G.R. No. L-44349. October 29, 1976.
JESUS V. OCCENA and EFIGENIA C. OCCENA, petitioners, vs. HON. RAMON V. JABSON, Presiding Judge of the Court Of First Instance of Rizal, Branch XXVI; COURT OF APPEALS and TROPICAL HOMES, INC., respondents.

FACTS

Private respondent Tropical Homes, Inc. filed a complaint for modification of a subdivision contract against petitioners, the landowners. The contract stipulated that the landowners would receive a fixed share of forty percent (40%) of all cash receipts from lot sales. Respondent alleged that due to a worldwide increase in oil prices and the consequent spiraling cost of raw materials, the development costs had risen to unanticipated levels not within the contemplation of the parties at the time of the agreement. It claimed that further performance would result in unjust enrichment for the landowners and cause it “implacable losses,” creating an unconscionable situation.
Petitioners moved to dismiss the complaint for failure to state a cause of action. The lower court denied the motion. On certiorari, the Court of Appeals upheld the complaint, citing Article 1267 of the Civil Code. This article provides that when a service becomes so difficult as to be manifestly beyond the contemplation of the parties, the obligor may be released from the obligation. The appellate court reasoned that this created a positive right for the obligor, justifying a trial on the merits.

ISSUE

Whether the complaint for modification of the contractual sharing ratio states a sufficient cause of action under Article 1267 of the Civil Code.

RULING

No. The petition is granted. The complaint was correctly dismissed for failure to state a cause of action. The Supreme Court clarified the legal logic of Article 1267. This provision authorizes the release of an obligor from an obligation when its performance has become excessively difficult beyond the parties’ contemplation. It is a remedy of release, not revision. The article does not grant courts the authority to remake, modify, or revise the substantive terms of a contract, such as fixing a different sharing ratio from what was expressly stipulated by the parties.
While respondent court correctly cited the rationale for Article 1267, it misapplied it to the complaint. Respondent sought not release from the contract but a judicial modification of the profit-sharing terms. The Court emphasized that obligations arising from contracts have the force of law between the parties and must be complied with in good faith. The alleged increase in costs, making the contract more burdensome or unprofitable, does not justify a court rewriting the agreement. If a party desires protection from such economic contingencies, it must provide for them in the contract itself.
Procedurally, while an order denying a motion to dismiss is generally interlocutory, certiorari is proper here as an exception. An appeal would not be a speedy and adequate remedy, as it would force petitioners through a protracted and futile trial for a baseless action, needlessly clogging court dockets. Accordingly, the Court reversed the Court of Appeals and ordered the dismissal of the complaint.