvenience,
unexpected
impediments
or
increased expenses is not enough. Equity cannot
relieve from bad bargains simply bec they are such.
Effect: The contract has the force of law.

B. Obligation to do
Hahn vs. CAI want these diamond rings.
Santos received 2 diamond rings with a total
amount of 47K. She issued separate receipts
therefore in which she acknowledged that they have
been delivered by Letty Hahn for sale on
commission and that they would be returned upon
demand if unsold. The rings were not sold nor
returned after demand. Thus this action.

Issue: WON the contract was of sale or agency.

Held: Of agency. There is no evidence that would tell
that is was of sale. Their contracts stipulation does
not show it was of sale. Although resp was willing to
give a different object, the debtor cannot compel
the creditor to receive a diff object.
To do: Deliver the rings, the specific rings.
Chavez vs. GonzalesDahil sa typewriter.
P delivered to D a typewriter for D to repair. D was
not able to repair the typewriter and asked for P6 for
spare parts. P went to D and demanded the
typewriter which D gave in a wrapped package.
When P opened it at home, he saw that the
typewriter had missing parts and found it in
shambles. P demanded missing parts, interior cover
and P6. P brought it to a diff repair shop and spent
P89.95. P filed for payment of P90 and damages.
Issue: WON D is liable for damages.
Held: Yes. 1167 states that when a person is obliged
to do something and fails to do the same, it shall be
executed at his cost. What is poorly done be
undone. D claims no period but Court held that
fixing a period would only be a mere formality and
would serve no purpose than to delay. Liable under
1170.
To do: Specific performance repair typewriter.
Oceana
vs
Jabsonsubdivision
maling akala.

kontrata,

To do: To give 40% of the cash receipts from sale of

subdivision lots.
**Woodhouse vs. HaliliMission Softdrinks
P and D entered into an agreement that they will
form a partnership for the bottling and distribution

of Mission softdrinks, P as manager and D as

capitalist. When the bottling plant was in operation
P wants to execute the partnership papers but D
refuses. D claims that he was made to believe that P
has the exclusive ownership of the bottling
franchise.
Issue: WON the misrepresentation of P can vitiate
the contract.
Held:
No.
Although
P
was
guilty
of
misrepresentation,
it
was
not
the
causal
consideration or the principal inducement that led
defendant to enter into the partnership. D may not
be compelled to carry out the agreement which is to
execute the partnership papers. The defendant has
obligation to do and not to give. The D reduced the
percentage of P from 30% to 15% bec of his
misrepresentation.
Obligation to do: Execute partnership contract.
Ong vs. BognalbalShe wants her Kenzo Tiles,
now na.
Bognalbal was an architect hired by Ong who was a
businesswoman to construct her boutique. Bog
agrees to furnish labor within 45 days and owner to
pay every 2 weeks based on the accomplishment of
work value. 4th billing came and Ong refused to pay
but reason was not clear on the record. She wanted
to change Vinyl tiles to Kenzo flooring. Ong claimed
Bog abandoned job.
Issue: WON Bog be liable for abandoning job.
Held: No. He is not liable but is not justified for doing
so. 1191, it was a reciprocal obligation and there is
power to rescind it in case one doesnt comply with
what is incumbent upon him. But this article should
be judicially invoked. Novation is not presumed.
There must be an express stipulation. Novation a.
change of obj or principal conditions, b. substituting
person of debtor c. subrogating 3rd person in the
rights of creditor. Liability is on the first infractor,
1192. There has been no contract novation that

required Bog to finish the Kenzo flooring before the

4th billing shall be paid. 1186. Condition shall be
deemed fulfilled when the obligor voluntarily
prevents the fulfillment.
To do: Pay 4th billing. (Reciprocal-di mo ginawa di ko
rin gagawin-pero sabi nga ng court hindi pa rin yun
justification, but only the first infractor shall be
liable).
C. Obligation not to do
Fajardo vs. Freedom to BuildWag dagdagan
kung hindi bawasan!
FTB, owner-developer and seller of low-cost housing,
sold to petitioner-spouses a house and lot.
Restrictive covenant was contained in the contract,
easement. No upward and front expansion which is
contained in their Transfer Certificate. Pets children
are to wed so extended their house thus
contravening the terms of contract. Pet filed,
demolish the unauth structures.
Issue: WON resp has the auth to ask for demolition
since ownership already transferred to the prop
owners or homeowners association.
Held: Yes. Restrictive covenant should still be
followed. Although courts generally view restrictive
covenant with disfavor but sustain them if
reasonable, not contrary to public policy, law etc.
Intent of developer was to provide safety, aesthetic
and
decent
living
conditions
and
prevent
overcrowding. Art. 1168, when ob consists in not
doing, obligor does what was forbidden, shall be
undone at his expense.
Not to do: Expand structures of house.
D. Effect of Breach
1. Delay in Performance

Villaruel vs. Manila MotorsKasalanan

lawyer, naningil ng renta nung may gera.

ng

Manila Motors and Villaruel entered into a contract

whereby the former agreed to convey by lease to
the latter some premises. The term of lease is 5
years. The premises were invaded by the Japanese
and then the American occupied the same building.
The occupants paid the same rate as the defendants
after which they have vacated the premises. Def
renewed contract for addtl 5 yrs. Pet, as per his
lawyers advise, demanded for rental from the Def
for the period when the Jap and the Americans
occupied the premises. The premises was set on fire
and the reason was unknown.
Issue: WON Pet has power to demand rentals and
recover the same due to default.
Held: No. Art. 1554 of CC of Spain states the duties
of a lessor. A. deliver to the lessee the subject
matter b. make thereon, during the lease, all repairs
necessary and maintain serviceable condition c.
maintain lessee in peaceful enjoyment of lease.
1560, lessor shall not be liable for any act of mere
disturbance of 3rd person but lessee would have
direct action against trespassers. No lessee would
agree to pay rent for premises he could not enjoy.
Delay in performance: It was the creditor who was in
default or delay when it refused to get the payment
given by the resp.
Lopez vs. Tan TiocoIbenta mo ang asukal
pag sinabi kong ibenta mo.
Lopez and Tan Tioco entered into a verbal contract
that shell deliver certain sugar to Tan Tioco which
he obligated himself to store until he receives
instructions from her to sell them. She delivered the
piculs of sugar and instructed to sell in on Sept 1904
but def did not do so. Pet filed action. Def denies
allegations.
Issue: WON the defendant was in default.

Held: Yes. He was in default from the time the Pet

demanded to deliver or do something, or the
fulfillment of the obligation. Neither the contract nor
the law demands to make judicial demand than
extrajudicial. The price of the sugar should be from
the time she instructed the def to sell them.
Delay in Performance: Delay in selling the sugar
upon instructions.
Dela Rosa vs. BPIAtat sa announcement ng
winners ng design contest.
BPI held this contest of designs and plans for the
construction of a building. Prizes would be awarded
not later than Nov. 30, 1921. Plaintiff took part in
the said contest and after the date stipulated, the
bank
didnt
award
prize
nor
made
any
announcement. Plaintiff filed.
Issue: WON BPI was in default when it did not
release the announcement on the date stipulated.
Held: The bank cannot be held in default through
the mere lapse of time. Plaintiff never demanded
from bank and just filed the case in Court. A binding
obligation may originate from advertisements
addressed to the general public. Demand will not be
necessary only in certain conditions, but demand is
indispensable as a general rule. Plaintiff has no
cause of action bec he alleges that the contest
didnt push thru but in consideration of the
evidence, the materials are on their way to New
York and were sent to a technical committee.
Delay: Bank was not in default. No demand.

Lizares vs. HernaezCamarin was burned and

lessee wont pay.

Lizares and Hernaez entered into a contract, the

former became the lessee of the two haciendas. Pet
used one of the improvements there which was a
roofed camarin used in manufacture of sugar. A fire
occurred and destroyed the camarin. Pet demanded
from Def that he reconstruct camarin. Def refused.
Pet did not pay the rentals bec of non-construction
of the camarin. Def claims Pet should be liable for
the fire since he is the lessee when the fire
occurred.

reduced due to suspension since the pet was

generous enough to compute only from 1948, the
truck was commandeered in 1941. Def could have
filed a claim from the US govt and he would have
been paid but he failed to do so.

Issue: WON plaintiff has

damages caused by fire.

Tabora bought books from Pet and made partial

payment. It was delivered to his law office. On the
same date, a fire broke out in the office and
destroyed the building including the books. Def
doesnt want to pay balance since the books were
loss due to force majeure and the ownership has not
been transferred to him yet.

responsibility

to

the

Held. No. And so is the def. Force Majeure. But the

plaintiff is in default with regard to the non-payment
of rentals due to non-construction of camarin.
Although there is presumption against lessee when
loss in the leased prop occurs, proof is necessary to
prove he is not responsible. 1183. When a thing is
lost while in the possession of the debtor, it is
presumed that it loss occurred by his fault and not
by fortuitous even in the absence of the contrary.
Delay: Not in the Def for non-construction but in
Plaintiff in non-payment of rentals.
Bachrach Motor vs. Lee TayKinuha ng Kano
ang truck niya, ayaw na niyang magbayad.
Def executed and delivered to the plaintiff a
promissory note payable in installments which
represents the balance of one white chasses
purchased by def from pet. The truck was delivered
to the def. After the outbreak of war, the truck was
one of the trucks that were commandeered by the
USAFEE. Neither the plaintiff not def filed an official
claim from the US govt.
Issue: WON the commandeering of the truck
exempts the def from payment of the obligation
represented by the prom note.
Held: No. There is no principle of law by which the
obligation was extinguished. The interest was not

Delay: Non-payment of the prom note.

Lawyers Coop Pub vs. Taborabumili ng law
books, nasunog.

Issue: WON force majeure can be claimed by

defendant from his non-fulfillment of obligation.
Held: No. Ownership was already transferred to the
buyer. Although there has been an agreement that
the ownership shall remain with the seller until the
price has been fully paid, it was only for the security
of payment but in the very contract in was expressly
agreed that the loss or damage after delivery to the
buyer shall be borne by the buyer. Exemptions from
liability due to fortuitous event: 1. determinate thing
(in the present case, pecuniary in nature) 2. No
stipulation holding him liable even in case of
fortuitous
Delay: Non-payment of balance.
Equatorial vs. Mayfairright of first refusal
Delay: ***By not giving to Mayfair the 30-day period
of which it is entitled to exercise right of first refusal
upon communication of Carmelo that he would sell
the property.

Co vs. CA--carnap
Delay: Delay in delivering the car to Co after
demand which is the premise of negligence of resp.
Aerospace vs. CASulfuric Acid na ayaw pang
kunin.
Pet purchased from resp Philphos 500 MT of Sulfuric
Acid. In their contract it was pets responsibility to
get the acid from resp. Philphos demanded that pet
get the acid and pet chartered a vessel MT Sultan
but the vessel was not able to get the whole volume
bec it tilted. Resp sent a demand letter that the acid
should be emptied or else petitioner will be liable for
the storage and other incremental expenses if pet
fails to do so. Pet chartered MT Sultan again but it
tilted so never gotten the whole volume. Chartered
another vessel Don Victor and asked Resp to deliver
additional orders. Resp did not do so unless the
remaining acid be emptied and that pet pay the
maintenance and storage. Pet filed and contended
Resp is in default.
Issue: WON the Resp is in default.
Held: No. The obligation to withdrew the 500MT of
H2SO4 before Aug. 1989 and the resp was already
ready to deliver the same but it was Plaintiffs fault
for not chartering another vessel which has the
capacity to withdraw the volume. It has the duty of
emptying the acid. Pet claim that it was due to a
storm thats why it cant empty the storage but
evidence proved that it was of the incapability of the
vessels. There was an obligation on the pet to
empty the storage.
They were the ones in delay.
Delay: Pet for not emptying the storage.
Selegna vs.
ballooned.

UCPBcredit

facility

which

Selegna, rep by spouses Edgardo and Zenaida

Angeles were granted a credit facility for P70M by
UCPB. As a security, pet executed real estate
mortgages over several parcels of land. Pet also
executed prom note every time they avail of credit
facility. In their credit agreement, it was stipulated
that failure to pay any availment of the
accommodation or interest or any sum due shall
constitute an event of default which shall allow resp
bank to declare as immediate and payable all
outstanding availments together with accrued
interest.
Pet increased credit facility and they
agreed to 21.75% interest per annum. Demand
letters were sent upon failure to pay. Pet paid 10M
as partial payment of accrued interest. UCPB
applied for extra-judicial foreclosure of petitioners
mortgaged properties. The obligation has ballooned
to 132M and pet alleged that 10M as payment had
the effect of updating and thereby averting the
maturity of the obligation.
Issue: WON the Pet were in default.
Held: Yes. The contract is the law and the resp is
justified in invoking the acceleration clause
declaring the entire oblig due and payable. The
resp had the right to foreclose the mortgages extrajudicially. Failure to furnish a detailed statement of
account doesnt ipso facto result in unliquidated
obligation. Pet was in default.
Delay:
Non-payment
accommodation.

of

availement

of

2. Non-fulfillment
Chavez vs. Gonzales
Non-fulfillment: The typewriter was not fixed.
Telefast vs. Castrodahil sa telegrama, magisa lang nang ilibing ang mama.
Consolacion Bravo-Castro died in Pangasinan and on
the same day the daughter sent a telegram to the

US to inform the other siblings and dad about death

of Mom. The Mom was interred by daughter alone.
When she came back to the states, she found out
that the telegram never reached her siblings.
Telefast claimed force majeure bec of technical and
atmospheric factors but no evidence to support.
Issue: WON force majeure applies.
Held: No. No evidence to support. And even so, def
should have informed the plaintiff that it cannot
transmit the telegram. 1170 and 2176, guilty of
fraud, negligence or delay. 2217 for moral damages.
Non-fulfillment: Sending of telegram.
Tanguiling vs. CAwindmill na nasira sa wind.
A case involving proper interpretation of contract.
JMI Engr and GM proposed to resp Vicente to
construct windmilling system for him. They agreed
on the construction for P60K. P30K DP and P15K
installment. Vincente didnt pay the remaining P15K
bec he paid it to SPGMI who constructed the deep
well to which the windmill would be attached. And
even assuming that he owes pet P15K, it should
have been offset by the collapse after a strong wind.
Issue: a. WON agreement to construct windmill
included in the installation of a deep well.
b. WON the pet is under the obligation to
reconstruct the windmill.
Held: a. No. It was not included in the agreement.
Intention of the parties must be accorded primordial
consideration
and
in
case
of
doubt,
contemporaneous and subsequent acts shall be
principally considered.
b. Yes. Pet claimed there is a strong wind but this is
actually necessary for the windmill to turn. It was
just newly constructed, it should have not collapsed.
Non-fulfillment: Payment of last installment.

Perez vs. CAniloko yung businessman at

pinaalaga ang fishpond.
Juan Perez usufructuary of a parcel of land called
Papaya Fishpond with other usufructuaries. The
usufructuaries entered into a contract leasing the
fishpond to Luis Keh for a period of 5 years. The
contract states that the lessee cannot sublease the
fishpond nor assign his rights to anyone. But
Crisostomo was persuaded by the pet Keh to take
over the Papaya fishpond bec Cris is a businessman.
Executed a written agreement. Cris even paid the
rentals until 1985, 10 years of taking care of the
fishpond. In 1979 however, pet with armed men
went to fishpond and showed that Keh surrendered
the fishpond to the usufructuaries.
Issue: WON the resp is a sublessee of Keh which is
barred by the lease contract.
Held: Yes. He was a sublessee. But Perez and his
counsel knew and acquiesced to that arrangement
by their act of receiving from the resp rentals
evidenced by the receipts which puts the pet in
estoppelwhich arises when one by his acts and
representations and admission or by his own silence
when he is obliged to speak out, intentionally or
thru culpable negligence induces another to believe
certain facts to exist and such other rightfully relies
and acts on such beliefs so that he will be
prejudiced if the former is permitted to deny the
existence of such facts. 1168: Oblig is in not doing
and obligor has done what is forbidden, shall be
done at his expense.
Non-fulfillment: of the obligation not to do which is
to sublease the fishpond.
3. Fraud
Board of Liquidators vs. Heirs of Maximo
KalawCopra Trading, hindi na kelangan ng
pirma ng Board of Directors.

Nacoco is for the protection, preservation and

development of the coconut industry. Kalaw is the
manager and board chairman. Nacoco embarked on
copra trading activities, thus entering into contracts.
For 3 years, profited 3M but after 4 typhoons, left
the coconut lands devastated throughout the
country. It was not able to fulfill the contracts it has
engaged in. Nacoco paid damages to one of the
parties. Nacoco now sues Kalaw for having approved
the contracts.
Issue: WON Kalaw is guilty of negligence for
entering into contracts without prior approval of the
Board of Directors.
Held: No. Consideration of practice. Corporate
officer entrusted with the gen management and
control of business has implied authority to make
any contract or do other act wichi is necessary or
appropriate to the conduct of the ordinary business
of the corporation. But there is a citation on the
Nacocos by-laws requiring prior directorate
approval of Nacoco contracts. Court considered
practice of trade of short-sellling or forward sales.
Prev contracts without prior auth from Board. And
evidence showed that Kalaw actually handled the
corp well for it to profit. Force majeure reason.
Fraud: There is no fraud because Kalaw didnt need
the Boards approval due to practice of trade. No
negligence too on his part.
ICB vs. GuecoJoint Motion to Dismiss for the
car.
Gueco spouses obtained a loan from UPC to
purchase car and executed prom note which were
payable in mnthly installments and chattel
mortgage over car to serve as security over the
notes. Spouses defaulted in payment. The payment
was lowered but still no payment. Car was detained
inside the banks compound. Gueco went to bank
and negotiated and issued a managers check. But
car was not released bec Gueco doesnt want to

sign Joint Motion to Dismiss claiming not in the

contract that they have to sign.
Issue: WON the bank in not informing the spouses to
sign motion to dismiss liable for damages for not
releasing car.
Held: No. Joint Motion to Dismiss for the spouses
benefit and not for the bank. It would only state that
the case would be dropped and that the spouses
had fully settled his obligation thus the dismissal of
the case. There is no fraudno intentional and
deliberate evasion of the normal fulfillment of
obligations.
Fraud: In not stating that they have to sign Joint
Motion to Dismiss but this is not considered Fraud.
No intent and for the benefit of the Plaintiff.

4. Negligence
Necessito vs.
passengers.

ParasKnuckles

killed

the

Action against owners and operators of the

commom carrier known as the Phil Rabbit Bus Lines
filed by one passenger and the heirs of another who
were injured as a result of the fall into a river in
which they were riding. The mother of the pet
drowned and the son Necessito was injured.
Issue: WON the carrier is liable for damages.
Held: Yes. Although resp claims that force majeure
since knuckles were the reason for the accident and
they have inspected the knuckles, does exercised
diligence. Carrier claims liability of manufacturer.
Court said that the inspection done was merely
visual and not meeting the requirement of expected
due diligence.
Negligence: In not exercising the proper diligence
required.

5. Contravention of the tenor of the obligation

Arrieta vs. NaricBurmese Rice, di naman
pala kayang mag-open ng Letter of Credit.
Pet participated in the public bidding by Naric for
the supply of 20K MT of Burmese rice. Her bidding
being the highest, she was awarded the contract. In
1952, entered into contract, Naric and Pet, sale of
rice. Pet obligated herself to deliver to the latter the
tons os Burmese rice and in turn corp has to pay for
the imported rice by means of an irrevocable,
confirmed and assignable letter of credit in US
currency. It was only In July that def took first step to
open letter of credit. Pet already made a tender to
her supplier a 5% and this will be confiscated if L/C
will not be received before Aug. 4. PNB informed
Naric that L?C approved but has a condition that the
50% marginal cash deposit be paid. Naric was not in
any financial position to meet the condition and
wrote the pet about it. L/C was opened in Sept thus
5% deposit was forfeited. When appellee failed to
restore cancelled Burmese rice she offered a sub but
Naric rejected.
Issue: WON Naric should be liable for damages.
Held: Yes. Failure of the letter of credit to be opened
in the contemplated period. Immediate cause of
damages. No necessary data but pet would not win
bid had she not furnish them with it. Waiver bec Pet
suggested to sub it Thai rice. Waiver are not
presumed. Express stipulation.
Contravention: That Burmese Rice should
delivered and should not deliver another thing.

be

Chavez vs. Gonzales

Contravention: That they agree that after 3 days,
typewriter would be usable.
E. Effect of fortuitous event
Necessito vs. Paras

Effect: Not fortuitous since knuckles should have

been inspected more than the visual inspection
done.
Ampang vs. Guincothe bus that skidded.
Held: The accident was caused by an accident which
was unforeseen and beyond the control of the
company on its driver.
Victoria Planters vs. Victorias Milling30
years contract suspended due to Japanese
Invasion.
Held: 1174 relieves obligor from fulfilling a
contractual obligation (fortuitous event). The
stipulation in the contract that in the event of force
majeure, the contract shall be deemed suspended
during the said period does not mean that the
happening of those events stops the running of the
period agreed upon. It only relieves the parties from
fulfilling their obligation that time. To require the pet
to deliver the sugarcane during the 6 yrs of
suspension was impossible of being performed. 6
yrs cant be deducted from 30 yrs.
La Mallorca vs. De Jesustire blow-out.
Held: Cause of the blow-out was known. It was a
mechanical defect of the conveyance or a fault in its
equipment which was easily discoverable if the bus
had been subjected to a more thorough or rigid
check-up before it took the road that day. The bus
was driving fast as was evidenced in the trial.
Nakpil vs. CAEngr/Archi
liable sa pagguho ng bldg.

pati

Contractors

Phil Bar Assoc decided to construct its building in

INtramuros Manila. Construction was undertaken by
UCCI on administration basis and the plans and
specifications of the building were prepared by
another party Nakpil. It was completed in June 1966.

In 1968, a strong earthquake hit Manila and building

sustained major damages. As temporary remedy
UCCI shoved up the building at its own expense.
PBA commenced action against UCCI for the partial
collapse of the building. Allegations were that there
was a failure of the contractors to follow plans and
specifications and violations by the defendants of
the terms of the contract. Def then filed against 3 rd
party-architects
who
prepared
plans
and
specifications alleging collapse was due to the
defect of it.

Held: No. It was undisputed that Abad was a victim

of robbery. Even when she walked alone at night
knowing that she had with her the pendant and a
large amount of money, the crimes then were not as
prevalent as the present time.

Issue: WON UCCI and Nakpil be held liable.

Pioneer Cebu left the port of Manila. The vessel

encountered a typhoon and struck a reef and
subsequently sank. Plaintiffs seek the recovery of
damages due to the loss of children and other
people due to voyage. There was a storm as def
claims but it was established that the captain knew
about it but still proceeded.

Held: Yes. The case was referred to the

Commissioner and found out that there were
defects in plans and specifications and that
contractors
failed
to
observe
requisite
of
workmanship and even the owners failed to observe
requisite degree of supervision in the construction.
Fortuitous even will not be applied bec there is
negligence. 1723 will apply. Engineer/ arch who
drew up plans and spec liable for damages.
Contractor liable if edifice falls within the same
period on acct of defects in the construction or the
use of materials of inferior quality. Engr/archi will be
held solidary liable if supervises construction.
Fortuitous Event: Will not apply bec there is
negligence.
Austria vs. CANaglakad mag-isa sa gabi,
nanakawan ng diamond pendant.
Abad acknowledged receiving from Austria one
pendant with diamonds valued at P4,500 to be sold
on commission basis or to be returned on demand.
While walking home, Abad was robbed and her
things were taken including pendant. Estafa. RTC
ruled negligence. CA held that robbery was
established, fortuitous event.
Issue: WON Abad is liable for the loss of the
pendant.

Fortuitous event: Robbery was unforeseen and

evidence established that it happened.
Vasquez vs. CAsinabi na sa captain na may
bagyo, tumuloy pa rin. Lumubog.

Issue: WON fortuitous event shall be considered and

exempt def from liability.
Held: No. They already knew the risk they were
taking. They already receive report of the typhoon
but proceeded anyway. Def claim Art. 587 Code of
Commerce, loss of vessel exempt liability. But it is
cited there that the liability of the owner is limited
to the value of the vessel or to the insurance
thereon. It was held that the insurance of the vessel
would be liable for the damages that the shipowner
or agent be liable for the death of the passengers.
Fortuitous Event: Will not apply bec captain had
knowledge of the event thus making it not
unforeseen.
F. Usurious transactions
Angel Jose Warehousing Co vs. CheldaLoans
with usurious interest, principal still enforced
but interest not. (P20K+)
Angel Jose filed against Chelda, its capitalist partner
for the recovery of the unpaid loans with legal

interest and attys fees (P20K+). Def paid bal of

P5.6K. Plaintiff charged and deducted from the loan
usurious interest at the rate of 2% and 2.5% PER
MONTH and consequently, as claimed by def should
not be permitted to recover under the law. RTCP1048.15 usurious interest which the payment was
deducted from the interest and def claims that it
should have been deducted from the principal
obligation.
Issue: a. WON in loans with usurious interest, the
plaintiff may still recover the principal of the loan.
b. WON the illegal terms as to the payment of
interest renders nullity as to the payment of the
principal debt.
Held: a. Yes. Creditor may still recover principal of
the loan. Loans with usurious interest are not totally
void but only as to the interest. Renunciation of the
principal would extinguish accessory but waiver of
the accessory would not extinguish the principal.
b. Yes. Divisible contract, that which is illegal can be
separated from legal ones and the latter may be
enforced. Interest which would be allowed is the
interest bec of delay and default due to the general
provisions of the law.
Usurious obligation: Principal only, usurious interest
not enforced.
Briones vs. CammayoP1500 lang utang pero
interest P300 per year-usurious.
Briones filed against Cammayo to recover P1500.
They executed a real mortgage as security for the
loan of P1200 given by Cammayo upon usurious
agreement and reserved to himself P300 payment
of interest for a year. Plaintiff paid total sum of P330
but Cammayo refused to acknowledge it as
payment for principal but for interest of loan for a
year.
Issue: WON creditor entitled to collect the principal
obligation and interest.

Held: Yes. But only as to the principal. Ruling of

Angel vs. Chelda.

and stipulated 43% would go to Lincallo. Jimena

demanded part but he was not paid.

Usurious obligation: Principal only, usurious interest

not enforced.

Issue: WON Jimena has a cause of action against

Gold Mine when it contracted only with Lincallo.

G. Presumption of interest and installments

Held: Yes. Art. 1177 provides that creditors after

having pursued the property in possession of the
debtor to satisfy their claims, may exercise all the
rights and bring all the actions of the latter (debtor)
for the same purpose, save which are inherent in his
person. 1883: the principal may sue the person
with whom the agent dealt with in his own name,
when the transaction involves things belonging to
the principal.

***Hill vs. Veloso

***Vda De Ongsiako vs. Cabatuando
H. Action Subrogation
Accion Subrogatoria: action which the creditor
may exercise in the place of his negligent
debtor in order to preserve or recover for the
patrimony of the debtor the product of such
action, and then obtain therefrom the
satisfaction of his own credit. Double function:
conserving the patrimony of the debtor by
bringing into it property abandoned or
neglected by him AND of making execution on
such property effective thereafter. Debtors
debtor is my own debtor. Debtor who is sued
may set up against the plaintiff the same
defense he could set up against his own
creditor. If the action succeeds, the plaintiff is
entitled only to so much as is needed to
satisfy his credit; if there is any balance, it
shall pertain to his debtor.
Goldstar Minig vs. Lim Jimenamining claims
pinondohan, hindi na siya binayaran sa
usapan.
Jimena lent to Lincallo money to purchase mining
claims and they agreed that f the proceeds shall
be given to Jimena. Mining rights over part of the
claim were assigned to Gold Star before WWII and
copr paid Lincallo P5000 royalties. Lincallo entered
contracts without the knowledge of Jimeana.
Marquez contracted with Gold Mining and 45%
should go to Lincallo. Another company contracted

AS: File against debtor of his debtor.

Estate of Hernandez vs. Luzon Surety
namatay yung guarantor, namana rin yung
utang niya.
Luzon Surety filed against estate of Hemady based
on 20 different indemnity agreements and
couterbounds by the deceased in consideration of
guaranteeing various principals in favor of different
creditors. Hemady died and estate claim not liable
bec of death.
Issue: WON death extinguishes obligation of the
estate.
Held: No. Obligations extinguished by death are: a.
support b. parental auth c. usufruct d. contracts for
a piece of work d. partnership e. agency. Articles
that regulate guaranty or suretyship contain no
provision that the guaranty is extinguished upon the
death of guarantor. Art. 774 and 776 (succession
and inheritance) state that heir succeed no only to
the rights but also to the obligations.
AS: Obligation was subrogated to the heirs of the
dead person.

III. KINDS OF OBLIGATION

A. PURE AND CONDITIONAL OBLIGATIONS
1. Pure Obligations
Pay vs. Palancananingil ng utang after 15
yrs, nagprescribe.
Held: Every obligation whose performance does not
depend upon a future or uncertain event or upon a
past unknown to the parties, it is demandable at
once.
2. Conditional Obligations
a. with suspensive/resolutory conditions
Lichauco
vs.
Figueras-HermanosLorchas,
emergency and regular use.
Held: The amendment to the contract bet the
plaintiff and def was expressly conditioned on the
defs being the successful bidders at the letting and
they were not the winners. Second contract has no
force but the first one. No showing that they have
given new life to the agreement.
Wise & Co vs. Kellyhindi naman sinabi na
ibenta yung goods sa ganitong halaga.
Held: No proof that Kelly has not turned over all the
money received from the sale of the merchandize so
that Lim, the surety, has no liability. The condition is
that Lim will pay if Kelly has not turned over all the
sales of the merchandise but not that he shall pay if
all the sales has not amounted to the original
amount of obligation. There is no stipulation that the
goods were to be sold at a certain price, or not less
than what it should be.
Santiago vs. Millarnanalo sa sweepstakes
pero nawala ang ticket.

Held: The ticket sold has a notation that prize will be

paid upon the surrender of the ticket. The surrender
or presentation of the ticket is a condition precedent
of payment.
Parks vs. Prov of Tarlacnagdonate ng land
for school and public park in 6 mos pero hindi
ginawa.
Cirer and Hill were owners of parcels of land and
donated it to the municipality of Tarlac on the
condition that erection of a public school and a
public park shall be commenced within the period of
6 months. Tarlac failed. Cicer and Hill sold land to
Parks. Parks pray for annulment of donation.
Issue: WON Parks is the owner of the land bec of
non-performance of the condition of the mun of
tarlac.
Held: No. The action for revocation of a donation is
10 yrs. They have filed case after 14 yrs. Although
condition was not complied with, revocation should
have been made before the sale of the land. Req: 1.
consent of the donee of the revocation 2. judicially
decreed. Onerous donations, 10 yrs prescription.
CPU vs. CAnagdonate ng land for medical
school pero hindi ginawa. No period but 50 yrs
na nakalipas di pa rin ginawa.
Don Lopez donated land to CPU on the condition
that it would be used for the establishment of a
medical school and that CPU cannot sell or convey
the land to any party. CPU failed to do so and even
exchanged land with another with the NHA. Heirs
filed for annulment of donation.
Issue: WON donation annulled.
Held: No. Although there is a need to fix a period
bec the contract did not stipulate period when to
commence condition. However, in consideration of
the facts, 50 years have lapsed for the condition to

be complied with and CPU was not able to perform.

SC ruled to reconvey to heirs the land.
Aguilar
vs.
Cititrustyung
hindi
ko
maintindihang kaso or baka hindi lang siya
talaga relevant under this title.
b. Potestative Mixed Conditions
Shotwell vs. Manila MotorBanks
chartered to accept liability.

were

Held: The banks will not be liable since they didnt

accept that they will should liability. The lease was
extinguished by the fire that occurred and the
chartered banks being a sublessee of the Manila
Motor which contracted lease also from Shotwell,
will not be liable for the construction of the
destroyed buildings. No potestative condition.
Lease for the enjoyment of the premises. No fault on
part of anyone.
Smith Bell vs. Sotello Mattii-deliver yung
equipment pero depende sa gobyerno.
Held: The conditions did not depend upon the will of
the debtor alone. There is no delay since there
existed rigid restrictions during the that time of
world war. It is a mixed one because dependent also
of the will of the third person or the US govt whether
to allow the delivery or not.
Trillana vs. Quezon Collegesif I harvested
fish.
The stipulation in this case was that the obligor
would pay the full value of a subscription for shares
in the Quezon College after she had harvested fish.
Held: This
sole will
obligation
create an
void.

condition is obviously depended upon the

of the obligor, and the conditional
is void, because it would have served to
obligation to pay, the whole obligation is

**When conditional obligation is void, then it would

convert the obligation to a pure obligation which
would be demandable at once.
Osmena vs. RamaIf the house of strong
materials is sold, I will pay my debt.
Held:
If
the
statement
found
in
the
acknowledgement should be regarded as a
condition, it was a condition dependent upon the
exclusive will of the debtor, and is, therefore, void.
The acknowledgement, therefore, was an absolute
acknowledgement of the obligation and was
sufficient to prevent the statute of limitations from
barring the action upon the original contract.
Hermosa vs. Longaraas soon as I receive
funds derived from the sale of my property in
Spain.
Held: The condition implies that the obligor has
already decided to sell his house or at least that he
had made his creditors to pay his indebtedness
demandable is that the sale be consummated and
the price thereof remitted to the islands. Not a
purely potestative one, depending upon the will of
the obligor, but partly upon chance, i.e. presence of
the buyer of the property for the price and under
conditions desired by the obligor.
c. Impossible and Illicit conditions
Luneta Motor Co. vs. Abadif I recovered
judgment in the action but he died during the
trial.
Held: The obligation is subject to the condition that
when the plaintiff recovered judgment, they shall
deliver the property so released to the officer of the
court for the payment of said judgment of in default,
pay its full value. Since Abad died, it has become a
legal impossibility since no judgment shall be
rendered.

Galang vs. CAyou pay 25% within 3 months

or upon the removal of the encargado.
Held: The removal of the encargado was not a
condition precedent to the fulfillment of the
contract. What we have is a contract to sell wherein
the ownership is retained or title until the fulfillment
of a positive condition, normally the payment of the
purchase price in the manner agreed upon. It was
just an alternative period for the payment of the
second installment.
d. positive and negative conditions
3. Constructive Fulfillment
Taylor vs. Uy Tiengdapat may trabaho siya
pero binawi ni Uy Tieng dahil di maganda
sitwasyon. FOR ANY REASON
Held: Should the machinery to be installed in the
said factory fail, for ANY REASON, 6 months from
the date hereof, this contract may be cancelled.
The def can rescind the contract bec their reason
falls under any reason.
But there is no constructive fulfillment on this case.
Constructive fulfillment: condition shall be deemed
fulfilled if the obligor intentionally impedes its
fulfillment, has no application to the cases of the
resolutory provision giving to the obligor a right to
cancel contract upon contingency within the control
of the obligor.
Herrera vs. LevisteGSIS and Leviste Case.
Teehankees Dissent.
Tehankees Dissent: Leviste was guilty of bad faith
and violated the terms of the contract thus there is
constructive fulfillment. Herrera was required by
GSIS to submit papers to support his assumption but
could not be approved until Herrera could submit a
final deed of sale and Leviste did not execute this
deed. He prevented the assumption of Herrera of

the mortgage. Not only that, Leviste is in arrears for

14 months in its amortization and Herrera did not
know that. 1186 and 1169 (reciprocal obligations).
Tayag vs. CAestopped bec receipt
payments and knowledge of irregularities.

of

Held: The acceptance of the petitioners of the

various payments even beyond the periods agreed
upon, was perceibved by the lower court as
tantamount to faithful performance of the
obligation. 1186 applies to both obligees and
obligors in reciprocal obligations even when the
proviso only speaks of the obligor. Pet accepted the
performance knowing its incompleteness and
irregularity and without expressing any protest or
objection, the obligation is deemed to be complied
with.
Coronel vs. CAReceipt of Downpayment
Held: Intent of the parties has to be considered. It
was a contract of sale and not a contract to sell.
Contract of saleownership already transferred
upon fulfillment of the suspensive condition.
Absolute sale. Contract to sell-although suspensive
condition was complied with, ownership will not
automatically transfer. There is still a need to
convey title to the prospective buyer by entering
into a contract of absolute sale.
4. Retroactivity of Obligation
Padilla vs. Paterno-his mom is the universal
heir and not his wife-paraphernal.
Held: The ownership of the land is retained by the
wife until she is paid the value of the lot, as a result
of the liquidation of the conjugal partnership. There
mere construction of the building from common
funds does not automatically convey the ownership
of the wifes land to the conjugal partnership. The
properties conversion from paraphernal to conjugal
assets would be deemed to retroact to the time the
conjugal buildings were first constructed thereon or

at the very latest, the time before the death of

Narcisso Padilla that ended the partnership. The
acquisition by the partnership of theses properties
was subject to the suspensive condition that their
values would be reimbursed to the widow at the
liquidation of the conjugal partnership; once paid,
the effects of the fulfillment of the condition should
be deemed to retroact to the date the obligation
was constituted.

Coronel vs. CADownpayment

Retroactive: From the moment the obligation was
constituted, upon payment of full balance, retroact
to that date.
5.Preservation of Creditors Rights
Art. 1188: The creditor may, before the
fulfillment of the condition, bring the
appropriate actions for the preservation of his
right.
The debtor may recover what during the
same time he has paid by mistake in case of a
suspensive condition.
6. Rescission in Reciprocal Obligations
Ocejo vs. Interbankmaswerteng assignee.
Yung asukal na nasa ibang warehouse na
kinuha ng banko.
Held: The thing sold not subject to condition that the
buyer was the pay the price before the delivery. On
demandability: No term having been stipulated on
payment, it should be demandable at the time and
place of the delivery of the thing sold. Demandable
at once and failure to do so would entitle obligor
either performance or rescission. But rescission
should be applied to the court for a decree for the

rescission of the contract. No rescission was made

before the insolvency of plaintiff, the assignee
standing on the shoes of the buyer has a better
right.
Albert vs. University Publishingpublishing
the Revised Penal Code.
Held: It was the defendant corporation who had
breached the contract. The plaintiff has written
letters reminding the corp that the contract will be
deemed rescinded if the corp would not fulfill its
obligation.
Accg to Tolentiono: Rescission must be judicially
invoked. Unless there is a stipulation of period when
the contract would be deemed rescinded. If one
party is willing to perform and the other is not extrajudicial rescission would suffice if there is
stipulation. However, if there has been a
performance already by one of the parties,
rescission should already be judicially invoked
regardless whether there is a stipulation or none,
especially if the other party rejects rescission.
UP vs. Delos Angelesaward of logging rights;
rescission without need of judicial suit.
Held: In the agreement, there is a stipulation that
UP has the right and power to consider the Logging
Agreement date Dec 2 1960 rescinded without the
necessity of a judicial suit. 1191s consideration:
There is nothing in the law that prohibits that parties
from entering into agreement that violation of the
terms of contract would cause cancellation thereof
even without court intervention. BUT PROCEEDS AT
ITS RISK. Extra-judicial resolution will remain
contestable and subject to judicial invalidation,
unless attack thereon should become barred by
acquiescence, estoppel or prescription.
Roque vs. Lapuz10 yrs to pay, I can pay
anytime within the 10 years.

Held: Qualification for rescission: so substantial and

fundamental to defeat the object of the parties.
Absence of a formal deed of conveyance is a very
strong indication that the parties did not intend
immediate transfer of ownership and title, but only
a transfer after full payment of the price. Intent of
the parties was to have the obligation be paid in
monthly installment.
Herrera vs. Leviste
Tehankees dissent: Upon Levistes refusal to
execute the deed of sale, Herrera has the option of
specific performance or the rescission of the
contract.
Zulueta
vs.
MarianoAvellana
a
movie
director made movies for Zulueta for his
political
campaign,
automatic
rescission
clause.
Held: There is an automatic rescission clause in the
contract and the fact that pet has cancelled
contract, resp has no right to remain in the
premises. Extra-judicial rescission shall only take
legal effect where the other party does not oppose
it.
Delta Motor Corp vs. Genuinodelivery of
black iron pipes for iceplant and storage.
Held: Power to rescind under 1191 is not absolute.
The act of a part in treating a contract as canceled
or resolved on account of infractions by the other
contracting party must be made known to the other
and is always provisional subject to the scrutiny and
review by the proper court.
Delta no manifestation that it had opted to rescind
contract, it has possession of the two irons and the
downpayment and has waived the performance of
conditions of the contract when they opted to go on
with the contract only with a much higher price.
Ong vs. Bognalbal

Rescission: Upon the infraction of Ong, Bognalbal

could have filed rescission of the contract or the
performance of it.
Carrascoso vs. CAnotice of lis pendence but
continued with the sale of the land.
1972-El Dorado sold to Carrascoso the parcel of land
July 1975- Buy and Sell bet Carrasco and PLDT
April 1977- Carrasco to PLDT
May 30, 1977 PLDT to PLDTAC
May 15, 1977-notice of lis pendens
Held: Notice of Lis pendens, but still PLDT conveyed
land to PLDTAC. Where a contract is rescinded it is
the duty of the Court to require both parties to
surrender that which they may have respectively
received and to place each other as far as
practicable in his original situation. The exercise of
the power to rescind extinguished the obligatory
relation as if it had never been created, the
extinction having a retroactive effect.

B. OBLIGATIONS WITH A PERIOD

PNB vs. Lopez Vitoloan of spouses when
there is a condition and a period stipulated.
Held: The non-fulfillment of the conditions of the
contract renders the period ineffective, and makes
the obligation demandable at the will of the creditor.
Failure to pay would make the entire obligation due
and demandable, so regardless of the period of
other installments, def has to pay the entire
obligation.
Smith Bell vs. Matti
Held: There also was a stipulated period however
there is also a condition which states that delivery
would depend upon the US govt. Upon the lapse of
the period and the condition bars the performance,
def will not be liable.

Gaite vs. Fonacierexpiration of the surety,

debtor loses the benefit of the period. Mining
claim case.
Held: 1198 states when debtor loses the benefit of
the period. The surety contract expired and Fonacier
didnt renew or replaced the surety. Sale of the ore
was not a suspensive condition but a suspensive
period, fixing the future date of the payment.
Qui vs. CAfactory was razed to the ground
and failure of lease to rebuild the building of
the lessee. (the building to be constructed
shall belong to the resp lessor after 20 yrs).
Held: 1197. If obligation does not fix a period but
from its nature and circumstance it can be inferred
that a period was intended , the courts may fix the
duration thereof. Will also fix period when it depends
upon will of the debtor. In determining period, courts
will have to consider the circumstances and see if
period was contemplate. The contract doesnt
stipulate a period, thus the court held that resp has
to institute a judicial action to fix the period. (this
case is an ejectment case so fixing a period was not
alleged in the case).
Sarmiento vs. Villasenorloan with a pledge
of a medal with a diamond in the center with
10 diamonds surrounding it, pair of diamond
earrings, comb with 22 diamds, and two
diamond rings! Daming diamonds!!!
Held: In a contract of loan with interest wherein a
term was fixed for the payment thereof, it is
presumed that said terms was established for the
benefit of the creditor as well as that of the debtor,
unless from its tenor or other circumstances it
appears to have been stipulated for the benefit of
one only. In such a case the debtor has no right to
pay the debt before the lapse of said period, without
the consent of the creditor, and demand the
devolution of the goods that were pledged to secure
the payment. Only after the expiration of said period

may the debtor make payment, and, therefore, the

action for the recovery of the goods pledged arises
only after the lapse of said for the purpose of the
computation for he period of prescription of said
actions.
Daguhoy Enterprises vs. Poncenagsecure ng
mortgage as guaraty sa loan sa isang corp
tapos after ibigay yung loan, withdrew
mortgaged properties then mortgage them
again sa ibang corp for another loan. Madaya.
Held: Although the contract stipulates that loan
payable in 6 years, but because of the failure to give
and register the security agreed upon in the form of
two deeds of mortgage, the obligation becomes
pure and without condition thus due and
immediately demandable. 1198, lost the benefit of
the period.
Victorias Planter, supra
De Leon vs. Syjucogusto ng magbayad ng
debtor pero ayaw pang tanggapin ng creditor.
Held: Consignation was not valid. Req: a. debt due
b. consignation has been made bec creditor to
whom payment is made refused to accept, or was
absent or incapacitated c. prev notice of
consignation to the person interested in the
performance d. amount due placed at the disposal
of the court 3. after consignation had been made,
the person interested was notified thereof. Reasons
why creditor cant be forced to accept payment a.
may want to keep his money invested safely instead
of having it in his hands. B. to protect himself of
sudden decline on the purchasing power of the
currency loaned. Unless creditor consents, debtor
cannot accelerate payment.
Millare vs. Hernandoyung bahay
gusting gawing resto e ayaw niya nga.

niya

Held: On the contract, it is stipulated that the lease

may be renewed after a period of 5 years under the

terms and conditions as will be mutually agreed

upon by the parties at the time of the renewal. 1197
and 1670 of the CC (fixing of period, and after 15
days of occupying the leased property and without
any notice from lessor, contract shall be renewed).
It is understood that there is an implied new lease,
not for the period of the original contract, but for the
time established by 1682 and 1687. The other terms
of the contract shall be revived. After the expiration
of the contract, the implied new lease could not
possibly have the period of 5 years, but rather
would have been a month-to-month lease since the
rentals were payable on a monthly basis.

Agoncillo
vs.
JavierAnastacio
Alano
mortgaging his property to pay the debt.

Pacific Banking Corp vs. CAnegosyo sa

cultivation of fish and saltmaking bumagsak.

Ong Guan Can vs. Centurythe insurance

company doesnt want to rebuild with the
same materials.

Held: An agreement to extend the time of payment

in order to be valid must be for a definite time. The
cause of action was for the fixing of the period.
Song Fo vs. Orialaunch was sold but was
shipwrecked, Song Fo did not insure and Oria
did not secure.
Held: The launch was with Oria already and knowing
that the launch has not been insured yet, sent it
from Manila to Samar and on the trip it was
shipwrecked. The contract stipulates quarterly
installments. Since the vessel is lost, Oria doesnt
want to pay. That unpaid installments of the
purchase price of the launch, which under the
express terms of the contract had not become due
and payable at the time of the loss of the vessel,
became due and payable under the provisions of
article 1129 of the Civil Code, upon the failure of the
purchaser, within a reasonable time after the loss of
the launch, to offer either satisfactory security or to
give bond to secure the payment of the unpaid
installment of the purchase price.
C.
ALTERNATIVE
OBLIGATIONS

AND

FACULTATIVE

Held: Anastacio was only a rep of his children, and

his partial payment does not affect prescription not
for the benefit of the other debtors. The mortgage
was never recorded therefore invalid. Action to
recover has prescribed, the action to compel a
conveyance of the house and lot is likewise barred
as the agreement to make such conveyance was not
an independent principal undertaking, but merely a
subsidiary alternative pact relating to the method by
which the debt might be paid.

Held: On the contract the insurance company

obligated itself to either pay the amount to which
the house was insured or rebuild it. The debtor must
notify the creditor of his election, stating which
prestation he is disposed to fulfill. The effect of
notice is to give the creditor, that is, the plaintiff in
the instant case, opportunity to express his consent,
or to impugn the election made by the debtor, and
only after said notice shall the election take legal
effect when consented by the creditor, or impugned
by the latter, when declared improper by the
competent court.
Jaucian vs. Queroisurety
liable, then surety died.

was

solidarily

obligation does not imply that each of the former is

entitled to demand the performance of the
obligation in its entirety or that each of the latter is
bound to perform it. This shall be the case only
when the expressly so provided by the terms of the
obligation, and the parties are bound in solido. The
presumption, in the absence of the stipulation as to
how certain debtors are bound, is that they are
bound jointly.
Versoza vs. LimCollision of Perla and Ban
Yek.
Held: Where a collision occurs between tow seagoing
vessels,
caused
exclusively
by
the
carelessness of the navigating officers in charge of
one of the vessels, both the owner and the
operating company directly in charge of the
offending vessel are liable for the damage done. The
rule that joint obligations are apportionable unless
otherwise specially provided has no application to
obligations arising from tort. Persons who cooperate
in the tortuous infliction of damage are jointly and
severally liable.
Contractual Obligations-joint
Tortuous act-joint and severally liable
Ronquillo vs. CAfoodstuff, individually and
jointly, auction of furnitures on same day of
hearing for reconsideration.

Ramos vs. GibbonMining Claims, Possessory

Rights of a Qualified Locator.

Held: Clearly then, by the express term of the

compromise agreement and the decision based
upon it, the defendants obligated themselves to pay
their obligation, individually and jointly. The term
individually
has
the
same
meaning
as
collectively,
separately,
distinctively,
respectively, and severally. An agreement to be
individually liable undoubtedly creates a several
obligation and a several obligation is one by which
one individual binds himself to perform the whole
obligation.

Held: The concurrence of two or more creditors or of

two or more debtors with respect to the same

Oritz vs. CayanonBartolome Ortiz,

umalis
sa
premises
dahil
sa

Held: The right of a guarantor or surety to insist on

the exhaustion of the property of the principal
debtor, before his own shall be taken in execution
does not exist where the guarantor or surety is
jointly and severally bound with the principal debtor.

ayaw
mga

improvements na ginawa niya at hindi siya

nakasama sa bidding. Nangolekta pa ng toll.

Inchausti vs. Yulomagkakapatid na hindi pa

nagkasundo sa remission na binigay.

Held: Presumption when two persons are liable

under a contract or judgment and no mention of the
specific liability of each for the entire obligation.
With respect to the amount of reimbursement to be
paid by Comintan, it appears that the dispositive
portion of the decision was lacking in specificity, as
it merely provided Zamora and Comintan jointly
liable therefore. When two persons are liable under
a contract or under a judgment, no words appear in
the contract or judgment to make each liable for the
entire obligation, the presumption is that their
obligation is mancommunada, and each debtor is
liable only for a proportionate part of the obligation.
The judgment debt of 13K should be pro-rated in
equal shares to Comintan and Zamora.

Held: The remission of any part of the debt, made

by the creditor in favor of one or more his solidary
debtors, inures to the benefit of the rest of them,
and these latter may utilize in their favor the
defense of remission. The solidary debtor
unconditionally obligated or whose period for
payment has expired, may not, with respect to the
part of the debt he is liable, plead the defense of
prematurity of the action, which is personal to his
co-debtors.

Imperial Insurance vs. Davidspouses bound

themselves to be solidary and jointly liable,
husband died.
Held: If husband and wife bound themselves jointly
and severally, in case of his death her liability is still
solidary and may be sued for the whole debt. The
Rules of Court provide the procedure should the
creditor desire to go against the deceased debtor,
but there is nothing in the said provision making
compliance with such procedure a condition
precedent before an ordinary action against the
surviving solidary debtors, should the creditor
choose to demand payment from the latter, could
be entertained to the extent that failure to observe
the same would deprive the court jurisdiction to
take cognizance of the action against the surviving
debtors. CIVIL Code allows the creditor to proceed
against any of the solidary debtors or some or all of
them simultaneously. Hence, there is nothing
improper in the creditors filing of an action against
the surviving solidary debtors alone, instead of
instituting a proceeding for the settlement of the
estate of the deceased debtor wherein his claim
could be filed.

BPI vs. McCoyMcCoy paid all the debts and

was
subrogated
with
the
rights
to
contribution from his co-debtors.
Held: Where one of the several persons who are
sued upon a joint and several liability elects to pay
the whole, such person is subrogated to the rights of
the common creditor and may properly substituted
in the same action as plaintiff for the purpose of
enforcing contribution from his former associates
under art. 1145.
**But Maam said, this is not the same meaning of
real subrogation of rights.
Chinese Chamber of Commerce vs. Pua Te
ChingSurety was jointly ans severally liable,
principal died.
Held: The surety may use against the creditors all
the defenses which the principal debtor is entitled
and that are inherent in the debt, but not those
purely personal to the debtor, to wit, those which
may contribute to weaken or destroy the juridical
bond existing between the creditor and the principal
debtor, not any means of defense which may
invalidate the original contract from which the tight
or the action of the creditor against the security
arises in this class of actins is not included the
means of defense as to how the trial may be
continued and the writ of execution issued in case of

the death of the principal debtor which can not

affect the original contract nor destroy the bond
existing bet the creditor and the principal debtor, it
being, therefore, an exception or means of defense
no inherent in the debt, but at the most, a purely
personal one of the debtor or the successors-ininterest of the debtor.
Intl Finance vs. Imperial Textileguarantee
vs. surety
Held: Although it states Guarantee, the
stipulations of the contract make it clear that
jointly and severally phrase is the one used in the
contract.
Surety: person binds himself solidary with the
principal debtor, primary liability
Guaranty: contract whereby a person binds himself
to the creditor to fulfill the obligation of the principal
in case the latter should fail to do so, secondary
liability.
Construction Dev. Vs. EstrellaBus was
rammed and their knees are pinned to the
seats in front of them.
Held: The bus company, its driver, the operator of
the other vehicle and the driver of the vehicle were
jointly and severally liable to the injured passenger
or the latters heirs. Nor should it make any
difference that the liability of pet (bus owner)
springs from contract while that of respondents
(owner and driver of other vehicle) arises from
quasi-delict.
Bus owner-contract, owner and owner of other
vehicle-quasi-delict : both jointly and severally
liable.
E. DIVISIBLE AND INDIVISIBLE OBLIGATION
Art. 1223-1225
F. OBLIGATION WITH A PENAL CAUSE
Manila Racing vs. Manila Jockeyforfeiture of
what was partially paid.

Held: The clause of the contract referring to the

forfeiture of the P100,00 already paid, should the
purchases C fail to pay the subsequent installments,
is valid, It is in the nature of a penal clause which be
legally established by the parties. In its double
purpose of insuring compliance with the contract
and of otherwise measuring beforehand the
damages which may result from non-compliance, it
is not contrary to law, morals or public order bec it
was voluntarily and knowingly agreed upon by the
parties. Viewing concretely the true effects thereof
in the present case, the amount forfeited constitutes
only 8% of the stipulated price, which is not
excessive if considered as the profit which would
have been obtained had the contract been complied
with. There is, moreover, evidence that the
defendants, because of this contract with C, had to
reject other propositions to buy the same property.
At any rate, the penal clause does away with the
duty to prove the existence and measure of the
damages caused by the breach.
Caridad Est. vs. Santeroloan to be paid in 60
days and failure to do so, those already paid
shall be forfeited.
Antichresis: a contract whereby the creditor
acquires the right to receive the fuirts of an
immovable of his debtor with the obligation to apply
them to the payment of interest if owing and
thereafter to the principal of his credit.
Penal ClauseL generally intended to substitute the
indemnity for damages and the payment of
interests in case of non-compliance of the
obligation.
Held: The provisions in which the parties have
indicated in the contract is a penal clause which
carries the express waiver of the vendee to any all
sums he had paid when the vendor, upon his
inability to comply with his duty, seeks to recover
passions of the property, a conclusive recognition of
the right of the vendor to the said sums, and avoid

unnecessary
litigation
designed
to
enforce
fulfillment of the terms and conditions agreed upon.
Said provisions are not unjust or inequitable and
does not, as appellant contends, make the vendor
unduly rich at his cost and expense.
Bachrach
Motors
partly performed,
WHITE TRUCKS.

vs.
Espirituobligation
25% penalty, reduced.

Held: Interest and penalty are not the same. When

the obligation has been partly performed, the CC
authorizes the court to reduce the penalty thereon.
Cabbarroguis vs. Vicentejeep accident.
Held: The refusal of the defendant to pay when the
demand was made by plaintiff entitles the latter to
interest on the penalty. 2210 provides that in the
discretion of the court, interest may be allowed
upon damages warded for breach of contract. This
interest is recoverable from the time of delay, that is
to say, from the date of demand, either judicial or
extrajudicial. And if there is no showing as to when
demand for payment was made, plaintiff must be
considered to have made such demand only from
the filing of the complaint.
Hodges vs. Javellana--iceplant
softdrint, ice drop and fixture.

machinery,

Held: The provisions in the contract between the

parties relative to the compounding of interest
partake the nature of a penal clause and under
1229, may be reduced by court if iniquitous or
unconscionable.
Pamintuan vs. CAplastic sheetings
Held:
The theory that penal and liquidated
damages are the same cannot be sustained where
the obligor is guilty of fraud in the fulfillment of his
obligation. The penalty clause is strictly penal or
cumulative in character and does not partake the

nature of liquidated damages when the parties

agree.
Concurring Antonio: A creditor in case of fraud by
the obligor is entitled only to the stipulated penalty
plus the difference bet the proven damages and
such stipulated penalty.
Robes-Francisco Realty vs. CFJ
Held: A contract of sale which stipulate payment of
interest at 4% per annum in case vendor fails to
issue a certificate of title to vendee is not a penal
clause because even without it vendee would be
entitled to interest at the legal rate of 6% per
annum.
It is therefore inconceivable that the
aforecited provision in the deed of sale is a penal
clause which will preclude an award of damages to
the vendee Millan.
Makati Devt Corp vs. Empire Insurance Co.
you should build a house on the lot or else.
Held: Mitigation of the penalty is allowed where
there is partial payment of the obligation, the
reduction of the penalty is justified. This is true
where the indemnity provided for is essentially a
mere penalty , having for its object to compel
compliance with the contract.
Umali vs. Miclatcreation of an advertisement
LAGRIMAS
Held: Under the law, a penalty takes the place of
interests only if there is no stipulation to the
contrary, and even then, damages may still be
collected if the obligor refuses to pay the penalty.