OBLICON CASES FINALS Hernandez-Nievera vs. Hernandez Hernandez, et al assails the decision of the CA holding the novation of a MOA between petitioners and respondents in a sale of parcels of land for housing development. The original MOA had the option of rescission if the vendees did not exercise their option to buy the properties. However, one of the siblings, entered into a DAC with the respondents conveying the properties in exchange for stocks and shares. Supreme Court denied petition, holding the novation valid and extinguishing the old obligation in favor of the new one, saying the power of attorney held by Demetrio as an agent, covered the sale of the land in behalf of his sisters. Reyna vs. COA Petitioners are employees of LBP who authorized the prepayment of fees with the cattle supplier in connection with a credit financing loan program by the said bank to cooperatives. Upon audit, COA ordered the petitioners to refund the disallowed transaction after the BSP ordered the debt to be written-off in the books of the LBP. Supreme Court stated that a write-off is not a condonation, wherein in the latter, the gratuity of the creditor and acceptance of the debtor is needed. Such is not the case in a write-off, wherein a debt is deemed uncollectable in the accounting books of the creditor and on the occasion that the debtor becomes solvent again, the former may change the entry on their books to make the debt collectible even without the approval of the debtor. A write-off does not release the petitioners from liability for the prepayment of fees, the latter being without legal basis. Insurance of PI vs Sps. Gregorio Petitioners granted loans to the respondents who mortgaged parcels of lands to the former as security in the event of nonpayment. The spouses gave the bank tax certificates as proof of ownership, saying the lands were still untitled. When the respondents failed to pay back the loan, the properties were foreclosed and were subjected to an auction, wherein the petitioner was the highest bidder. Upon consolidation of properties, the petitioners discovered that the parcels of land now belonged to third persons. The Supreme Court ruled that actions upon injury or for quasi delicts must be instituted within 4 years upon discovery of the fraud (Art. 1146), which was done by the petitioners; and laches did not occur because the petitioners relied on the good faith of the respondents false representations regarding the properties. Sandoval Shipyards vs PMMA The respondent asked the petitioners to build them two boats to be used for the training of their students. Payment was made in full and the boats were received by one of the employees of the respondent. However, the boats were substandard and receipt was made without the authority of the employee. Furthermore, the petitioners failed to comply with the delivery even after asking for extensions. The respondents then asked for rescission of the contract and the amount paid should be restituted plus damages. The Supreme Court held that rescission only works with mutual restitution that is, the return of the objects received plus damages. Since the employee was not authorized to receive, it was as if there was no receipt at all. Hence there can be no mutual restitution. Petitioners are ordered to return the amount received plus damages. Stronghold Insurance vs. Republic Asahi The respondents asked a construction company to construct roadways and drainage in their compound, wherein the petitioners took part in the performance bond. Because of the slow progress, the respondents asked for rescission and asked another construction company to finish the job. Thereafter, they filed for damages. However, the petitioners refused to honor the performance bond because the owner of the construction company already died, saying their obligation was already extinguished upon death of the principal obligor. The Supreme Court ruled that the death of the principal obligor shall not extinguish the obligation and claims may be made against his estate unless a contrary stipulation is indicated, if it is against the law or nature of the obligation. Consequently, the obligation of the insurance company in the performance bond is not extinguished and therefore, they must pay.

Cacayorin vs AFPMBAI The petitioners tried to purchase a property of the respondents through a loan with a rural bank, which then issued a title in their name. However, the bank closed shop and was brought under receivership with PDIC. Somehow, the papers regarding the loan and the TCT came into the possession of the respondents and demanded the payment of the loan. Confused as to where to tender the payment, the petitioners asked the court for consignation, which the respondents assailed, saying the HLURB has the jurisdiction over the case. The Supreme Court ruled that consignation requires judicial authority so only a court may receive the payment of the loan. The respondents should not have assailed the jurisdiction of the court if they wanted the loan to be settled. Typingco vs. Lim, BPI Respondents borrowed money from the petitioner and conveyed their house and lot as dacion in pago (delivery of a thing as an acceptable equivalent of an obligation, wherein the object is the thing offered and the debt is the consideration or price) upon delay of the latter. However, the property was under mortgage with BPI and they refused to deliver the title unless the family settles their account. The Supreme Court ruled that a mortgage does not vest the ownership unless it was bought from a public auction. Surrender of the title will not impair the existing obligation of the family over the property. Thus, the bank must deliver the title in favor of the respondent who acquired ownership of the property. Rockville Excel vs. Sps. Culla The respondents had a loan with PS Bank and asked the help of the petitioners to pay that debt. In return, they offered to pay their loan with a property which was valued more than the amount borrowed. The petitioners alleged this as dacion in pago while the respondents claim it was just an equitable mortgage. The Supreme Court ruled that it was only an equitable mortgage (a contract which lacks the formality but was nevertheless intended to be a mortgage) because of the granting of extensions for the payment of the loan and the continued possession of the property of the respondents even after the perfection of the deed of sale. Determination of the nature of contract lies with the intention of the parties, not with the name given to it by them. Sps. Go Cinco vs. CA The petitioners owed money with the respondents and secured the loan with some properties. When they failed to pay the debt, they secured another loan with PNB and used the same properties as mortgage. When the petitioner found out about the mortgage during the collection with the bank, she refused to sign the release of the properties. The Supreme Court ruled that the respondents refusal to accept the payment of the petitioner was without valid ground, but such refusal cannot be equated with payment. Consignation may be used as a remedy. A refusal of payment releases the debtor from the payment of interest from the time the refusal took place. Megaworld vs Tanseco The respondent agreed to buy a condominium unit sold by the petitioner, to be delivered on a specific date. Having failed to deliver the unit after due payments made by the respondent, the petitioner was asked to rescind the contract and return the money paid by the respondent. The Supreme Court ruled that the failure of the petitioner to deliver the unit, contending the 1997 Asian Financial crisis as a force majeure is untenable as fluctuations of the stock market are foreseeable especially in the real estate business. The respondent cannot be compelled to accept the late delivery of the unit and demand on her part is not needed if it is useless. In reciprocal obligations, delay on one party begins when the other party had fulfilled his obligation. Petitioner was made to return the payment plus interests and damages. Sta Lucia Realty vs Sps. Buenaventura Respondents bought a lot from a subdivision owned and developed by petitioner. However, during the building of the house, they found out that the said lot was also awarded to another person. They nevertheless continued with the construction by virtue of the permit granted by the petitioner. The Supreme Court ruled that Art. 1311 is applicable because the lot was bought from the original owner and the rights attached to that lot were transmitted to the new owner unless it is contrary to law, to an expressed stipulation or due to the nature of the contract. Rescission would be the correct remedy.