G.R. No. L-44349, 29 October 1976

FACTS:

Respondent Tropical Homes entered into a subdivision contract to develop petitioner’s land. They agreed that respondent would receive 40% from the sale of the subdivision lots. Thereafter, development costs rose to unanticipated levels which prompted respondent to file an action for the modification of the contract, particularly on the sharing of sale proceeds. Petitioners moved to dismiss complaint for lack of cause of action. The lower court denied said motion. CA upheld lower court citing Article 1267 on impossible obligations. Petitioner insists that the increase in said costs do not justify a modification of the contract. Hence petition.

ISSUE:

WON respondent may demand modification of the contract on the ground that the prestation has manifestly come beyond the contemplation of the parties.

RULING:

No. private respondent cannot demand modification of the contract.

SC ruled that Article 1267 of the Civil Code which states that: “When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part” is only applicable if the remedy sought is the release from the compliance of the obligation not a modification of the same.

The cited article does not grant the courts authority to remake, modify or revise the contract or to fix the division of shares between the parties as contractually stipulated with the force of law between the parties, so as to substitute its own terms for those covenanted by the parties themselves. Respondent’s complaint for modification of contract manifestly has no basis in law and therefore states no cause of action. Petition granted.

* Case digest by  Ariel M. Acopiado, LLB-1, Andres Bonifacio Law School, SY 2017-2018