George L. Parks vs. Province of Tarlac 49 Phil.

142
Facts: On October 18, 1910, Conception Cirer and James Hill, the owners of parcel of land No. 2 referred
to in the complaint, donated it perpetually to the Municipality of Tarlac, subject to the condition that it
will be absolutely and exclusively for the erection of a central school and the other for a public park, the
work to commence in both cases within the period of six months from the date of the ratification by the
parties of the document evidencing the donation. The donation was accepted by Mr. Santiago de Jesus
in the same document on behalf of the municipal council of Tarlac of which he was the municipal
president and subsequently transferred the title to this property to the Province of Tarlac.
On January 15, 1921, Conception Cirer and James Hill sold this parcel of land to herein plaintiff George L.
Parks. The plaintiff alleging that the condition of the donation had not been complied with and invoking
the sale of this parcel of land made by Corception Cirer and James Hill in his favor, brought this action
against the Province of Tarlac, the Municipality of Tarlac, Corception Cirer and James Hill and prayed
that he be declared the absolute owner entitled to the possession of this parcel of land.
The Lower Court dismissed the complaint.
Issue:Whether or not the plaintiff, George L. Parks, has a right of action to recover the parcel of land
from the Province of Tarlac on the ground that the condition imposed is a suspensive or condition
precedent and therefore, the said municipality had never acquired a right thereto since the condition
was never performed.
Held: The Supreme Court ruled that the contention of the appellant that a condition precedent having
been imposed in the donation and the same not having been complied with, the donation never became
effective is without merit and erroneous. The characteristic of a condition precedent is that the
acquisition of the right is not effected while said condition is not complied with or is not deemed
complied with. Meanwhile, nothing is acquired and there is only an expectancy of right. Consequently,
when a condition is imposed, the compliance of which cannot be effected except when the right is
deemed acquired, such a condition cannot be a condition precedent but a condition subsequent or
resolutory condition.

JAMES SVENDSEN v. PEOPLE OF THE PHILIPPINES 546 SCRA 659 (2008)
The failure of the prosecution to prove the existence and receipt by the accused of the requisite written
notice of dishonor and that he was given at least five banking days within which to settle his account
constitutes sufficient ground for his acquittal. Cristina Reyes (Reyes) extended a loan to James Svendsen
(Svendsen) in the amount of P200,000, to bear interest at 10% a month. After Svendsen had partially
paid his obligation, he failed to settle the balance which had reached P380,000 inclusive of
interest. Reyes thus filed a complaint against Svendson, which was eventually settled when Svendson
paid her P200,000 and issued in her favor a postdated International Exchange Bank check. The same was
co- signed by one Wilhem Bolton. When the check was presented for payment it was dishonored for
having been Drawn Against Insufficient Funds (DAIF). Reyes then filed a complaint against Svendsen and
his co-signatory to the check, Bolton, for violation of B.P. Blg. 22 before the Metropolitan Trial Court of
Manila. Svendsen denied the allegation against him stating that he has no knowledge about the
insufficiency of his funds with the drawee bank for the payment of the check in full upon its
presentment. The MeTC rendered judgment and found Svendsin guilty of the offense charged. The
Regional Trial Court (RTC) affirmed the MeTC judgment. On appeal, the Court of Appeals affirmed the
conviction. Hence, this appeal.
ISSUE:
Whether or not the CA erred in denying the Svendsons appeal despite failure of the prosecution to
prove all the elements of violation of B.P. Blg. 22
HELD:
For Svendsen to be validly convicted of the crime under B.P. Blg. 22, the following requisites must thus
concur: (1) the making, drawing and issuance of any check to apply for account or for value; (2) the
knowledge of the maker, drawer, or issuer that at the time of issue he does not have sufficient funds in
or credit with the drawee bank for the payment of the check in full upon its presentment; and (3) the
subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit or dishonor for
the same reason had not the drawer, without any valid cause, ordered the bank to stop payment The
spirit and letter of the Bouncing Checks Law require for the act to be punished there under not only that
the accused issued a check that is dishonored, but also that the accused has actually been notified in
writing of the fact of dishonor. This is consistent with the rule that penal statues must be construed
strictly against the state and liberally in favor of the accused. The same penalty shall be imposed upon
any person who, having sufficient funds in or credit with the drawee bank when he makes or draws and
issues a check, shall fail to keep sufficient funds or to maintain a credit to cover the full amount of the
check if presented within a period of ninety (90) days from the date appearing thereon, for which reason
it is dishonored by the drawee bank. Where the check is drawn by a corporation, company or entity, the
person or persons who actually signed the check in behalf of such drawer shall be liable under this Act.
The making, drawing and issuance of a check payment of which is refused by the drawee because of
insufficient funds in or credit with such bank, when presented within ninety (90) days from the date of
the check, shall be prima facie evidence of knowledge of such insufficiency of funds.

QUIJADA VS. CA- RESOLUTORY CONDITION IN DONATIONS

When a person donates land to another on a condition. The condition imposed is not a condition
precedent or a suspensive condition but a resolutory one.

FACTS:
Petitioners are the children of the late Trinidad Quijada. Trinidad and her siblings executed a deed of
donation of a two-hectare lot in favor of the Municipality of Talacogon (Agusan del Sur), exclusively for
the purpose of constructing the proposed provincial high school. However, possession remained with
Trinidad. She subsequently sold the two hectares on two separate occasions to Regalado Mondejar, who
sold it to different persons. Eventually, the Municipality, failing to construct the high school, reverted
ownership to the donors. Petitioners filed an action for quieting of title and recovery of possession and
ownership. RTC ruled in favor of petitioners, but CA reversed.

ISSUE:
Whether the deed of donation had a suspensive condition or a resolutory condition
Whether the sale was valid

RULING:
When the donation was accepted, the ownership was transferred to the school, only subject to a
condition that a school must be constructed over the lot. Since ownership was transferred, and failure
to fulfill the condition reverts the ownership back to the donor, it is a resolutory condition.

(Not really a discussion in Property) When Trinidad sold the parcels of land to Mondejar, she was not the
owner of the land. Petitioners also did not sleep on their rights to recover the possession and ownership
over the property since they immediately filed the action when the municipality passed the resolution,
reverting the ownership of land to the donors. However, a sale being a consensual contract, it can be
perfected upon meeting of the minds, and completing the three essential elements of a valid contract of
sale. Even when Trinidad was not the owner when the sale was perfected, tradition through delivery is
only important upon the consummation stage. Such transfer of ownership through actual or
constructive delivery only happened when the lands reverted back to petitioners. Art 1434 is applicable,
stating that seller's "title passes by operation if law to the buyer," and therefore making the sale valid.
The donated lots cannot be considered outside the commerce of man, since nowhere in the law states
that properties owned by municipality would be as such.

Chua vs Timan
Interest Rate Usurious Rates 12% Per Annum Interest Rate Central Bank Circular No. 905-82 Legal
Rate
In February and March 1999 Chua loaned the Timans 6 loans amounting to P864k. The interest rate
agreed upon was 7%. The Timans paid at that rate until September 1999. In October 1999, the % rate
was reduced to 5%. In March 2000, the Timans offered to pay P764k. Chua did not accept payment as
they wanted the full amount of P864k. The Timans then consigned with the court the amount of P864k.
The RTC ruled that the 7% and the reduced rate of 5% stipulated rate is excessive, iniquitous,
unconscionable and exorbitant (equivalent to 84% and 60% per annum rate). Chua averred that by
virtue of CB Circular 905, the ceiling on interest rate has been removed hence the 5-7% rate is valid and
in the first place, Timan agreed to it.
ISSUE: Whether or not the rate is valid.
HELD: No. As has been ruled by the Supreme Court in a multitude of cases, interest rates of 3% and
higher are already excessive. The rate should then be reduced to 12% per annum or 1% per month. The
Usury Law has been rendered ineffective by the said CB Circular but it has not repealed the law, it
merely suspended it. Note that only laws can repeal laws, not circulars.
While C.B. Circular No. 905-82, which took effect on January 1, 1983, effectively removed the ceiling on
interest rates for both secured and unsecured loans, regardless of maturity, nothing in the said circular
could possibly be read as granting carte blancheauthority to lenders to raise interest rates to levels
which would either enslave their borrowers or lead to a hemorrhaging of their assets.


Smith, Bell & Co. vs. Sotelo Matii 44 Phil. 874
Facts: In August, 1918, the plaintiff corporation and the defendant, Mr. Vicente Sotelo, entered into
contracts whereby the former obligated itself to sell two steel tanks, two expellers, and two electric
motors to the latter. As to the tanks, the agreement was that the delivery was to be made within three
or four months, but the seller shall not be responsible for delays caused by fires, riots on land or on sea,
strikes or other causes known as Force Majeure. With regard to the expellers, he contract says within
the month of September, 1918, or as soon as possible. And with reference to the motors, approximate
delivery within ninety days but not guaranteed.
The tanks arrived at Manila on April, 1919; the expellers on October 26, 1918, and the motors of
February 27, 1919. The plaintiff notified the defendant of the arrival of the said goods but the latter
refused to receive them and pay the prices. This caused the plaintiff to file a suit against defendant. The
defendant, in turn, denied the allegations of the plaintiff, stating that it was only on May, 1919 when
plaintiff infirmed them that the tanks have arrived. The Trial court rendered a decision absolving the
defendant insofar as the tanks and motors are concerned but it rendered a decision against the
defendant with regards to the receiving of the goods. Hence, an appeal by both parties.
Issue: Whether or not under the contracts entered into and the circumstances established in the record,
the plaintiff has fulfilled, in due time, it obligation to bring the goods in question to Manila.
Ruling: Judgment appealed from is modified and defendant is sentenced to accept the goods form the
plaintiff.
The obligation must be regarded as conditional. The fulfillment of the condition, in this case,
depends not only upon the will of the plaintiff but also that of the third person. According to article 1125
of the Civil Code (now art. 1193 of the NCC), Obligations for the performance of which a day certain has
been fixed shall be demandable only when the day arrives; A day certain must be understood to be one
which must necessarily arrive, even though its date be unknown; If the uncertainty should consists at
the arrival or non-arrival of the day, the obligation is conditional.. Time is regarded as unessential in
this kind of contract, though the delivery must be made within the reasonable time.
Moreover, the obligor will be deemed to have sufficiently performed his part of the obligation, if he has
done all that was in his power, even if the condition has not been fulfilled in reality. It is sufficient in the
record that the plaintiff has made all the efforts it could possibly be expected to make under the
circumstances, to bring the goods in question to Manila.

MACALINAO V. BPI, 600 SCRA 67

FACTS: Petitioner Ileana Macalinao defaulted on the payment of her BPI credit card dues. There was a
stipulation in a contract that the charges and/or balance shall earn 3% per month and additional penalty
fee of another 3% per month. The Regional Trial Court reduced the 3% monthly interest to 2%. On
appeal of the case, the Court of Appeals reversed the decision of the RTC holding that petitioner
Macalinao freely availed herself of the credit card facility offered by respondent Bank of the Philippine
Islands to general public; contracts of adhesion are not invalid per se. Petitioner assailed the appellate
courts decision alleging that the interest rate and penalty charges are unconscionable and iniquitous at
36% per annum.

ISSUE: Whether or not the interest rate and penalty charges are unconscionable and iniquitous at 36%
per annum.

HELD: The interest rate and penalty charges are unconscionable and iniquitous at 36% per annum. The
Supreme Court held that the interest rate and penalty charge of 3% per month or the 36% per annum
should be reduced to 2% per month or 24% per annum. In a long line of cased decided by the Supreme
Court, it considered the 36% per annum to be excessive and unconscionable. Citing Article1229, in
exercising this power to determine what is iniquitous and unconscionable; courts must consider the
circumstances of each case since what may be iniquitous and unconscionable in one maybe totally just
and equitable in another. In the instant case, Macalinao made partial payments to BPI .Therefore, the
interest rate and penalty charge of 3% per month or 36% per annum should be reduced to 2% per
month or 24% per annum.

Case of Francisco Lao Lim vs Court of Appeals and Benito Villavicencio Dy
G.R.No. 87047 31October1990
This case is with regard to Art 1182 of the NCC- Potestative Condition- Stipulation dependent upon the
sole will of the debtor
FACTS OF THE CASE:
Records show that Francisco Lim, entered into a contract of lease with Benito Dy for a period of 3 years,
from 1976 to 1979. After the stipulated term expired the respondent refused to leave the premises, so
Francisco Lim filed an ejectment suit against Benito Dy. This case was then taken over by a judicially
approved compromise agreement which provides an automatic increase in rent of 20% every 3 years.
On 1985 Dy, informed Lim of his intention to renew the lease up to 1988, Lim did not agree to the
renewal.
In 1987 another ejectment suit was filed by Lim after the failure of Dy to vacate the premises. It was
dismissed by the RTC and later affirmed by the CA for the following reasons: (1) the stipulation in the
compromise agreement which allows the lessee (Benito Dy) to stay on the premises as long as he needs
it and can pay rents is valid, being a resolutory condition, and therefore beyond the ambit of art 1308 of
the NCC; and (2) the compromise agreement has the effect of res judicata.

ISSUES OF THE CASE:
Was the stipulation in the compromise agreement which allows the lessee to stay on the premises as
long as he needs it and can pay rents is valid?
- No, since the stipulation for as long as the defendant needed the premises and can meet and pay said
increases is a purely potestative condition because it leaves the effectivity and enjoyment of leasehold
rights to the sole and exclusive will of the lessee.
- The continuance, effectivity, and fulfillment of a contract of lease cannot be made to depend
exclusively upon the free and uncontrolled choice of the lessee between continuing payment of the
rentals or not, completely depriving the owner of any say in the matter. Mutuality does not obtain in
such a contract of lease and no equality exists between the lessor and the lessee.

HELD:
The decision of the Court of Appeals is REVERSED AND SET ASIDE. Benito Dy is ordered to immediately
vacate and return the possession of the premises and pay the monthly rentals due thereon in
accordance with the compromise agreement until he shall have actually vacated the same. This
Judgment is immediately executory.

Obligations and Contracts Terms:

Potestative Condition- This can be found in Art 1182 of the NCC. A potestative condition speaks of
fulfillment of an obligation rests solely upon the will of the debtor. An obligation which is subject to a
suspensive potestative condition is non- demandable, hence it is void. If it is the debtor himself who
determines the fulfillment of the condition, such an agreement produces no juridical effect that can be
enforced, and thus null


G.R. No. 124290 January 16, 1998
ALLIED BANKING CORPORATION vs. CA

Issues:
There are two (2) main issues in this petition for review:
(a) Whether a stipulation in a contract of lease to the effect that the contract "may be renewed
for a like term at the option of the lessee" is void for being potestative or violative of the principle of
mutuality of contracts under Art. 1308 of the Civil Code and, corollarily, what is the meaning of the
clause "may be renewed for a like term at the option of the lessee;" and
(b) Whether a lessee has the legal personality to assail the validity of a deed of donation
executed by the lessor over the leased premises.

Facts:
Spouses Tanqueco owned a 512-square meter lot. They leased the property to Allied Banking
Corporation (ALLIED). The lease contract specifically states in its Provision No. 1 that "the term of this
lease shall be fourteen (14) years commencing from April 1, 1978 and may be renewed for a like term at
the option of the lessee."
Sometime in February 1988 the Tanqueco spouses executed a deed of donation over the subject
property in favor of their four (4) children who accepted the donation in the same public instrument.
A year before the expiration of the contract of lease, the Tanquecos notified ALLIED that they
were no longer interested in renewing the lease. ALLIED replied that it was exercising its option to
renew their lease under the same terms with additional proposals.

When the lease contract expired, an action for ejectment was commenced before the MTC of
Quezon City. The MTC, RTC and CA ruled in favor of the Tanquecos. Hence, this present petition.

Ruling:
We agree with ALLIED. Article 1308 of the Civil Code expresses what is known in law as the
principle of mutuality of contracts. It provides that "the contract must bind both the contracting parties;
its validity or compliance cannot be left to the will of one of them." The ultimate purpose is to render
void a contract containing a condition which makes its fulfillment dependent solely upon the
uncontrolled will of one of the contracting parties.
An express agreement which gives the lessee the sole option to renew the lease is frequent
and subject to statutory restrictions, valid and binding on the parties. This option, which is provided in
the same lease agreement, is fundamentally part of the consideration in the contract and is no different
from any other provision of the lease carrying an undertaking on the part of the lessor to act
conditioned on the performance by the lessee. It is a purely executory contract and at most confers a
right to obtain a renewal if there is compliance with the conditions on which the rights is made to
depend. The right of renewal constitutes a part of the lessee's interest in the land and forms a
substantial and integral part of the agreement.
The fact that such option is binding only on the lessor and can be exercised only by the lessee
does not render it void for lack of mutuality. After all, the lessor is free to give or not to give the option
to the lessee.
With respect to the meaning of the clause "may be renewed for a like term at the option of the
lessee," we sustain petitioner's contention that its exercise of the option resulted in the automatic
extension of the contract of lease under the same terms and conditions.
Finally, ALLIED cannot assail the validity of the deed of donation, not being a party thereto. A
person who is not principally or subsidiarily bound has no legal capacity to challenge the validity of the
contract.

WHEREFORE, the Decision of the Court of Appeals is REVERSED and SET ASIDE. Considering that
ALLIED already vacated the leased premises, the renewed lease contract is deemed terminated as of
that date. However, ALLIED is required to pay rentals to lessors at the rate provided in their existing
contract.