Fermin Ong vs Court of Appeals G.R. No. 75819.September 8, 1989.

Concept: Art. 1279

In order that compensation may be proper,

it is necessary:

(1) That each one of the obligors be bound principally,

and that he be at the same time a principal creditor

of the other;

(2) That both debts consist in a sum of money, or if the

things due are consumable, they be of the same kind,

and also of the same quality if the latter has been

stated;

(3) That the two debts be due;

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention

or controversy, commenced by third persons and

communicated in due time to the debtor.

Art 1283

If one of the parties to a suit over an obligation

has a claim for damages against the other, the former may set

it off by proving his right to said damages and the amount

thereof.

Facts:

·         Fermin borrowed money to Mariano (his cousin) the amount of P160,000 and secured its payment with three post-dated checks. The check dated in Sept. 6, 1978 for P50,000; The check dated Oct. 8, 1978 for P10,000 and the check dated on Oct. 15, 1978 for P100,000. All were drawn against Fermin’s account with Consolidated Band and Trust Corporation.

·         On January 23, 1979 Fermin issued a fourth check amounting P40,000 in partial settlement of the loan. It was drawn against Fermin’s account in China Banking Corporation.

·         Fermin stored in Mariano’s warehouse a quantity of zipper valuing P181,000. Fermin claims that Mariano is denying access to the zippers because of the non-payment of the loan. Fermin avers that he had requested Mariano not to deposit or encash the post-dated checks on maturity and admits that he had not made good their amount when they were dishonored.

·         Mariano sued Fermin. Fermin denied the liability and contested that the debt was reduced to P120,000 because of the partial payment and that the remaining balance of P120,000 is offset by the P200,000 due from Mariano.

·         Mariano claimed that the payment of P40,000 is from a different obligation. He then abandoned this defense. He then claimed on that the original debt was P200,000 and it was then reduced by the payment of the P40,000, thus leaving a balance of P160,000; on which is the face value of the three post dated checks that he could not encash.

·         Fermin was not consistent either, for he abandoned his original allegation that Mariano owed him P200,000.00 for the rights to the market stalls when the latter showed that the consideration was only P25,000.00. Fermin was thereafter to invoke another set-off, to wit, his outstanding loan against the cost of the zippers, which he said Mariano had unjustly retained.

·         Because of the inconsistencies of the parties which resulted the non-agreement of the trial court and respondent court, Rule 45 of the Rules of Court was applied

·         The Supreme court finds that the findings of the respondent court more conformable because it is more plausible with the evidence.

Issue: W/ON the the balance of Fermin’s debt is deemed set off by the price of the zippers in the possession of Mariano

W/ON Art. 1283 is applicable

Held: No. The instant case does not certainly satisfy Article 1279 because (1) appellant is not a debtor of appellee, it is only the latter who is indebted to appellant; (2) the debts, even admitting that the delivery of the zippers to plaintiff is a debt, do not both consist in a sum of money nor are they of the same quality and kind.

No. Fermin has not proved the right to any damage as a result of the claimed retention of the zippers by Mariano. There was also no proof of the amount of such damages as he could not even say how many of the zippers had been earlier withdrawn by him.

Victorino Magat Jr. vs Court of Appeals and Santiago Guerrero G.R. No. 124221. August 4, 2000.

Concept:

Article 1267. When the service has become so difficult as

to be manifestly beyond the contemplation of the parties, the

obligor may also be released therefrom, in whole or in part.

Facts:

·         Guerrero is the President and Chairman of the “Guerrero Transport Services” (GTS), a single proprietorship. IN 1972, the GTS won a bidding to operate a fleet of taxicabs in Subic. As the highest bidder, Guerrero was required to have four door, four wheel, radio controlled, meter controlled and sedans taxi services.

·         Guerrero and Magat, General Manager of the Spectrum Electronic Laboratories, executed a letter-contract for the purchase of transceivers at $77,620.59 FOB, Yokohoma. Magat was to deliver within the 60-90 days after receiving from the Guerrero the assigned frequency.  Magat then contacted his Japanese supplier (Koide & Co., Ltd.) and placed an order for the transceivers.

·         On Sept. 22, 1972, in the event of the Martial Law, the then President Marcos issued the Letter of Instructions (LOI) no. 1 which stated: “SEIZURE AND CONTROL OF ALL PRIVATELY OWNED NEWSPAPERS, MAGAZINES, RADIO AND TELEVISION FACILITIES AND ALL OTHER MEDIA OF COMMUNICATION.”, said LOI was for the prevention of Propaganda actions against the government.

·         On Sept. 25, 1972. Pursuant to the LOI, the Radio Control Office issued Administrative Circular no. 4, which stated: “SUSPENDING THE ACCEPTANCE AND PROCESSING OF APPLICATIONS FOR RADIO STATION CONSTRUCTION PERMITS AND FOR PERMITS TO OWN AND/OR POSSESS RADIO TRANSMITTERS OR TRANSCEIVERS”. said circular suspended the sale and purchase of radio transmitters or transceivers.

·         The permit to import the transceivers was denied because of the Martial Law

·         Guerrero was not able to obtain the necessary letter of credit. He then did not continue with the contract.

Issue: W/ON there is a breach of contract

Held: No. The law provides that when the service has become so difficult as

to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part. Here in the case, the denial of permit to import resulted the non compliance of the obligation and the inability to secure the letter of credit.

Barons Marketing Corp vs Court of Appeals and Phelp Dodge Phils Inc [G. R. No. 126486. February 9, 1998] 286 SCRA 96 Case Digest

Concept:

Article 1248. Unless there is an express stipulation to that

effect, the creditor cannot be compelled partially to receive the

prestation in which the obligation consists. Neither may the

debtor be required to make partial payments.

However, when the debt is in part liquidated and in

part unliquidated, the creditor may demand and the debtor

may effect the payment of the former without waiting for the

liquidation of the latter.

Facts:

·         August 31, 1973. Phelps Dodge appointed Barons Marketing as one of its dealers of electrical wires and cables effective Sept. 1, 1973. Defendant was given 60 days credit for its purchases of Phelps Dodge’s electrical products

·         Barons Marketing purchased, on credit, from Phelps Dodge’s electrical wires and cable in the total amount of P4,102,483.30. This was then sold to MERALCO, Baron Mktg being the accredited supplier of the electrical requirements of MERALCO.

·         Under the sales invoices issued by Phelps Dodge to Barons Mktg for the subject purchases, it is stipulated that interest at 12% on the amount of atty’s fees and collection. Baron’s Mktg paid P300,000 out of its total purchases leaving an unpaid account of P3,802,478.20. Phelps Dodge wrote Barons Mktg demanding payment of its outstanding obligations due Phelps Dodge. Baron Mktg responded by requesting if it could pay its outstanding account in monthly installments of P500,000 plus 1%interest per month until full payment, this request was rejected and Phelps Dodge demanded full payment

·         Phelps Dodge then filed a complaint before the Pasig Trial Court for the recovery of P3,802,478.20 and it also prayed to be awarded with attorney’s fee  at the rate of 25% of the amount demanded, exemplary damages in the amount of P100,000, the expenses of litigation and the costs of suit.

·         The court ruled in favor of Phelps Dodge with the exemplary damages of P10,000 and recovery of P3,108,000

·         Both parties appealed. Phelps Dodge claimed that court should have awarded the sum of P3,802,478.20. It also said that the amount awarded was a result of a typographical error.

·         Barons Mktg claimed that Phelps Dodge’s claim for damages is a result of “creditor’s abuse” and it also claimed that Phelps Dodge failed to prove its cause of action against it.

·         CoA ruled in favor of Phelps Dodge with the correct amount but only with the 5% for the Atty’s fee. No costs.

·         Barons Mktg then alleged that the Coa erred its decision

Issue: W/ON private respondent is guilty of abuse of right

Held: No. a creditor cannot be considered in delay if he refuses to accept partial performance because, unless otherwise provided by law or stipulated by the parties, a creditor cannot be compelled to accept

partial performance; however, if good faith necessitates acceptance or if the creditor abuses his right in not accepting, the creditor will incur in delay if he does not accept such partial performance.

Natalia Bustamante vs Rodito and Norma Rosel [G. R. No. 126800. November 29, 1999] 319 SCRA 413 Case Digest

Natalia Bustamante vs Rodito and Norma Rosel

Concept:

Article 1245. Dation in payment, whereby property is

alienated to the creditor in satisfaction of a debt in money,

shall be governed by the law on sales.

Facts:

·         March 8, 1987. Norma Rosel entered in a loan agreement with Natalia Bustamante with the conditions:

1.  That the borrowers are the registered owners of a parcel of land, evidenced by TRANSFER CERTIFICATE OF TITLE No. 80667, containing an area of FOUR HUNDRED TWENTY THREE (423) SQUARE Meters, more or less, situated along Congressional Avenue.

2.  That the borrowers were desirous to borrow the sum of ONE HUNDRED THOUSAND (P100,000.00) PESOS from the LENDER, for a period of two (2) years, counted from March 1, 1987, with an interest of EIGHTEEN (18%) PERCENT per annum, and to guaranty the payment thereof, they are putting as a collateral SEVENTY (70) SQUARE METERS portion, inclusive of the apartment therein, of the aforestated parcel of land, however, in the event the borrowers fail to pay, the lender has the option to buy or purchase the collateral for a total consideration of TWO HUNDRED THOUSAND (P200,000.00) PESOS, inclusive of the borrowed amount and interest therein;

3.  That the lender do hereby manifest her agreement and conformity to the preceding paragraph, while the borrowers do hereby confess receipt of the borrowed amount.”

·          

When the loan was about to mature the respondent proposed to buy the land for P200,000 but the petitioner refused and offered another residential lot at road. 20 project 8, quezon city. Respondent accepted the lot. The Respondents were not the owner but entitled as Land developers

·         March 1, 1989. Petitioner tendered payment for the loan but the respondent refused insisting that the former sign the document as deed of absolute sale of the collateral

·         Respondent filed a complaint and sent a letter asking the petitioner to sell the collateral pursuant to the loan agreement

·         March 5, 1990. Petitioner filed a petition for consignation and deposited the amount of P153,000 with the City Treasurer of Quezon City. Petitioner refused the sell the collateral and the respondent cosigned the amount of P47,500 with the trial court. In arriving at the amount deposited, respondents considered the principal loan of P100,000.00 and 18% interest per annum thereon, which amounted to P52,500.00. The principal loan and the interest taken together amounted to P152,500.00, leaving a balance of P47,500.00

·         The trial court ruled in favor of the petitioner and denied the prayer of the respondents in the execution of the deed of sale

·         Court of Appeals reversed the decision of the trial court

·         The SC found no error in the decision of the trial court, petitioner asked for a reconsideration. Respondent filed an opposition against petitioner’s motion for reconsideration. They contend that the agreement between the parties was not a sale with right of re-purchase, but a loan with interest at 18% per annum for a period of two years and if petitioner fails to pay, the respondent was given the right to purchase the property or apartment for P200,000.00, which is not contrary to law, morals, good customs, public order or public policy.

Issue: W/ON the petitioner failed to pay the loan at its maturity and is the stipulation in the loan contract valid

Held: No. The respondents refused to accept payment, petitioner consigned the amount with the trial court. We note the eagerness of respondents to acquire the property given as collateral to guarantee the loan. The sale of the collateral is an obligation with a suspensive condition. It is dependent upon the happening of an event, without which the obligation to sell does not arise.  Since the event did not occur, respondents do not have the right to demand fulfillment of petitioner’s obligation, especially where the same would not only be disadvantageous to petitioner but would also unjustly enrich respondents considering the inadequate consideration (P200,000.00) for a 70 square meter property situated at Congressional Avenue, Quezon City.

No, The SC said that the stipulation is void. the intent of the creditor appears to be evident,for the debtor is obliged to dispose of the collateral at the preagreed consideration amounting to practically the same amount

as the loan. In effect, the creditor acquires the collateral in the event of non-payment of the loan. This is within the concept of pactum commissorium. Such stipulation is void.