TITLE Issue: Short Facts Ruling

1. Gan Tion v. CA WON NCC, Art. Natividad Franklin Failed to appear on her
1266 applies to this arraignment when called by the court after
Impossibility in bail case? - NO. being Charged of Estafa. She was released
bond does not apply from custody upon a bail bond posted by the
Asian Surety & Insurance Company in the
amount of P2,000. The surety company argued
that it should have been released from liability
due to negligence of the Philippine
Government in issuing a passport to accused
and allowing Franklin to leave the country.
Hence, they applied a motion for reduction of
Bond for this reason.
2. Laguna v. Manabat WON the Petitioner Companies reduced the rental
suspension of Payments w/o the consent of Manabat. W/c
Impossibility due to operations obviously objected by Manabat. Subsequently,
“extra-ordinary authorized by the Petitioner companies did not pay the rents
fortuitus event” PSC, based on completelty. Further, they filed case w/ Public
“financial losses” Service Commission (PSC) to suspend
of petitioners, was a operation of lines covered by leased certs w/
justification for the respondent due to --- (which the PSC granted)
equitable reduction 1. Reduction in amount of US dollars
of rentals NO. allowed by Monetary Board of
Central Bank for purchasing of spare
parts
2. Difficulty of and costly procurement
of said parts
3. High costs of operation, coupled w/
lack of passenger traffic, resulting to
financial loss
The TC and CA ruled in favor of Manabat and
grant the recovery of deducted rentals + unpaid
rent, as well as attorney’s fees and damages.
NCC, ARTICLE 1266, DOES NOT APPLY TO THE RELATION BETWEEN
SURETY TO A BAIL BOND AND THE STATE - This provision does not apply
to the case because the provision speaks of the relation between a debtor and a
creditor, which does not exist in the case of a surety upon a bail bond, on the
one hand, and the State, on the other.
Due to the surety company's fault because it was its duty to do everything and
take all steps necessary to prevent that departure.
“Art 1680 – The lessee shall have no right to a reduction of the rent on account of
the sterility of the land leased, or by reason of the loss of fruits due to ordinary
fortuitous events; but he shall have such right in case of the loss of more than one-
half of the fruits through extraordinary and unforeseen events.”
Extraordinary fortuitous events are understood to be: fire, war, pestilence, unusual
flood, locusts, earthquake, or others which are uncommon, and which contracting
parties could not have reasonably foreseen.
Court said the words used in Art 1680 clearly show it is a special provision for
leases of rural lands. “No other legal provision makes it applicable to ordinary
leases.” It is thus not applicable to leases involving operations of lines for
public transportation. “It is a provision of social justice designed to relieve poor
farmers from the harsh consequences of their contracts with rich landowners.”
Court said CA correctly observed that reasons stipulated by Petitioner Companies
e.g. high prices, reduction of dollar allocations already existed when the contract
of lease was executed. These events could are not fortuitous events or out of
their control; the suspension was out of the petitioners’ voluntary desistance

3. Occeña v. Jabson Whether or not the Tropical Homes, Inc had a subdivision contract
worldwide increase with petitioners who are the owners of the land The cited article does not grant the courts this authority to remake, modify or
Impossibility of in prices cited by subject of subdivision development by private revise the contract or to fix the division of shares between the parties as
Performance respondent contractually stipulated with the force of law between the parties, so as to
respondent. The contract stipulated that the
constitute a substitute its own terms for those covenanted by the parties themselves.
sufficient cause for petitioners’ fixed and sole share and
modification of the participation is the land which is equivalent
subdivision to forty percent of all cash receipts from the
contract. NO. sale of the subdivision lots.
 When the development costs increased to such
level not anticipated during the signing of the
contract and which threatened the financial
viability of the project as assessed by the
private respondent, respondent filed at the
lower court a complaint for the modification
of the terms and conditions of the contract
by fixing the proper shares that should
pertain to the parties therein out of the gross
proceeds from the sales of the subdivision lots.
Legal Compensation
1. Gan Tion v. CA / whether or not there On 1961, Gan Tion filed an ejectment case The award is made in favor of the litigant, not of his counsel, and is justified by
Ong has been legal against Ong for the alleged non-payment of way of indemnity for damages recoverable by the former in the cases enumerated
compensation rents for August and September of that year. (P in Article 2208 of the Civil Code.
Legal Compensation between petitioner 180 per month, total of P 360) before the MTC.
of attorney’s fees Gan Tion and W/c the CFI ordered to Tion to pay Ong the It is the litigant, not his counsel, who is the judgment creditor and who may
respondent Ong sum of P 500 as atty’s fees upon appeal by Ong. enforce the judgment by execution. Such credit, therefore, may properly be the
Wan Sieng – YES. The judgment became final. subject of legal compensation.

On 1963, Tion served notice on Ong that he Quite obviously it would be unjust to compel petitioner (Tion) to pay his debt for
was increasing his rents to P180 per month, P500 when admittedly his creditor (Ong) is indebted to him for more than P4,000.
effective on Nov. 1st and at the same time
demanded the rents in arrears at the old rate in
the aggregate amount of P4,320. (from the
period: August 1961 to Oct. 1963) In the
meantime, Ong obtained a writ of execution of
the judgment for atty’s fees in his favor. Then
Tion went to the CA via certiorari where he
pleaded legal compensation. CA said that
there is NO Legal Compensation since since
the real creditor with respect to the sum of
P500 was the Ong’s counsel.
2.
3. Francia v. IAC W/N Francia’s tax Engracio Francia is the registered owner of a A person cannot refuse to pay a tax on the ground that the government owes
delinquency of residential lot and a two-story house built upon him an amount equal to or greater than the tax being collected. The collection
P2,400 should have it situated at Pasay City. The lot covers 328 sq. of a tax cannot await the results of a lawsuit against the government.
been set off from meters, TCT No. 4739 of the Registry of
the government’s Deeds. A portion (125 sq m) of Francia's Reason: government and taxpayer are not mutually creditors and debtors of each
debt from him property was expropriated by the government other' under Article 1278 of the Civil Code and a "claim for taxes is not such a
(P4,116). - NO for the sum of P4,116.00 representing the debt, demand, contract or judgment as is allowed to be set-off." [Republic v.
estimated amount equivalent to the assessed Mambulao Lumber Co]
value of the aforesaid portion. Since 1963 up to
1977, Francia failed to pay his real estate taxes. The tax was due to the city government while the expropriation was effected
Hence the said property was sold in public by the national government.
auction which Ho Fernandez won.
 Francia contended that The government is
indebted to her by P4,116. IAC committed a
grave error of law when it did not set off
Francia’s obligation to pay P2,400 for
supposed tax delinquency from the
government’s debt
4. Republic v. de los W/N The The RCA filed a Motion to Vacate the Orders
Angeles Respondent Judge directing the RCA to pay rentals to Marcelo
also erred in Steel Corporation. In said motion, the RCA
Liquidated Damages denying the claim emphasized that it is not a party to the case; that
need not be proven of the RCA that it had been denied due process for lack of
compensation of notice and the right to be heard; that
debts had taken compensation took place by operation of law
place - YES pursuant to Art. 1286 of the Civil Code without
the need of filing a case against Petra R. Farin,
or a decision rendered against her for the
payment of such obligation; and that the
provisions of the Rules of Court permitting a
judgment creditor to reach money or property
in the hands of third persons like the RCA, all
presuppose a final judgment, and not a mere
interlocutory order. Which the RTC did not act
upon
It would have been an easy matter to withdraw P2,400.00 from the deposit so that
he could pay the tax obligation thus aborting the sale at public auction. The amount
of P4,116.00 paid by the national government for the 125 square meter portion of
his lot was deposited with the Philippine National Bank long before the sale at
public auction of his remaining property.
Proof of the liquidation of a claim, in order that there be compensation of debts, is
proper if such claim is disputed. But, if the claim is undisputed, as in the case at
bar, the statement is sufficient and no other proof may be required.
The claim of RCA that Petra Farin has an outstanding obligation the the RCA in
the amount of P236,062.40 which should compensate against the rents due was
raised by RCA in its MR on Dec 23, 1967. Such copy of the Motion was given to
Petra and she did not dispute nor deny such claim. Neither did the MSC deny. Such
silence could be taken as admission of the existence and validity of such a claim.
Therefore, since the claim of the RCA is undisputed, proof of its liquidation is not
necessary

Petra Farin and Benjamin Farin obtained a loan

from the Marcelo Steel Corporation in the
amount of P600,000.00, and as security
therefor, the said spouses constituted, in favor
of the said corporation, a real estate mortgage
upon their parcel of land situated at Quezon
City
5.