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    87 PNCC v. CA

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    1) PNCC entered into a lease agreement for over 30,000 sqm of property but later wanted to terminate the contract due to financial and technical difficulties. 2) The Court held that PNCC was obligated to honor the lease agreement as its obligations were to "give" (pay rent) rather than "do" some work or service, so legal impossibility did not apply. 3) The Court also found that the reasons given by PNCC for termination like political climate changes were not the specific legal or physical impossibilities needed to invalidate the contract under Article 1266.

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    87 PNCC v. CA

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    GSS
    43 views1 page
    1) PNCC entered into a lease agreement for over 30,000 sqm of property but later wanted to terminate the contract due to financial and technical difficulties. 2) The Court held that PNCC was obligated to honor the lease agreement as its obligations were to "give" (pay rent) rather than "do" some work or service, so legal impossibility did not apply. 3) The Court also found that the reasons given by PNCC for termination like political climate changes were not the specific legal or physical impossibilities needed to invalidate the contract under Article 1266.

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    1) PNCC entered into a lease agreement for over 30,000 sqm of property but later wanted to terminate the contract due to financial and technical difficulties. 2) The Court held that PNCC was obligated to honor the lease agreement as its obligations were to "give" (pay rent) rather than "do" some work or service, so legal impossibility did not apply. 3) The Court also found that the reasons given by PNCC for termination like political climate changes were not the specific legal or physical impossibilities needed to invalidate the contract under Article 1266.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    43 views1 page

    87 PNCC v. CA

    Uploaded by

    GSS
    1) PNCC entered into a lease agreement for over 30,000 sqm of property but later wanted to terminate the contract due to financial and technical difficulties. 2) The Court held that PNCC was obligated to honor the lease agreement as its obligations were to "give" (pay rent) rather than "do" some work or service, so legal impossibility did not apply. 3) The Court also found that the reasons given by PNCC for termination like political climate changes were not the specific legal or physical impossibilities needed to invalidate the contract under Article 1266.

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    © All Rights Reserved
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    of 1

    Title: #87 PNCC v.

    CA for the use of the recipient, or for its simple possession, or in order
    Details: G.R. No. 116896, May 5, 1997 | J. Davide, Jr. to return it to its owner.
    Topic: Rebus Sic Stantibus  The obligation to pay rentals or deliver the thing in a contract of
    Doctrine: lease falls within the prestation to give; hence, it is not covered
    Facts: within the scope of Article 1266. 
    1. Lease over 30,000 sqm. property  At any rate, the unforeseen event and causes mentioned by
    2. PNCC (Phil. Nat’l Construction Corp) obtained from the Ministry of petitioner are not the legal or physical impossibilities contemplated
    Human Settlements a Temporary Use Permit for the proposed rock in said article. Besides, petitioner failed to state specifically the
    crushing project. The permit was to be valid for two years unless circumstances brought about by the abrupt change in the political
    sooner revoked by the Ministry. climate in the country except the alleged prevailing uncertainties
    3. Private respondents wrote petitioner requesting payment of the in government policies on infrastructure projects.
    first annual rental was due and payable upon the execution of the
    contract.
    4. PNCC argued that under paragraph 1 of the lease contract,
    payment of rental would commence on the date of the issuance of
    an industrial clearance by the Ministry of Human Settlements, and
    not from the date of signing of the contract. 
    5. PNCC then expressed its intention to terminate the contract, as it
    had decided to cancel or discontinue with the rock crushing project
    "due to financial, as well as technical, difficulties."
    6. Private respondents refused to accede to petitioner's request for
    the pretermination of the lease contract. They insisted on the
    performance of petitioner's obligation and reiterated their demand
    for the payment of the first annual rental.

    Issue:
    WON petitioner is obligated to honor the lease agreement? – YES

    Held:
     Invoking Article 1266 and the principle of rebus sic stantibus,
    petitioner asserts that it should be released from the obligatory
    force of the contract of lease because the purpose of the contract
    did not materialize due to unforeseen events and causes beyond
    its control, i.e., due to abrupt change in political climate after the
    EDSA Revolution and financial difficulties.
     It is a fundamental rule that contracts, once perfected, bind both
    contracting parties, and obligations arising therefrom have the
    force of law between the parties and should be complied with in
    good faith.
     But the law recognizes exceptions to the principle of the obligatory
    force of contracts. One exception is laid down in Article 1266 of the
    Civil Code, which reads: "The debtor in obligations to do shall also
    be released when the prestation becomes legally or physically
    impossible without the fault of the obligor."
     Petitioner cannot, however, successfully take refuge in the said
    article, since it is applicable only to obligations "to do", and not to
    obligations "to give".
     An obligation "to do" includes all kinds of work or service; while an
    obligation "to give" is a prestation which consists in the delivery of
    a movable or an immovable thing in order to create a real right, or

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