may also be released therefrom, in whole

Republic of the Philippines

or in part. 1
SUPREME COURT
Manila ... a positive right is created in favor of the
obligor to be released from the
FIRST DIVISION
performance of an obligation in full or in
G.R. No. L-44349 October 29, 1976 part when its performance 'has become so
difficult as to be manifestly beyond the
JESUS V. OCCENA and EFIGENIA C. OCCENA,
contemplation of the parties.
petitioners,
vs. Hence, the petition at abar wherein petitioners insist that
HON. RAMON V. JABSON, Presiding Judge of the the worldwide increase inprices cited by respondent does
Court Of First Instance of Rizal, Branch XXVI; not constitute a sufficient casue of action for modification
COURT OF APPEALS and TROPICAL HOMES, INC., of the subdivision contrct. After receipt of respondent's
respondents. comment, the Court in its Resolution of September 13,
1976 resolved to treat the petition as special civil
Occena Law Office for petitioners.
actionand declared the case submitted for decision.
Serrano, Diokno & Serrano for respondents.
The petition must be granted.
While respondent court correctly cited in its decision the
TEEHANKEE, J.: Code Commission's report giving the rationale for Article
The Court reverses the Court of Appeals appealed 1267 of the Civil Code, to wit;
resolution. The Civil Code authorizes the release of an The general rule is that impossibility of
obligor when the service has become so difficult as to be performance releases the obligor.
manifestly beyond the contemplation of the parties but However, it is submitted that when the
does not authorize the courts to modify or revise the service has become so difficult as to be
subdivision contract between the parties or fix a different manifestly beyond the contemplation of
sharing ratio from that contractually stipulated with the the parties, the court should be authorized
force of law between the parties. Private respondent's to release the obligor in whole or in part.
complaint for modification of the contract manifestly has The intention of the parties should govern
no basis in law and must therefore be dismissed for failure and if it appears that the service turns out
to state a cause of action. On February 25, 1975 private to be so difficult as have been beyond
respondent Tropical Homes, Inc. filed a complaint for their contemplation, it would be doing
modification of the terms and conditions of its subdivision violence to that intention to hold the
contract with petitioners (landowners of a 55,330 square obligor still responsible. ... 2
meter parcel of land in Davao City), making the following
It misapplied the same to respondent's complaint.
allegations:
If respondent's complaint were to be released from having
"That due to the increase in price of oil and its derivatives
to comply with the subdivision contract, assuming it could
and the concomitant worldwide spiralling of prices, which
show at the trial that the service undertaken contractually
are not within the control of plaintiff, of all commodities
by it had "become so difficult as to be manifestly beyond
including basis raw materials required for such
the contemplation of the parties", then respondent court's
development work, the cost of development has risen to
upholding of respondet's complaint and dismissal of the
levels which are unanticipated, unimagined and not within
petition would be justifiable under the cited codal article.
the remotest contemplation of the parties at the time said
Without said article, respondent would remain bound by
agreement was entered into and to such a degree that
its contract under the theretofore prevailing doctrine that
the conditions and factors which formed the original basis
performance therewith is ot excused "by the fact that the
of said contract, Annex 'A', have been totally changed;
contract turns out to be hard and improvident,
'That further performance by the plaintiff under the
unprofitable, or unespectedly burdensome", 3 since in
contract.
case a party desires to be excuse from performance in the
That further performance by the plaintiff event of such contingencies arising, it is his duty to
under the contract,Annex 'S', will result in provide threfor in the contract.
situation where defendants would be
But respondent's complaint seeks not release from the
unustly enriched at the expense of the
subdivision contract but that the court "render judgment I
plaintiff; will cause an inequitous
modifying the terms and Conditions of the Contract by
distribution of proceeds from the sales of
fixing the proper shares that should pertain to the herein
subdivided lots in manifest actually result
parties out of the gross proceed., from the sales of
in the unjust and intolerable exposure of
subdivided lots of subject subdivision". The cited article
plaintiff to implacable losses, all such
does not grant the courts this authority to remake, modify
situations resulting in an unconscionable,
or revise the contract or to fix the division of shares
unjust and immoral situation contrary to
between the parties as contractually stipulated with the
and in violation of the primordial concepts
force of law between the parties, so as to substitute its
of good faith, fairness and equity which
own terms for those covenanted by the
should pervade all human relations.
partiesthemselves. Respondent's complaint for
Under the subdivision contract, respondent "guaranteed modification of contract manifestly has no basis in law
(petitioners as landowners) as the latter's fixed and sole and therefore states no cause of action. Under the
share and participation an amount equivalent to forty particular allegations of respondent's complaint and the
(40%) percent of all cash receifpts fromthe sale of the circumstances therein averred, the courts cannot even in
subdivision lots" equity grant the relief sought.
Respondent pray of the Rizal court of first instance that A final procedural note. Respondent cites the general rule
"after due trial, this Honorable Court render judgment that an erroneous order denying a motion to dismiss is
modifying the terms and conditions of the contract ... by interlocutory and should not be corrected by certiorari but
fixing the proer shares that shouls pertain to the herein by appeal in due course. This case however manifestly
parties out of the gross proceeds from the sales of falls within the recognized exception that certiorari will lie
subdivided lots of subjects subdivision". when appeal would not prove to be a speedy and
Petitioners moved to dismiss the complaint principally for adequate remedy.' Where the remedy of appeal would
lack of cause of action, and upon denial thereof and of not, as in this case, promptly relieve petitioners from the
reconsideration by the lower court elevated the matter on injurious effects of the patently erroneous order
certiorari to respondent Court of Appeals. maintaining respondent's baseless action and compelling
petitioners needlessly to go through a protracted trial and
Respondent court in its questioned resolution of June 28, clogging the court dockets by one more futile case,
1976 set aside the preliminary injunction previously certiorari will issue as the plain, speedy and adequate
issued by it and dimissed petition on the ground that remedy of an aggrieved party.
under Article 1267 of the Civil Code which provides that
ACCORDINGLY, the resolution of respondent appellate
ART. 1267. When the service has become court is reversed and the petition for certiorari is granted
so difficult as to be manifestly beyond the and private respondent's complaint in the lower court is
contemplation of the parties, the obligor ordered dismissed for failure to state a sufficient cause of
action. With costs in all instances against private
respondent.
Makasiar, Muñoz Palma, Concepcion, Jr., and Martin JJ.,
concur.

Footnotes
1 Other Civil Code articles cited by
respondent court as justifyng the
complaint were Articles 19 and 1159
which read:
ART. 19. Every person must, in the
exercise of his rights and in the
performance of his duties, act with justice,
give everyone his due and observe
honesty and good faith.
xxx xxx xxx
ART. 1159. Obligations arising from
contracts have the force of law between
the contracting parties and should be
complied with in good faith.