2nd batch cases oblicon cases norsu law

7/23/2019 2nd Batch Cases Oblicon Cases Norsu Law

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Patente vs. Omega-“Promissory note did not expressly provide for a period of whenpayment shall be made” (Application of Art. 1180 !o"rts may fix a period of payment if

the obli#ation$ tho"#h period is not expressly stip"lated$ is deemed to be one with aperiod%&amon 'me#a owesal"d Patente P)P 1$*00 as shown in a promissory note whichreads as follows+“,illalba$ eyte$ A"#"st /$ 1/. his is to ac2nowled#e receipt of the s"m of 'ne ho"sand ix)"ndred Pesos (P1$ *00% from )ealth Patent$3ilipino citi4en$ of a#e$sin#le$ Also a resident of ,illalba$ eyte$ li2e myself$ as myindebtedness to her. 5 am #oin# topay debt to her$ her heirs$ Assi#nsand s"ccessors$ in the said s"m of P1$ *00 in Philippine c"rrency$ assoon aspossible or as soon as 5 have money.his debt is not covered by any sec"rity 6eca"se of the intimaterelations of myfamily to her.his s"m covers my previo"s indebtedness to her which i received fromher on 7ay /$ 1/ andprevio"s thereto.5 hereby certify hat 5 have to pay his whole indebtedness to her$before 5 exercise my ri#ht ofrep"rchase of an a#ric"lt"ral land$ sit"atedin a#-alan#$ ,illalba$ eyte$ bearin# ax 9o. **$ :"e 5 sold to her "nder a covenant retro sale.” he ;"d#e iss"ed a r"lin# orderin# the payment of the debt within the period of fo"rmonths from the date of its

enactment$ with costs. At the hearin# of the case in the !o"rt of 3irst 5nstance of eyte$ to whichthis case wasta2en on appeal$ both parties had made an a#reement to read as follows+“hat$ "pon the face of the promissory note in :"estion$ it is apparenthat term is not fixed therein definite and that its performance is left tothe will of the debtor-defendant.” 5<=+>hether or not the ;"d#e of ,illalba$ eyte had ?"risdiction to ta2e co#ni4ance of thepresent case and to fix a definiteterm for the payment of the indebtedness in :"estionby the defendant@)=+Bes.

'!&59=+Art. 1180. When the debtor binds himself to pay when his means permit him to doso, the obligation shallbe deemed to be one with a period, subjet to theprovisions of artile 11!". Accordin# to the a#reement of facts s"bmitted by the parties$ the :"estion to be solvedis thefollowin#+5f the term of payment has been left to the will of the debtor$ does the condition ofpayment"as soon as possible or as soon as I have money"n"llify the condition@!o"rt held that when the deadline for payment of an obli#ationis left to the sole will ofthe debtorres"ltin# in the ann"llment of the conditiondoes not make it into a pureobligation.The obligation is deemed with a period or term. he two promissory notes show that theplaintiff intended to #rant the defendant a period within which to pay hisdebts "nderthe condition that the debtor will

pay “as soon as possible or as soon as 5 havemoney“. ince there is an implied intention for the plaintiff to #ive thedefendant aperiod for payment$ tho"#h it wasnCt expressly stip"lated in the promissory note$ itdoes not ma2e the obli#ation p"re wherein the obli#ation to pay is immediatelydemandable.#emedy for reditor when no definite period is fi$ed As the promissory notes do not fix this period$ it is for the co"rt to fix the same.Thecreditor cannot immediately demand for payment. !reditorDs reco"rse in s"ch a case is to #o to co"rt to demand the fixin# of the term



Araneta vs. Philippine %ugar &states 'evelopment (o., )td. *+.#. o. )-//8, ay 1,1!2"3Post "nder case di#ests$ !ivil aw at "esday$ 3ebr"ary 1$ 01 Posted by chi4ophrenic7ind

4ats5 ;. 7. "ason E !o.$ 5nc. is the owner of a land$ 2nown as the ta. 7esa )ei#hts

"bdivision$ and covered by a orrens title in its name. 'n ;"ly 1F0$ thro"#h Gre#orio Araneta$

5nc$ ;7$ sod a portion thereof to herein respondent to Philippine "#ar =states evelopment

!o.$ td. he parties stip"lated$ amon# in the contract of p"rchase and sale with mort#a#e$ that

the b"yer will H b"ild on the said parcel land the to. omin#o !h"rch and !onvent. >hile the

seller for its part will H constr"ct streets on the 9= and 9> and > sides of the land herein

&espondent was able to finish his obli#ation. )owever$ herein petitioner was "nable to finish theconstr"ction of the 9= side beca"se a third-party physically occ"pies the middle part thereof$

ref"sed to vacate the sameI hence &espondent filed a complaint a#ainst petitioner see2in# to

compel Araneta to comply with the obli#ation$ andor to pay dama#es in the event they failed or

ref"sed to perform said obli#ation.

efendants in said complaint ar#"ed that the action was premat"re since the obli#ation to

constr"ct the streets in :"estion was witho"t a definite period which needs to be fixed first by

the co"rt in a proper s"it. he lower co"rt dismissed the plaintiffCs complaint. 7otion to

reconsider was prayed$ and that the co"rt fix a period within which petitioner in said case can

comply in the constr"ction of the streets.

he ower !o"rt iss"ed a order #rantin# the motion for reconsideration and amended its

previo"s decision$ promptin# defendant Araneta to reconsider b"t this was denied

th"s appealin#in the !o"rt of Appeals. he Appellate !o"rt declared the fixin# of the period was

within the pleadin#s and affirmed the ower !o"rtCs decision$ hence this petition for !ertiorari.

6ssue5 >hether or not the fixin# of the period of the ower !o"rt was valid and ?"stified base on

the pleadin#s$ the facts of the case$ p"rs"ant to Article 11

7eld5 9'$ there was no ?"stification in law for the settin# of the performance at any other time

than that of the eviction of the s:"atters occ"pyin# the land in :"estion. And the rial !o"rt and

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he Appellate !o"rt were fo"nd to have committed a reversible error. ecision appealed is

reversed and the time for the performance of the obli#ation is fixed at the date that all the

s:"atters on affected areas are finally evicted from the area.

he fixin# of a period by the co"rts "nder Article 11 of the !ivil !ode of the Philippines is

so"#ht to be ?"stified on the basis that petitioner (defendant below% placed the absence of a

period in iss"e by pleadin# in its answer that the contract with respondent Philippine "#ar

=states evelopment !o.$ td. #ave petitioner Gre#orio Araneta$ 5nc. Jreasonable time within

which to comply with its obli#ation to constr"ct and complete the streetsJ was fo"nd le#ally

"ntenable.

9either of the co"rts below seems to have noticed that$ on the hypothesis stated$ what the

answer p"t in iss"e was not whether the co"rt sho"ld fix the time of performance$ b"t whether

or not the parties a#reed that the petitioner sho"ld have reasonable time to perform its part of

the bar#ain.

5f the contract so provided$ then there was a period fixed$ a Jreasonable timeIJ and all that the

co"rt sho"ld have done was to determine if that reasonable time had already elapsed when s"it

was filed if it had passed$ then the co"rt sho"ld declare that petitioner had breached the

contract$ as averred in the complaint$ and fix the res"ltin# dama#es.

'n the other hand$ if the reasonable time had not yet elapsed$ the co"rt perforce was bo"nd to

dismiss the action for bein# premat"re. 6"t in no case can it be lo#ically held that "nder the plea

above :"oted$ the intervention of the co"rt to fix the period for performance was warranted$ for

Article 11 is precisely predicated on the absence of any period fixed by the parties.

=ven on the ass"mption that the co"rt sho"ld have fo"nd that no reasonable time or no period

at all had been fixed (and the trial co"rtDs amended decision nowhere declared any s"ch fact%

still$ the complaint not havin# so"#ht that the !o"rt sho"ld set a period$ the co"rt co"ld

not proceed to do so "nless the complaint in as first amendedI for the ori#inal decision is clear

that the complaint proceeded on the theory that the period for performance had already

elapsed$ that the contract had been breached and defendant was already answerable in

dama#es.



Grantin#$ however$ that it lay within the !o"rtDs power to fix the period of performance$ still the

amended decision is defective in that no basis is stated to s"pport the concl"sion that the period

sho"ld be set at two years after finality of the ?"d#ment. he list para#raph of Article 11 is

clear that the period cannot be set arbitrarily. he law expressly prescribes that H “the !o"rt

shall determine s"ch period as may "nder the circ"mstances been probably contemplated by

the parties.”

Article 11 of the !ivil !ode involves a two-step process. he !o"rt m"st first determine that

Jthe obli#ation does not fix a periodJ (or that the period is made to depend "pon the will of

the debtor%$J b"t from the nat"re and the circ"mstances it can be inferred that a period was

intendedJ. 'nce settled$ the !o"rt m"st proceed to the second step$ and decide what period

was Jprobably contemplated by the partiesJ o that the !o"rt cannot fix a period merely

beca"se in its opinion it is or sho"ld be reasonable$ b"t m"st set the time that the parties are

shown to have intended. As the record stands$ the trial !o"rt appears to have p"lled the two-

year period set in its decision o"t of thin air$ since no circ"mstances are mentioned to s"pport it.

Plainly$ this is not warranted by the !ivil !ode.

5n this connection$ the contract shows that the parties were f"lly aware that the land described

therein was occ"pied by s:"atters$ beca"se the fact is expressly mentioned therein. he

concl"sion is th"s forced that the parties m"st have intended to defer the performance of the

obli#ations "nder the contract "ntil the s:"atters were d"ly evicted$ as contended by the

petitioner Gre#orio Araneta$ 5nc.

Gaite v. FonacierFacts:

Gaite was appointed by Fonacier as attorney-in-fact to contract any party forthe exploration and development of mining claims. Gaite executed a deed of assignment in favor of a single proprietorship owned by him. For some



reasons Fonacier revoked the agency which was acceded to by Gaite sub!ectto certain conditions one of which being the transfer of ores extracted fromthe mineral claims for #$%%% of which &%%%% has already been paid uponsigning of the agreement and the balance to be paid from the first letter of credit for the first local sale of the iron ores. To secure payment Fonacier

delivered a surety agreement with 'arap (ines and some of its stockholdersand another one with Far )astern Insurance. *hen the second surety agreement expired with no sale being made on the ores Gaite demanded the+$%%% balance. ,efendants contended that the payment was sub!ect to thecondition that the ores will be sold.

Issue:

& *hether the sale is conditional or one with a period

/ *hether there were insufficient tons of ores

Held:

& The shipment or local sale of the iron ore is not a condition precedent orsuspensive to the payment of the balance of +$%%%.%% but was only asuspensive period or term. *hat characteri0es a conditional obligation is thefact that its efficacy or obligatory force as distinguished from itsdemandability is subordinated to the happening of a future and uncertainevent1 so that if the suspensive condition does not take place the parties

would stand as if the conditional obligation had never existed.

2 contract of sale is normally commutative and onerous3 not only does eachone of the parties assume a correlative obligation the seller to deliver andtransfer ownership of the thing sold and the buyer to pay the pricebut eachparty anticipates performance by the other from the very start. *hile in a salethe obligation of one party can be lawfully subordinated to an uncertain eventso that the other understands that he assumes the risk of receiving nothing for

what he gives as in the case of a sale of hopes or expectationsemptio spei itis not in the usual course of business to do so1 hence the contingent character

of the obligation must clearly appear. 4othing is found in the record toevidence that Gaite desired or assumed to run the risk of losing his right overthe ore without getting paid for it or that Fonacier understood that Gaiteassumed any such risk. This is proved by the fact that Gaite insisted on a bonda to guarantee payment of the +$%%%.%% an not only upon a bond by Fonacier the 'arap (ines 5 6melting 7o. and the company8s stockholders

but also on one by a surety company1 and the fact that appellants did put up



such bonds indicates that they admitted the definite existence of theirobligation to pay the balance of +$%%%.%%.

The appellant have forfeited the right court below that the appellants haveforfeited the right to compel Gaite to wait for the sale of the ore before

receiving payment of the balance of +$%%%.%% because of their failure torenew the bond of the Far )astern 6urety 7ompany or else replace it with ane9uivalent guarantee. The expiration of the bonding company8s undertakingon ,ecember : &;$$ substantially reduced the security of the vendor8s rightsas creditor for the unpaid +$%%%.%% a security that Gaite consideredessential and upon which he had insisted when he executed the deed of sale of the ore to Fonacier.

/ The sale between the parties is a sale of a specific mass or iron ore becauseno provision was made in their contract for the measuring or weighing of the

ore sold in order to complete or perfect the sale nor was the price of #$%%%%% agreed upon by the parties based upon any such measurement.see 2rt. &<:% second par. 4ew 7ivil 7ode. The sub!ect matter of the sale istherefore a determinate ob!ect the mass and not the actual number of unitsor tons contained therein so that all that was re9uired of the seller Gaite wasto deliver in good faith to his buyer all of the ore found in the massnotwithstanding that the 9uantity delivered is less than the amount estimated

by them.

#6))AA 9% :;&<O (O))&+&, 6(.



K Phil. K8K

3A!+

amasa !risostomo wrote a letter to the L"e4on !olle#e$ 5nc. for the s"bscription of

shares of stoc2 of the said colle#e wherein payment was to be made thro"#h money she was

#oin# to #enerate from fishin#. )owever$ she died and as no payment appears to have been

made on the s"bscription mentioned in the fore#oin# letter$ the L"e4on !olle#e$ 5nc. presented

a claim before the !o"rt of 3irst 5nstance in her testate proceedin#$ for the collection of the said

s"m of money. he claim was dismissed by the trial co"rt on the #ro"nd that the s"bscription in

:"estion was neither re#istered in nor a"thori4ed by the ec"rities and =xchan#e !ommission.

3rom this order the L"e4on !olle#e$ 5nc. appealed.

5<=+

>as amasa !risostomo liable for the claim made by L"e4on !olle#es$ 5nc@

&<59G+

9o. he application sent by amasa !risostomo to the L"e4on !olle#e$ 5nc. was

written on a #eneral form indicatin# that an applicant will enclose an amo"nt as initial payment

and will pay the balance in accordance with law and the r"les or re#"lations of the !olle#e. 5n

the letter act"ally sent by amasa !risostomo$ she not only did not enclose any initial payment$

b"t stated that Jbabayaran 2on# lahat pa#2atapos na a2o ay ma2apa#pah"li n# isda.J he

acceptance of L"e4on !olle#e$ 5nc. was essential$ beca"se it wo"ld be "nfair to immediately

obli#ate the L"e4on !olle#e$ 5nc. "nder amasaDs promise to pay the price of the s"bscription

after she had ca"sed fish to be ca"#ht. 5n other words$ the relation between amasa

!risostomo and the L"e4on !olle#e$ 5nc. had only th"s reached the preliminary sta#e whereby

the latter offered its stoc2 for s"bscription on the terms stated in the form letter$ and amasa

applied for s"bscription fixin# her own plan of payment$ a relation in the absence$ as in the

present case of acceptance by the L"e4on !olle#e$ 5nc. of the co"nter offer of amasa!risostomo$ that had not ripened into an enforceable contract.

he need for express acceptance on the part of the L"e4on !olle#e$ 5nc. imperative$ in

view of the proposal of amasa !risostomo to pay the val"e of the s"bscription after she had

harvested fish$ a condition obvio"sly dependent "pon her sole will and$ therefore$ fac"ltative in

nat"re$ renderin# the obli#ation void$ "nder article 111F of the old !ivil !ode (118 of 9!!%.



OA% O%&=A 9%. (&OA #AA

1> P76). !!

3A!+

'n 9ovember 1F$ 180$ defendant &ama exec"ted and delivered to ,ictoriano 'smeMa

a contract. he contract stip"lates that &ama received from ,ictoriano the s"m of P00 which

defendant will pay ,ictoriano 'smeMa in s"#ar and pay also an interest at a rate of half a

c"artillo per month. efendant promise that he well sell to 7r. 'smeMa all the s"#ar that he may

harvest and as a #"arantee pled#e as a sec"rity all his present and f"t"re property and as

special sec"rity his ho"se in Pa#ina.

'n 'ctober $ 181$ defendant exec"ted another contract with ,ictoriano 'smeMa

which states that defendant as2ed for a loan amo"ntin# to P0$ PF0 of which defendant loaned

to on PeMares$ which they will pay in s"#ar.

ometime after the exec"tion and delivery of the above contracts$ ,ictoriano died. 5n the

settlement and division of the property of his estate the above contracts became the property of

one of his heirs$ A#"stina &afols. ater$ A#"stina &afols ceded to the present plaintiff omas

'smeMa all of her ri#ht and interest in said contracts.

'n 7arch 1F$ 10$ plaintiff presented the contracts to the defendant for payment and

she ac2nowled#ed her responsibility "pon said contracts by an endorsement which stip"lates+

'n this date 5 hereby promise$Nthat if the ho"se of stron# materials in which 5 live in Pa#ina is

sold$ 5 will pay my indebtedness to on omas 'smeMa as set forth in this doc"ment.

he defendant not havin# paid the amo"nt d"e on said contracts$ the plaintiff filed an

action before the !35 of !eb". he lower co"rt rendered ?"d#ment in favor of the plaintiff for the

s"m of P00 with interest. 3rom this ?"d#ment the defendant appealed.

5<=+



5s the endorsement made by defendant &ama for payment of said obli#ation valid@

&<59G+

9o.5t was s"##ested d"rin# the disc"ssion of the case in this co"rt that$ in theac2nowled#ment above :"oted of the indebtedness made by the defendant$ she imposed the

condition that she wo"ld pay the obli#ation if she sold her ho"se. 5f that statement fo"nd in her

ac2nowled#ment of the indebtedness sho"ld be re#arded as a condition$ it was a condition

which depended "pon her excl"sive will$ and is therefore$ void. (Art. 111F$ !ivil !ode.% he

ac2nowled#ment$ therefore$ was an absol"te ac2nowled#ment of the obli#ation and was

s"fficient to prevent the stat"te of limitation from barrin# the action "pon the ori#inal contract.

=4I>)?6IT@ AF TB) BI'II4)6 >6. ,) 'A6

24G)')6

C$ 67?2 &%/

F27T63

An 4ovember / &;+% = and 2'=(7A entered

into a logging agreement whereby the latter was granted

exclusive authority to cut collect and remove timber from

the 'and Grant for a period starting from the date of

agreement to ,ecember C& &;+$ extendible for a period of $ years by mutual agreement.

An ,ecember : &;+< 2'=(7A incurred an

unpaid account of /&;C+/.;<. ,espite repeated

demands 2'=(7A still failed to pay so = sent a notice

to rescind the logging agreement. An the other hand

2'=(7A executed an instrument entitled

D2cknowledgment of ,ebt and roposed (anner of

ayments. It was approved by the president of = whichstipulated the following3

C. In the event that the payments called for are not

sufficient to li9uidate the foregoing indebtedness

the balance outstanding after the said payments

have been applied shall be paid by the debtor in

full no later than Eune C% &;+$.



$. In the event that the debtor fails to comply with

any of its promises the ,ebtor agrees without

reservation that 7reditor shall have the right to

consider the 'ogging 2greement rescinded

without the necessity of any !udicial suit

2'=(7A continued its logging operations but

again incurred an unpaid account. An Euly &;&;+$ =

informed 2'=(7A that it had as of that date considered

rescinded and of no further legal effect the logging

agreement and that = had already taken steps to have

another concessionaire take over the logging operation.

2'=(7A filed a petition to en!oin = from conducting the

bidding. The lower court ruled in favor of 2'=(7A

hence this appeal.

I66=)3

7an petitioner = treat its contract with 2'=(7A

rescinded and may disregard the same before any !udicial

pronouncement to that effect

?='I4G3

@es. In the first place = and 2'=(7A had

expressly stipulated that upon default by the debtor =

has the right and the power to consider the 'ogging 2greement of ,ecember / &;+% as rescinded without the necessity of any !udicial

suit. 2s to such special stipulation

and in connection with 2rticle &&;& of the 7ivil 7ode the

6upreme 7ourt stated in Froilan vs. an Ariental 6hipping

7o3

DThere is nothing in the law that prohibits the

parties from entering into agreement that violation

of the terms of the contract would cause

cancellation thereof even without court

intervention. In other words it is not always

necessary for the in!ured party to resort to court

for rescission of the contract.H



#O:;& 9%. )AP;%

* !&A /1

3A!+

ometime in 1*/$ plaintiff and defendant entered into an a#reement of sale coverin# ots 1$

and $ 6loc2 1$ of said property$ payable in 10 e:"al monthly installments at the rate of P1*.00$

P1F.00 per s:"are meter$ respectively. 5n accordance with said a#reement$ defendant paid to

plaintiff the s"m of P1F0.00 as deposit and the f"rther s"m of P/0.F* to complete the payment

of fo"r monthly installments coverin# the months of ;"ly$ A"#"st$ eptember$ and 'ctober$

1F/.

'n ;an"ary /$ 1FF$ defendant re:"ested plaintiff that he be allowed to abandon ands"bstit"te ots 1$ and $ the s"b?ect with ots / and 1$ 6loc2 of the &oc2ville "bdivision$

which are corner lots$ to which re:"est plaintiff #racio"sly acceded. he evidence discloses that

defendant proposed to plaintiff modification of their previo"s contract to sell beca"se he fo"nd it

:"ite diffic"lt to pay the monthly installments on the three lots$ and besides the two lots he had

chosen were better lots$ bein# corner lots. 5n addition$ it was a#reed that the p"rchase price of

these two lots wo"ld be at the "niform rate of P1.00 per s:"are meter payable in 10 e:"al

monthly installments$ with interest at 8O ann"ally on the balance "npaid. P"rs"ant to this new

a#reement$ defendant occ"pied and possessed ots / and 1$ and enclosed them$ incl"din#

the portion where his ho"se now stands$ with barbed wires and adobe walls. )owever$ aside

from the deposit of P1F0.00 and the amo"nt of P/0.F*$ which were paid "nder their previo"s

a#reement$ defendant failed to ma2e any f"rther payment on acco"nt of the a#reed monthlyinstallments for the two lots in disp"te$ "nder the new contract to sell. Plaintiff demanded "pon

defendant not only to pay the stip"lated monthly installments in arrears$ b"t also to ma2e "p-to-

date his payments$ b"t defendant ref"sed to comply with plaintiffDs demands.

'n or abo"t 9ovember K$ 1F$ plaintiff demanded "pon defendant to vacate the lots in

:"estion and to pay the reasonable rentals thereon at the rate of P*0.00 per month from

A"#"st$ 1FF. 'n ;an"ary $ 1*0$ petitioner 3elipe !$ &o:"e filed the complaint a#ainst

defendant 9icanor ap"4 for rescission and cancellation of the a#reement of sale between them

involvin# the two lots in :"estion and prayed that ?"d#ment be rendered orderin# the rescission

and cancellation of the a#reement of sale$ the defendant to vacate the two parcels of land andremove his ho"se therefrom and to pay to the plaintiff the reasonable rental thereof at the rate

of P*0.00 a month from A"#"st 1FF "ntil s"ch time as he shall have vacated the premises$ and

to pay the s"m of P$000.00 as attorneyDs fees$ costs of the s"it and award s"ch other relief or

remedy as may be deemed ?"st and e:"itable in the premises.

he !o"rt of Appeals rendered its decision that the defendant 9icanor ap"4 is #ranted a

period of ninety (0% days from entry hereof within which to pay the balance. )ence$ this



appeal.

5<=+

!an private respondent be entitled to the 6enefits of the third para#raph of Article 111$ 9ew

!ivil !ode$ for the fixin# of period

&<59G+

9o. &espondent as obli#or is not entitled to the benefits of para#raph K of Art. 111$ 9!!

)avin# been in defa"lt and acted in bad faith$ he is not entitled to the new period of 0 days

from entry of ?"d#ment within which to pay petitioner the balance of P11$/K/.// with interest d"eon the p"rchase price of P1$KF.00 for the two lots. o allow and #rant respondent an

additional period for him to pay the balance of the p"rchase price$ which balance is abo"t O

of the a#reed price$ wo"ld be tantamo"nt to exc"sin# his bad faith and sanctionin# the

deliberate infrin#ement of a contract"al obli#ation that is rep"#nant and contrary to the stability$

sec"rity and obli#atory force of contracts. 7oreover$ respondentDs fail"re to pay the s"cceedin#

11* monthly installments after payin# only / monthly installments is a s"bstantial and material

breach on his part$ not merely cas"al$ which ta2es the case o"t of the application of the benefits

of pa para#raph K$ Art. 111$ 9.!.!.

P"rs"ant to Art. 111$ 9ew !ivil !ode$ petitioner is entitled to rescission with payment of

dama#es which the trial co"rt and the appellate co"rt$ in the latterDs ori#inal decision$ #ranted in

the form of rental at the rate of P*0.00 per month from A"#"st$ 1FF "ntil respondent shall have

act"ally vacated the premises$ pl"s P$000.00 as attorneyDs fees. he !o"rt affirmed the same

to be fair and reasonable. he !o"rt also s"stained the ri#ht of the petitioner to the possession

of the land$ orderin# thereby respondent to vacate the same and remove his ho"se therefrom.

?O@%AW 9%. 6&#P76) P#OO6O%

1/8 !&A *KF

3A!+



olomon 6oysaw and his then 7ana#er$ >illie etch"m$ si#ned with 5nterphil Promotions$ 5nc.

represented by ope arreal$ r.$ a contract to en#a#e Gabriel J3lashJ =lorde in a boxin#

contest for the ?"nior li#htwei#ht championship of the world. 5t was stip"lated that the bo"t wo"ld

be held at the &i4al 7emorial tadi"m in 7anila on eptember K0$ 1*1 or not later than thirty

QK0R days thereafter sho"ld a postponement be m"t"ally a#reed "pon$ and that 6oysaw wo"ldnot$ prior to the date of the boxin# contest$ en#a#e in any other s"ch contest witho"t the written

consent of 5nterphil Promotions$ 5nc.

)owever$ before eptember K0$ 1*1$ 6oysaw entered into a non-title bo"t on ;"ne 1$ 1*1

and witho"t consent from 5nterphil$ etch"m assi#ned to Amado Araneta the mana#erial ri#hts

over 6oysaw. Amado Araneta in t"rn transferred the earlier ac:"ired mana#erial ri#hts to

Alfredo a#ain witho"t the consent from 5nterphil. B"lo thereafter informed 5nterphil 6oysawCs

readiness to comply with the boxin# contract of 7ay 1$ 1*1. he GA6 after a series of

conferences of both parties sched"led the =lorde-6oysaw fi#ht on 9ovember /$ 1*1. B"lo

ref"sed to accept the char#e in the fi#ht date even after arreal offered to advance the fi#ht

date to 'ctober 8$ 1*1. )owever$ he chan#ed his mind and decided to accept the fi#ht date

on 9ovember /$ 1*1. >hile an =lorde-6oysaw fi#ht was event"ally sta#ed$ the fi#ht

contemplated in the 7ay 1$ 1*1 boxin# contract never materiali4ed.

As a res"lt$ B"lo and 6oysaw s"ed 5nterphil for dama#es alle#edly d"e to the latterCs ref"sal to

honor their commitments "nder the boxin# contract of 7ay 1$ 1*1.

5<=+

1. >as there a violation of the fi#ht contract of 7ay 1$ 1*1@

. 5n reciprocal obli#ations$ who has the power to rescind@

&<59G+

1. Bes. 'n the iss"e pertainin# to the violation of the 7ay 1$ 1*1 fi#ht contract$ the evidence

established that the contract was violated by appellant 6oysaw himself when$ witho"t theapproval or consent of 5nterphil$ he fo"#ht o"is Avila on ;"ne 1$ 1*1 in as ,e#as 9evada.

Appellant B"lo admitted this fact d"rin# the trial. Another violation of the contract in :"estion

was the assi#nment and transfer$ first to ;. Amado Araneta$ and s"bse:"ently$ to appellant B"lo$

;r.$ of the mana#erial ri#hts over 6oysaw witho"t the 2nowled#e or consent of 5nterphil.

. he power to rescind obli#ations is implied$ in reciprocal ones$ in case one of the obli#ors

sho"ld not comply with what is inc"mbent "pon him. here is no do"bt that the contract in



:"estion #ave rise to reciprocal obli#ations. J&eciprocal obli#ations are those which arise from

the same ca"se$ and in which each party is a debtor and a creditor of the other$ s"ch that the

obli#ation of one is dependent "pon the obli#ation of the other. hey are to be performed

sim"ltaneo"sly$ so that the performance of one is conditioned "pon the sim"ltaneo"s f"lfillment

of the otherJhe power to rescind is #iven to the in?"red party. J>here the plaintiff is the party

who did not perform the "nderta2in# which he was bo"nd by the terms of the a#reement toperform / he is not entitled to insist "pon the performance of the contract by the defendant$ or

recover dama#es by reason of his own breach J

'n the validity of the fi#ht postponement$ the violations of the terms of the ori#inal contract by

appellants vested the appellees with the ri#ht to rescind and rep"diate s"ch contract alto#ether.

hat they so"#ht to see2 an ad?"stment of one partic"lar covenant of the contract$ is "nder the

circ"mstances$ within the appelleeDs ri#hts.

2@6A4-6I(A4 >6. 2,2(A6 24, F)?I2

G.?. 4A. '-C;C#: 2=G=6T /: &;:<

F27T63

,efendants 4icolas 2damos and >icente Feria

purchased two lots forming part of the iedad )state in

ue0on 7ity from Euan orciuncula. Thereafter the

successors-in-interest of the latter filed 7ivil 7ase 4o. &#<

for annulment of the sale and the cancellation of T7T 4o.+;<#$ which had been issued to defendants-appellants by

virtue of the disputed sale. The 7ourt rendered a ,ecision

annulling the saleThe said !udgment was affirmed by the

2ppellate 7ourt and had attained finality.

(eanwhile during the pendency of the case above

defendants sold the said two lots to etitioner Generosa

2yson-6imon for hpC:%%.%% plus hp:%%.%% for

facilitating the issuance of the new titles in favor of petitioner. ,ue to the failure of the defendants to deliver

the said lots petitioner filed a civil case for specific

performance. The trial court rendered !udgment to

petitionerJs favor. Bowever defendants could not deliver

the said lots because the 72 had already annulled the sale

of the two lots in 7ivil 7ase 4o. &#<. Thus petitioner filed



another civil case for the rescission of the contract.

,efendants were contending that petitioner cannot choose

to rescind the contract since petitioner chose for specific

performance of the obligation. 2lso even though

petitioner can choose to rescind the contract it would not

be possible because it has already prescribed.

I66=)63

&. 7an petitioner choose to rescind the contract even after choosing for the specific

performance of the obligation

/. Bad the option to rescind the contract prescribed

?='I4G3

&. @es. The rule that the in!ured party canonly choose between fulfillment and rescission of the

obligation and cannot have both applies when the

obligation is possible of fulfillment. If as in this case the

fulfillment has become impossible 2rticle &&;& allows the in!ured party to seek

rescission even after he has chosen

fulfillment.

/. 4o. 2rticle &&;& of the 7ivil 7ode provides

that the in!ured party may also seek rescission if thefulfillment should become impossible. The cause of action

to claim rescission arises when the fulfillment of the

obligation became impossible when the 7ourt of First

Instance of ue0on 7ity in 7ivil 7ase 4o. &#< declared the

sale of the land to defendants by Euan orciuncula a

complete nullity and ordered the cancellation of Transfer

7ertificate of Title 4o. +;<#$ issued to them. 6ince the two

lots sold to plaintiff by defendants form part of the land

involved in 7ivil 7ase 4o. &#< it became impossible for

defendants to secure and deliver the titles to and the

possession of the lots to plaintiff. Kut plaintiff had to wait

for the finality of the decision in 7ivil 7ase 4o. &#<

2ccording to the certification of the clerk of the 7ourt of

First Instance of ue0on 7ity )xhibit ")-/" the decision

in 7ivil 7ase 4o. &#< became final and executory "as per



entry of Eudgment dated (ay C &;+# of the 7ourt of

2ppeals." The action for rescission must be commenced

within four years from that date (ay C &;+#. 6ince the

complaint for rescission was filed on 2ugust &+ &;+: the

four year period within which the action must be

commenced had not expired.

+.#. o. )-1"" 'eember !, 1!/!

?&6O O#6, plaintiff-appellee$

vs.

?A)'#O+A (OPA@, )'., defendant-appellant.

Gonzales and Gutierrez for appellee.

Restituto B. Roman for appellant.

PA'6))A, J.:

'n 9ovember 1FF the plaintiff bro"#ht an action in the !o"rt of 3irst 5nstance of

!amarines 9orte to collect from the defendant the s"m of PF.000$ the balance of an

acco"nt d"e to export lo#s p"rchased by the latter from the former$ P1$F00 as attorneyDs

fee$ PK$000 as moral dama#es$ P$000 as exemplary dama#es and costs$ and to obtain

any other ?"st and e:"itable relief (civil 9o. F0%. 'n ;an"ary 1F* the defendant filed

an answer. 'n F eptember 1F* the parties$ assisted by their respective co"nsel$

entered into a stip"lation of facts and s"bmitted it to !o"rt. e terms of the stip"lationare+

hat the defendant admits in open co"rt its obli#ation to the plaintiff in the

amo"nt of 35,= )'<A9 P=' (PF$000.00% Philippine !"rrency$ pl"s

interest thereon from ecember 8$ 1FF and costsI



hat the parties m"t"ally a#reed to s"bmit to the !o"rt a fixed date when the

defendant sho"ld pay the plaintiff the above obli#ations$ the s"bmission of which

date is hereby m"t"ally a#reed to be "p to not later than 9ovember *$1F*I

hat for fail"re of the parties to s"bmit to the !o"rt the a#reed date of payment

on 9ovember *$ 1F*$ they m"t"ally a#reed that the !o"rt shall have the f"ll

power to fix a reasonable time when the defendant sho"ld pay$ and a ?"d#ment

therefor shall iss"e based "pon this stip"lation of facts.

he parties failed to s"bmit to the !o"rt the date when the defendant had to pay its debt

to the plaintiff. 'n * 9ovember 1F* the plaintiff filed an ex-parte motion prayin# that

?"d#ment be rendered "pon the stip"lation of facts and that the !o"rt fix the time in

which the defendant sho"ld pay the s"m d"e to the plaintiff. 'n 8 9ovember 1F* the

!o"rt rendered ?"d#ment as prayed for orderin# defendant to pay the plaintiff within

thirty days from receipt of notice of ?"d#ment the s"m of PF$000 with le#al interest

thereon from 8 ecember 1FF "ntil f"lly paid and to pay the costs. 'n 1 ;an"ary

1F the !o"rt denied the defendantDs motion for reconsideration dated 1 ;an"ary

1F. he defendant has appealed.

he appellant admits that it owes the appellee the s"m of PF$000. <nder the second

para#raph of the stip"lation of facts$ they a#reed to set a date for the appellant to pay

the appellee$ they a#reed to set a date for the appellant to pay the appellee$ to be

s"bmitted to the !o"rt not later that * 9ovember 1F* and "nder the third para#raph of

the same stip"lation$ sho"ld they fail to set a date for payment on * 9ovember 1F*$

the !o"rt may set a reasonable time for the appellant to pay the appellee. As they paidto set a date for payment and s"bmit it to the !o"rt on motion on the appellee$ the !o"rt

rendered ?"d#ment "pon the stip"lation of facts and ordered the appellant to pay the

appellee within thirty days from receipt of notice of ?"d#ment. he ?"d#ment rendered by

the !o"rt was b"t in p"rs"ance of the compromise a#reement embodied in the

stip"lation of facts entered freely and vol"ntarily by the parties with the assistance of

their respective co"nsel. he appellant cannot now claim and complain that the period

fixed by the !o"rt is "nreasonable.

!itin# article 11* of the new !ivil !ode in s"pport of its appeal$ which provides that+ lawphi1.net

>herever in an obli#ation a period is desi#nated$ it is pres"med to have been

established for the benefit of both the creditor and the debtor$ "nless from the

tenor of the same or other circ"mstances it sho"ld appear that the period has

been established in favor of one or of the otherI



the appellant claims that the period of thirty days fixed by the !o"rt rebo"nded to the

benefit only of the creditor$ the appellee$ and not m"t"ally to the creditor and the debtor.

5n its brief$ the appellant prays that it be #ranted at least a year within which to pay the

appellee.

he article cited by the appellant cannot be applied to the case at bar where the parties

entered into a compromise a#reement endin# a controversy and a"thori4in# the !o"rt

to fix a reasonable time within which the appellant sho"ld pay its debt to the appellee$ if

they fail to a#ree "pon a date for payment and s"bmit it to the !o"rt. 5t applies where

the parties to a contract themselves have fixed a period.

he appeal interposed by the appellant is manifestly to delay b"t not to evade payment

of its debt. 9othin# has been a#reed "pon by the parties in their stip"lation on that

contin#ency. )ence the collection or recovery of the s"ms of P1$800 as attorneyDs fee$

PK$000 as moral dama#es and P$000 as exemplary dama#es so"#ht by the appellee

in its motion dated * 7ay 1F filed in this !o"rt cannot be #ranted.

he ?"d#ment appealed from is affirmed$ with treble costs a#ainst the appellant.

FACTS PETITIONER: REYNALDO LABAYEN and TEODORO LABAYEN, plaintifs-appellants,RESPONDENT: TALISAY-SILAY CO., deendant-appellee

The plaintifs n ! "e!e A#$#st %& '(%),*e!e the #ndi+ided *ne!s the haiendan*n as Ds e!/ans, sit#ated in the/#niipalit0 Talisa0, A#$#st'(%(, theplaintifs and the deendant ente!ed int a/illin$ nt!at. Plante! *h si$ns this



nt!at, states and $#a!antees t the Cent!althat he is the a"sl#te *ne! the ll*in$pa!el land, sit#ated in the 1#niipalit0

Talisa0,2the plantatin2 ! 3the plantatins2

and ne th#sand t* h#nd!ed t*ent0-nineand 4'5%&6plante!s.

The s#$a! ent!al shall nst!#t and shallthe!eate! /ae needed ! the nse!+atin in$d dnditin. It shall p!+ide the said!ail*a0 *ith l/ti+es ! /t!s and*a$ns in s#7ient n#/"e! t e8pedite thet!ansp!tatin s#$a! ane, s#$a!, e!tili9e!

and $ds a!e/entined, and it shalllie*ise nst!#t a "!anh the !ail*a0nnetin$ the p!inipal line, at!0 and*a!eh#ses and the a!e/entined pie!, andit shall als n+enientl0 e#ip *ith s*ithes! the!*ise the 0a!d the at!0 nea! thes#$a! /ill. All the stea/ l/ti+es shall "ep!+ided *ith spa! a!!este!s. The !ail*a0 shallnsist a line ! *a0 n+enientl0 and

p!pe!l0 desi$nated s that, as a! as pssi"le,all the plante!s /a0 dep!i+e e#al "ene;tsthe!e!/< the !i$ht *a0 ! the p!inipalline the !ail*a0 shall "e th!ee and ne-hal45=6 /ete!s *ide n eah side /eas#!in$ !/the ente! the line, and the "!anhes,de+iatins, and #!+es shall "e /!e ineessa!0.

The Cent!al shall ha+e the !i$ht t !e#se thes#$a! ane *hih is #nlean, s#! ! "#!ned. Inase deli+e!0 s#$a! ane nt s#7ientl0lean ! #tf.Tthe Cent!al shall /ae ae!tain pe! ent !ed#tin !/ its *ei$hts#">et t the dete!/inatin the Cent!al andthe C//ittee Plante!s< and in ase



disa$!ee/ent n this /atte!, t dete!/ine thee8at a/#nt t "e ded#ted !/ the *ei$ht all the s#$a! ane in #estin, and thee8penses asined "0 said leanin$ shall "e

ha!$ed a$ainst thedelin#entplante!.The "#!ned s#$a! ane, ate!t*ent0-#! 4%?6 h#!s !/ the ti/e "#!nin$, shall "e aepted "0 the Cent!al nl0#pn speial a$!ee/ent "et*een the Cent!aland the C//ittee Plante!s, *h shall ;8the nditins *he!e"0 the sa/e sh#ld "e/illed and the s#$a! di+ided.that the deendant, in +ilatin the /illin$

nt!at, did nt nst!#t the !ail*a0 #ntil an+enient plae n the haienda Dse!/ans, as a !es#lt *hih the s#$a! anep!d#ed d#!in$ the said a$!i#lt#!al 0ea!s*e!e nt "!#$ht t and /illed "0 thedeendant@s ent!al< that ! this !easn theplaintifs s#fe!ed a lss a/#ntin$ t P%),%! the !e+e!0 *hih the0 "!#$ht i+ilase N. 5&)( the C#!t i!st Instane Oidental Ne$!s< that in said ase >#d$/ent

*as !ende!ed a"sl+in$ the deendant andsentenin$ the plaintifs, #pn the deendant@s#nte!lai/, t pa0 the latte! the s#/ P'%,''?< that the said >#d$/ent *as appealed,

>#d$/ent in a+! the deendant in said aseand n !els#!e the /!t$a$e thehaienda Ds e!/ans, the she!if sld thesa/e at p#"li a#tin and ad>#diated it ina+! the deendant< that i//ediatel0 ate!

it "ea/e the *ne! the haienda, thedeendant nst!#ted the !ail*a0,it had/aintained *as i/pssi"le t nst!#t d#e tthe #!+es and $!ades #nd n the haienda,the!e"0 sh*in$ that the deense *hih it p#t#p t this efet *as alse



and!a#d#lent.that as a !es#lt the >#d$/ents!a#d#lentl0 "tained "0 the deendant, theplaintifs ha+e s#fe!ed da/a$es in the s#/ P&,. As send a#se atin the

a/ended /plaint the ll*in$ ats *e!ealle$ed: that in the /illin$ nt!at, th!#$hthe alse !ep!esentatins the 7e!s thedeendant, the latte! ind#ed the plaintifs te/p*e! it t "tain a lan !/ an0instit#tin and t se#!e it "0 the /!t$a$e the haienda Ds e!/ans, p!/isin$ t $i+ethe plaintifs a "n#s ate! the lan had "eenpaid and the /!t$a$e !eleased< that the

plaintifs ha+e "een in!/ed, and s alle$e inthei! a/ended /plaint, that the deendant,a!/ed *ith said p*e!, "tained a lan !/ a"an *hih it $#a!anteed "0 the haienda Dse!/ans and that, nt*ithstandin$ thepa0/ent and !elease the /!t$a$e, thedeendant has !e#sed and still !e#ses t pa0the/ the fe!ed "n#s t "e late! dete!/inedat the t!ial.

ISSUE/SWhether defendant is guilty of fraud byfailure to construct railways system?.

AWSA!tile '5?) I/pssi"le thin$ ! se!+iesannt "e the ">et nt!ats.

!"#I$%S

'. The !els#!e the /!t$a$e thehaienda Ds e!/ans, the she!if sld thesa/e at p#"li a#tin and ad>#diated it in

a+! the deendant *as a7!/ed, !es#lted!/ #nte! lai/, #pn *hih the haienda*as in dea#lt.%. The deendant did nt nst!#t the !ail*a0"ea#se the land the haienda *as +e!0!#$$ed and the #!+es and $!ades /ade the



nst!#tin the!e i/pssi"le.

5. A!din$ t the alle$atins thea/ended /plaint the !a#d nsisted in thepe!>#!0 //itted "0 the *itnesses ! thedeendant *h stated that the !ail*a0 *as ntnst!#ted n the haienda Ds e!/ans"ea#se n the land *e!e #nd #!+es and$!ades *hih /ade its nst!#tin /ate!iall0i/pssi"le. This *as the speial deense p#t#p "0 the deendant in that ase and *as the#estin s#"/itted t the #!t and the latte!!esl+ed it in

Rivera vs. Del Rosario"0 1ai

RIERA +s. DEL ROSARIO

.R. N. '??(5? Fan#a!0 'G, %?

ats:

Del Rsa!i is the !e$iste!ed *ne!s Lt N. ')5-C, a pa!el land sit#ated at

Ll/"0, B#laan.

idela del Rsa!i "!!*ed P%G, !/ 1a!ian Ri+e!a in the ea!l0 pa!t '()&.

T se#!e the lan, she and 1a!ian Ri+e!a a$!eed t e8e#te a deed !eal estate

/!t$a$e and an a$!ee/ent t sell the land. Cnse#entl0, 1a!ian d!ated the

Deed Real Estate 1!t$a$e, a Has#nd#an 4A$!ee/ent t Sell6, and a Deed

A"sl#te Sale.

https://thestraydecision.wordpress.com/author/themakitendency/

https://thestraydecision.wordpress.com/author/themakitendency/



The Has#nd#an p!+ided the Ri+e!as *#ld p#!hase the lt ! P%.'1. The!e *e!e 5

install/ents:

%G H #pn the si$nin$ the Has#nd#an

&GH n A#$#st 5', '()&

'.'1 n Dee/"e! 5', '()&.

The Deed A"sl#te Sale *#ld "e e8e#ted nl0 ate! the send install/ent is

paid and a pstdated he ! the last install/ent is depsited *ith idela.

Alth#$h idela intended t si$n nl0 the Has#nd#an the !eal estate /!t$a$e,

she inad+e!tentl0 a78ed he! si$nat#!e n all 5 d#/ents.

Ri+e!a ailed t /plete the pa0/ent in the %nd install/ent.

Respndents ;led a /plaint asin$ ! the !esissin Has#nd#an ! ail#!e

Ri+e!a@s t /pl0 *ith its nditin@s. The0 als s#$ht the ann#l/ent the deed

a"sl#te sale n the $!#nd !a#d the !en+e0ane the enti!e p!pe!t0.

Petitine!s sa0 that the!e an "e n !esissin "ea#se in a!dane *ith A!tile

'5)5, the del Rsa!is /#st sh* that the!e *e!e n the! le$al /eans a+aila"le t

"tain !epa!atin the! than t ;le a ase ! !esissin.

NB: Niet *as the tenant the p!pe!t0. Jhen the Ri+e!as sh*ed t Niet that

the0 *e!e the ne* *ne!s, he desisted !/ +aatin$ the p!pe!t0. The Ri+e!as

a$!eed t $i+e hi/ a s/all piee the land in #estin.

The RTC dela!ed the deed a"sl#te sale as n#ll and +id. The CA /di;ed theRTC@s deisin insa! as it dee/ed the p!tin pe!tainin$ t Niet as +alid.

Iss#e:

JON the nt!at ente!ed int "et*een the pa!ties /a0 "e !esinded "ased n A!t

''('K NO

JON the deed a"sl#te sale is n#ll and +id in its enti!et0 as ppsed t the CA@s

deisin +alidit0 pe!tainin$ t Niet@s sha!eK YES, OID IN ITS ENTIRETY

eld:

The Has#nd#an !e+eals that it is in the nat#!e a nt!at t sell, as distin$#ished

!/ a nt!at sale. In a nt!at sale, the title t the p!pe!t0 passes t the

+endee #pn the deli+e!0 the thin$ sld< *hile in a nt!at t sell, *ne!ship is,

"0 a$!ee/ent, !ese!+ed in the +end! and is nt t pass t the +endee #ntil #ll

pa0/ent the p#!hase p!ie. In a nt!at t sell, the pa0/ent the p#!hase

p!ie is a psiti+e s#spensi+e nditin, the ail#!e *hih is nt a "!eah, as#al



! se!i#s, "#t a sit#atin that p!e+ents the "li$atin the +end! t n+e0 title

!/ a#i!in$ an "li$at!0 !e.

Respndents "#nd the/sel+es t deli+e! a deed a"sl#te sale and lean title

ate! petitine!s ha+e /ade the send install/ent. This p!/ise t sell *as s#">et

t the #l;ll/ent the s#spensi+e nditin. Petitine!s h*e+e! ailed t /pletepa0/ent the send install/ent. The nn-#l;ll/ent the nditin !ende!ed

the nt!at t sell inefeti+e and *ith#t !e and efet. It /#st "e st!essed that

the "!eah nte/plated in A!tile ''(' the Ne* Ci+il Cde is the "li$!@s ail#!e

t /pl0 *ith an "li$atin al!ead0 e8tant, nt a ail#!e a nditin t !ende!

"indin$ that "li$atin. ail#!e t pa0, in this instane, is nt e+en a "!eah "#t an

e+ent that p!e+ents the +end!@s "li$atin t n+e0 title !/ a#i!in$ "indin$

!e. ene, the a$!ee/ent the pa!ties in the instant ase /a0 "e set aside, "#t

nt "ea#se a "!eah n the pa!t petitine!s ! ail#!e t /plete pa0/ent

the send install/ent. Rathe!, thei! ail#!e t d s p!e+ented the "li$atin

!espndents t n+e0 title !/ a#i!in$ an "li$at!0 !e.

Jhile A!tile ''(' #ses the te!/ !esissin, the !i$inal te!/ #sed in A!tile ''%?

the ld Ci+il Cde, !/ *hih A!tile ''(' *as "ased, *as !esl#tin.? Resl#tin

is a p!inipal atin that is "ased n "!eah a pa!t0, *hile !esissin #nde! A!tile

'5)5 is a s#"sidia!0 atin li/ited t ases !esissin ! lesin #nde! A!tile

'5)' the Ne* Ci+il Cde.

RIOS S PAL1A

+.#. o. )-8! arh , 1!2

A;&) #6O% and PA(6&(6A #&@&%, plaintiffs-appellants$

vs.

A(6O PA)A @ 7&#AO%, %. (., #A4A&) PA)A, and P&#4&(O

A(6O, defendants-appellees.

Vicente Sotto for appellants.

Camus Delgado for appellees.

%#&&, J.:



his action was instit"ted in the !o"rt of 3irst 5nstance of the !ity of 7anila by 7an"el

&ios and wife$ Paciencia &eyes$ for the p"rpose of recoverin# the s"m of PK$K00$ with

le#al interest$ and costs$ as dama#es alle#ed to have been inc"rred by the plaintiffs by

reason of breach of a contract of lease. he defendants named in the complaint are the

firm of ;acinto$ Palma y )ermanos$ . !.$ as lessee$ in the same firm. <pon hearin# the

ca"se the trial co"rt absolved the defendants from the complaint and the plaintiffs

appealed.

9o transcript of the oral testimony appears in the record$ with the res"lt that o"r view of

the case will be limited to the :"estions of law arisin# "pon the facts fo"nd by the trial

co"rt$ in connection with the letter (=xhibit % referred to in the opinion.

5t appears that by contract dated eptember 1$ 10$ the plaintiffs$ as owners of a

parcel of land on Ga#alan#in treet$ ondo istrict$ 7anila$ let the same$ with the

improvements thereon$ to the firm of ;acinto$ Palma y )ermanos$ . !.$ for the term of

fifteen years at a monthly rental of P/00 payable in advance d"rin# the first ten days of

each month. Amon# the provisions contained in this contract we note cla"se $ which is

to the effect that the terms and conditions of the contract shall be obli#atory "pon and

redo"nd to the benefit of the persons composin# the lessee firm$ their heirs exec"tors$

administrators$ s"ccessors and assi#ns$ as well as the s"ccessors and assi#ns of the

lessors. he lessee entered "pon the possession of the leased premises "pon the date

above statedI and the payment of the a#reed rental was contin"ed "ntil 9ovember and

ecember of the year 1K$ for which months the rent fell into arrears.

7eanwhile several s"ccessive reor#ani4ations of the lessee firm had been effected asfollows+ he first lessee$ ;acinto$ Palma y )ermanos$ . !.$ was s"cceeded by the firm

of P. E 3. ;acinto$ and the latter in t"rn by the firm of Palma 6rothers E !o.$ td.$ to be

itself a#ain s"cceeded by Palma E !o$. a corporation. he plaintiffs were informed of

these chan#es in the personality of the lessee and$ as the trial co"rt fo"nd$ ac:"iesced

therein.

5n view of the defa"lt in the payment of the monthly rental for the months of 9ovember

and ecember$ 1K$ 7r. Gre#orio Araneta$ as attorney for 7an"el &ios$ addressed a

letter$ on ecember $ 1K$ to &afael Palma$ as partner in the ori#inal firm and its

former mana#er. 5n the co"rse of this letter the writer as2ed 7r. Palma$ in case thelessee co"ld not contin"e to pay the rent$ to ret"rn the property at once to &ios$ Jwitho"t

pre?"dice to "lterior responsibility for dama#es for breach of contract.J he writer added

that &ios desired prompt action in the matter and that he m"st have possession of the

property on or before the th of the month$ otherwise he wo"ld be compelled to be#in

a detainer s"it.



5n response to this demand the occ"pant$ Palma 6ros. E !o.$ td.$ or Palma E !o.$ or

whoever had act"al possession$ vacated the premises on ecember $ #ivin#

notification to the plaintiff 7an"el &ios$ who at once ass"med possession. >e #ather

from the record that the rent for 9ovember and ecember$ 1K$ has s"bse:"ently

been paidI b"t the premises appear to have been entirely vacant d"rin# the months of

;an"ary and 3ebr"ary$ 1/$ and for this period no compensation has been paid to the

plaintiffs by any one. 6e#innin# with 7arch$ 1/$ the property was let by the plaintiffs

for a term of three years$ renewable for another three$ to the firm of >alter A. mith !o.$

5nc.$ "pon the best terms then proc"rable in the mar2et$ which was at a monthly rental

of PF0.

5n this co"rt the plaintiffs$ as appellants$ have assi#ned error amon# other thin#s$ to the

fail"re of the trial co"rt to #ive ?"d#ment for the s"m of P800$ the stip"lated rent for

;an"ary and 3ebr"ary$ 1/$ and for the f"rther s"m of P$F00$ bein# the difference

between the amo"nt which the lessee had a#reed to pay d"rin# the twelve years thatthe lease was to r"n from the time when the plaintiffs res"med possession and the

amo"nt which$ d"rin# the same period$ the plaintiffs wo"ld obtain from the new-lessee$

or others$ at the rate of P1F0 a month.

he firm of ;acinto$ Palma y )ermanos$ . !.$ allowed a defa"lt ?"d#ment to be entered

in this case for its fail"re to answer$ b"t the individ"al defendants interposed an answer

relyin# "pon two special defenses which will be examined in t"rn. 5t is first claimed that

the ori#inal lessee and the partners in that concern were dischar#ed by a novation of

the ori#inal contract whereby the lessee was chan#ed and new debtor s"bstit"ted for

the ori#inal debtor. >e are of the opinion that there is no merit in this defense and thatthe facts fo"nd by the trial co"rt are not s"fficient in law to show a dischar#e of the

parties liable "pon the ori#inal lease. >hat appears to have occ"rred$ and what the

co"rt fo"nd$ was that the plaintiff &ios said that it was all ri#ht when told of the

s"ccessive chan#es in the personality of the lessee$ and he seems to have been

content to receive the monthly rent from anybody who wanted to pay it.

6"t by preference to cla"se of the contract$ it will be seen that the lessors really had

no choice in their attit"de to these chan#es. 5t was there stip"lated that the provisions of

the lease sho"ld be obli#atory "pon and redo"nd to the benefit not only of the persons

composin# the lessee firm b"t their assi#ns. he transfer of the lease was thereforeanticipated in the lease and stip"lated for$ and the lessors had no ri#ht to complain as

the leased premises passed from one entity to another. he contract$ however$ does not

stip"late that the ori#inal lessee sho"ld be dischar#ed by any s"ch assi#nment$ and an

a#reement to this effect cannot be implied from the mere forced ac:"iescence of the

lessors in the transfer of the lease. <nder article 10/ of the !ivil !ode the only

stip"lation where a novation havin# the effect of extin#"ishin# a prior obli#ation will be



implied$ in the absence of express stip"lation$ is where the new and old obli#ations are

incompatible in every respect. 5n the case "nder consideration the new obli#ation

ass"med by the s"ccessive entities ta2in# over the lease was not all incompatible with

the contin"ed liability of the ori#inal lessee. 5t is very common thin# in b"siness affairs

for a stran#er to a contract to ass"me its obli#ationI ad while this may have the effect of

addin# to the n"mber of persons liable$ it by no means necessarily implies the

extin#"ishment of the liability of the first debtor. (7ichi#an tove !o. vs. A. ). >al2er E

!o.$ 1F0 5owa$ K*KI Ann. !as. 11$ F0FI estate =state of 7ota vs. erra$ / Phil.$

/*/.%

he second #ro"nd of defense to the action is$ in the opinion of the ma?ority of the

members of the co"rt$ of a more meritorio"s character. his defense is planted "pon the

fact that after the defa"lt occ"rred in the payment of rent for the months of 9ovember

and ecember$ 1K$ the lessors vol"ntarily$ and "pon their own demand$ res"med

possession of the premises. 5t is insisted for the defense that this relieved the ori#inallessee and all other persons liable "pon the lease from any liability for f"t"re rent and

therefore from any liability for dama#es that may have accr"ed$ or mi#ht accr"e$ to the

lessors d"rin# the remainder of the term of the lease. he sit"ation is one that m"st be

considered in the li#ht of certain provisions of the !ivil !ode$ to which attention will be

directed.

5n article 11/ of the !ivil !ode it is declared that an obli#ation may be resolved if one

of the obli#ors fails to comply with that which is inc"mbent "pon himI and it is declared

that the person pre?"diced may elect between exactin# the f"lfillment of the obli#ation

(specific performance% and its resol"tion$ with compensation for dama#e and paymentof interest in either case. his #eneral principle is s"bstantially reprod"ced in the special

provisions of the !ivil !ode dealin# with the ri#hts and obli#ations of lessor and

lessees. 5n the first para#raph of article 1FFF it is declared to be the d"ty of the lessee

to pay the price of the lease in the manner a#reed "pon. 5n article 1FF* the fail"re of the

lessee to comply with this obli#ation is declared to be #ro"nd for the rescission of the

contract and the recovery of dama#es$ or the latter only$ leavin# the contract in force. 5t

will th"s be seen that the lessor is permitted to elect between the two remedies of (1%

rescissions$ or resol"tion$ with dama#es and (% specific performance$ with dama#es. 5t

will be noted that he is not entitled to p"rs"e both of these inconsistent remediesI and

sli#ht advertence to the lo#ic of the sit"ation will teach "s that$ in estimatin# the

dama#es to be awarded in case of rescission$ those elements of dama#es only can be

admitted that are compatible with the idea of rescissionI and of co"rse in estimatin# the

dama#es to be awarded in the case lessor elects for specific performance only those

elements of dama#es can be admitted with are compatible with the conception of

specific performance. 5t follows that dama#es which wo"ld only be consistent with the



conception of specific performance cannot be awarded in an action where rescission is

so"#ht.

5n the case before "s the lessors clearly elected to resolve or rescind the contract. 9ow

it is an inseparable incident of resol"tion or rescission that the parties are bo"nd to

restore to each other the thin# which has been the s"b?ect matter of the contract$

precisely as in the sit"ation where a decree of n"llity is #ranted. 5n the common case of

the resol"tion of a contract of sale for fail"re of the p"rchaser to pay the stip"lated price$

the seller is entitled to be restored to the possession of the thin# sold$ if it has already

been delivered. 6"t he cannot have both the thin# sold and the price which was a#reed

to be paid$ for the resol"tion of the contract has the effect of destroyin# the obli#ation to

pay the price. imilarly$ in the case of the resol"tion$ or rescission$ of a contract of

lease$ the lessor is entitled to be restored to the possession of the leased premises$ b"t

he cannot have both the possession of the leased premises for the remainder of the

term and the rent which the other party had contracted to pay. he termination of thelease has the effect of destroyin# the obli#ation to pay rent for the f"t"re.

he dama#es or indemnity conceded in case of resol"tion by article 11/ and the

dama#es conceded by article 1FF* in the case of the rescission of a lease have

reference to the dama#es for the defa"lt which #ave rise to the ri#ht to terminate the

lease. 5n a case of the 2ind now before "s it wo"ld cover rent in arrears and dama#e

done by the lessee to the leased premises or other special dama#es in partic"lar cases

res"ltin# from nonperformance of the lesseeDs obli#ation. 6y no reasonable

interpretation of these provisions can the indemnity or dama#es be "nderstood as

extendin# the rent for the f"t"re$ inasm"ch as the termination of the lease abro#atedliability for f"t"re rent.

5t is interestin# to observe that the very point "nder consideration was passed "pon by

the creators of the !ivil !ode$ while that wor2 was in pro#ress of ma2in#I and the

manner in which the articles which we have been disc"ssin# are expressed

demonstrates an intention to eliminate dama#es in lie" of f"t"re rent when the lessor

elects to rescind. 5n this connection it appears that the Pro?ect of the !ivil !ode of 18F1

expressly declared$ in article 18/0$ that if the contract of lease sho"ld be resolved for

defa"lt of the lessee$ he sho"ld be re:"ired$ in addition to other dama#es inflicted "pon

the lessor$ to pay the a#reed rental for the whole period of time that mi#ht elapse "ntilanother lease sho"ld be made. his provision was not incorporated in the "ltimate !ivil

!odeI and this is a #ood indication that the a"thors of the !ode tho"#ht it "nwise to

place this liability "pon the lessee. (10 7anresa$ nd ed.$ F/*.%

he ?"rispr"dence of the common law will be fo"nd to be in harmony with the concl"sion

reached aboveI for the sit"ation with which we are confronted is that which is called in



the common law a s"rrender$ and by the consens"s of a"thority a s"rrender has the

effect of abro#atin# the liability of the lessee for f"t"re rent. (KF !. ;.$ 10FI 1* &. !. .$

K.% >e are not "nmindf"l of the fact that American and =n#lish decisions contain

a"thority to the effect that when a lessee abandons the leased premises and the lessor

res"mes possession for the protection of his property$ the obli#ations of the lease still

remain in forceI and the lessor has a ri#ht$ if he so elects$ to hold the lessee responsible

"nder his contract "ntil the termination of the lease. 6"t this doctrine is properly

confined to cases of abandonment by the lessee$ and the dama#es there awarded are

in effect #iven in lie" of specific performance. 5n the case before "s there was no

abandonment by the lessee$ and in the intervention of the lessor to res"me possession

was p"rely vol"ntary.

At first bl"sh it mi#ht appear that the case wo"ld perhaps be affected by the reservation

contained in the demand of plaintiffsD attorney for the s"rrender of the premises$ in

which he stated that the demand was witho"t pre?"dice to "lterior responsibility fordama#es. 6"t a momentDs reflection o"#ht to show that the ri#ht of action here reserved

m"st be "nderstood as havin# reference to s"ch dama#es as mi#ht be recoverable in

law$ consistently with the election of the plaintiffs to rescind the contract.

3rom what has been said it follows that the ?"d#ment absolvin# the defendants from the

complaint m"st be affirmedI and it is ordered$ with costs a#ainst the appellants.

RACE PARH INC S DI1APORO

April 1$ 1F/$ Grace Par2 =n#ineerin#$ 5nc.$ and 7ohamad Ali imaporo entered into a !ontract

for the ale of !assava 3lo"r and tarch Processin# 7achinery and =:"ipment (=xh. A% whereby the corporation a#reed to sell and install$ for the consideration of PF$000.00$ a cassava

flo"r and starch processin# machinery and e:"ipment specifically described therein at imaporoDs place

in aromatan anao 7ill ite$ within a period of 0 wor2in# days from the date of si#nin# of the contract.

5t was a#reed that PF$F0.00 shall be paid "pon si#nin# of the contractI P10$000.00 shall be paid within

K0 days from the date of the si#nin# of the contract b"t before machinery and e:"ipment is loaded at

7anila )arbor and PK*$F0.00 shall be payable in 1 monthly installments as provided in the contract.



d"rin# the co"rse of installation of said machinery and e:"ipment$ imaporo failed to

comply with his obli#ations specified in par. * of said contract$ so m"ch so that the

!orporation was forced to provide the necessary materials and labor and advance

whatever expenses had been made for that p"rpose with previo"s 2nowled#e and

consent #iven by imaporo beca"se the latter was short of f"nds d"rin# that time.

5t too2 the !orporation one (1% year and three (K% months to install the said machinery

and e:"ipment$ after which$ it demanded from imaporo complete payment of the

balance d"e and for all expenses made in advance arisin# from the s"pply of materials

and labor which imaporo failed to provide on time. imaporo ref"sed to pay on the

#ro"nd that the balance of PK*$F0.00 never became d"e and demandable beca"se of

the !orporationDs fail"re to complete the installation of the machinery and e:"ipment

within the stip"lated period and place the same in satisfactory r"nnin# conditions as

#"aranteed by it in the contract.

5n case both parties have committed a breach of the obli#ation$ the liability

of the first infractor sho"ld be e:"itably tempered by the !o"rts. 5f it

cannot be determined which of the parties first violated the contract$ the

same sho"ld be deemed extin#"ished$ and each shall bear his own

dama#es.

3rom the ?"d#ment of the !o"rt below$ imaporo directly appealed to this !o"rt

imp"tin# seven (% assi#nments of errors committed by the trial co"rt$ which may be

synthesi4ed into fo"r (/% main iss"es+

a% whether he was #"ilty of breach of contract.

b% whether he was liable to ret"rn the machinery and e:"ipment s"b?ect matter of the

contract.

c% whether he was liable to pay appellee !orporation the amo"nt of P1$*8.K with

interest.

d% whether he was entitled to the award of dama#es in his favor.

he findin#s of fact of the trial co"rt that both appellant imaporo and appellee corporation have

committed a breach of obli#ation are f"lly s"pported by the evidence on record. As >e have

stated$ >e are not in a position to dist"rb the same. herefore$ it correctly applied Article 11

of the 9ew !ivil !ode to the effect that in case both parties have committed a breach of

obli#ation and it cannot be determined who was the first infractor$ the contract shall be deemed



extin#"ished and each shall bear hisits own dama#es. !onse:"ently$ the trial co"rt committed

no reversible error when it ordered appellee corporation to pay appellant the amo"nt of

P1F$F0.00 representin# partial payment of the p"rchase price of the machinery and e:"ipment.

his is b"t a conse:"ence of the decree of rescission #ranted by the trial co"rt. 9either did it

commit any error when it ref"sed to #rant any interest on the aforesaid amo"nt of P1F$F0.00.

his is also b"t a conse:"ence of the en"nciated r"le that each party sho"ld bear hisits owndama#es. 3or the same reasons$ >e hold that altho"#h appellant is liable to pay the amo"nt of

P1$*8.K which appellee corporation had spent by way of advances with which to p"rchase

the necessary materials and s"pplies$ however$ he is not liable to pay interest thereon at the

rate of *O per ann"m "ntil f"ll payment of the same$ as held by the lower co"rt. 'therwise$ to

hold so wo"ld be in conflict with the above-mentioned r"le that each party m"st bear hisits own

dama#es.

LA COMPAÑIA GENERAL DE TABACOS DE FILIPINA,Plaintiff- Appellee, vs. VICENTE ARAZA,

The plaintiff brought this action in the court below to foreclose a mortgage for

8,000 pesos upon certain land in the Province of Leyte. A demurrer to the complaint

was overruled, but to the order overruling it the defendant did not except. The

defendant answered, alleging that the document, the basis of the plaintiffs claim,

was executed through error on his part and through fraud on the part of the

plaintiff. A trial was had and !udgment was entered for the plaintiff as prayed for in

its complaint. The defendant moved for a new trial on the ground that the decision

was not !ustified by the evidence, this motion was denied, to its denial the

defendant excepted, and he has brought the case here for

review.chanroblesvirtualawlibrary chanrobles virtual law library

"pon the #uestions of fact raised by the answer, the findings of the court below are

sustained by the evidence, in no event they can be said to be plainly and manifestly

against the weight of the evidence. Those findings include a finding that there was

no fraud on the part of the plaintiff, no mista$e on the part of the defendant, and

that there was a sufficient consideration for the contract, As has been said, there

was in the case to support all of these

conclusions.chanroblesvirtualawlibrary chanrobles virtual law library

"pon one point, however, we thin$ that the !udgment was erroneous. The contract

send upon was executed on the %%th day of &une, %'0%. (y terms thereof the

defendant promised to pay the plaintiff 8,000 pesos as follows) *00 pesos on the



+0th of &une, %'0%, and the remainder at the rate of %00 pesos a month, payable

on the +0th day of each month, until the entire 8,000 pesos was paid. The

defendant paid 00 pesos and no more.chanroblesvirtualawlibrary chanrobles

virtual law library

This suit was commenced on the %-th day of &une, %'0+. There was no provision inthe contract by which, upon failure to pay one installment of the debt, the whole

debt should thereupon become at once payable. e are of the opinion that the

obligation can be enforced in this action for only the amount due and payable on

the %-th day of &une, %'0+.chanroblesvirtualawlibrary chanrobles virtual law library

The court below gave no credit for the payment of 00 pesos admitted by the

complaint to have been received by the plaintiff. /t is allowed interest upon the

entire debt from the %st day of &uly, %'0%. The contract does not provide for the

payment of any interest. There is no provision in it declaring expressly that the

failure to pay when due should put the debtor in default. There was therefore nodefault which would ma$e him liable for interest until a demand was made. 1ivil

1ode, art. %%002 3anresa, 1om. on 1ivil 1ode, vol 8, p. *4.5 The transaction did not

constitute a mercantile loan and article +%4 of the 1ode of 1ommerce is not

applicable. There was no evidence any demand prior to the presentation of the

complaint. The plaintiff is therefore entitled to interest only from the

commencement of the action.chanroblesvirtualawlibrary chanrobles virtual law

library

The !udgment is set aside and the case is remanded to the court below with

directions to determine the amount due in accordance with the views hereinbeforeexpressed and to enter !udgment for such amount. 6o costs will be allowed to

either party in this court. 7o ordered. chanroblesvirtualawlibrary chanrobles

+.#. o. )-12! anuary 0, 1!20

(O%6( );?&# (OPA@, 6(., plaintiff-appellee$

vs.

+AP6A AAO6%, defendant-appellant.

Primicias and Del Castillo for appellee.

Jose Riera for appellant.



PA'6))A, J .5

he defendants appeal from a ?"d#ment of the !o"rt of 3irst 5nstance of Pan#asinan$

3o"rth 6ranch$ orderin# her to pay the plaintiff the s"m of P/$1/./$ lawf"l interest

thereon from / 7arch 1F/ when the ori#inal complaint was by the !o"rt of Appeals to

this !o"rt for it involves only a :"estion of law.

As a#reed "pon by the parties$ the facts are+ 'n different dates from 10 9ovember 1F

to K0 ;"ne 1FK the appellant bo"#ht$ too2 delivery and received from the appellee

hardware #oods$ l"mber and constr"ction materials val"ed at the total s"m of

P1$1.F (par. 1$ stip"lation of factsI =xhibits A to SI AA to ''%$ and from / 9ovember

1F to 10 7arch 1F/ the appellant paid the appellee the total s"m of P*$.8K which

the latter credited to the formerDs acco"nt (par. K$ stip"lation of factsI =xhibits PP$ PP-1$

LL$ LL-1 to LL-%. 'n K ecember 1F/$ after the ori#inal complaint had been filed

by the appellee ( / 7arch 1F/%$ the appellant paid the appellee the s"m on P1$000

which the latter also credited to the formerDs acco"nt (par. *$ stip"lation of facts%$ thereby

red"cin# her total indebtedness to P/$ 1/./.

he appellant does not deny that she received the wares and materials listed in the

invoices (=xhibits A to S and AA to ''%$ and that she is still indebted to the appellee in

the s"m of P/$1/./. At the hearin# of the case on / ;"ne 1F*$ her co"nsel withdrew

the ob?ection (filed earlier d"rin# the day% to the items listed in some of the invoices

(7in"tes of the session of / ;"ne 1F*%. )owever$ she ar#"es that as no time for

payment was stip"lated or fixed and from the nat"re and the circ"mstances of the

obli#ation it co"ld be inferred that a period was intended$ the !o"rt sho"ld fix the periodfor payment p"rs"ant to article 11 of the new !ivil !ode.

he parties entered into a contract of sale on credit. 5n the invoices (=xhibit A to S and

AA to ''% of the wares and material sold and delivered to the appellant$ the words

Jcredit salesJ appear and it is stated that H

All civil actions on this contract shall be instit"ted in the co"rts of the !ity of

a#"pan and it is hereby a#reed that all mayor p"rchases from this !ompany

are payable in the said !ity of a#"pan. 5t is a#reed that if this bill is not paid

within . . . days from date hereof 5we will pay interest at the rate of 10 percent"mper ann"m on all overd"e acco"nts. he b"yer hereby a#rees to pay and all

attorneyDs fees and co"rt costs sho"ld the seller instit"te le#al action. Goods

travel at b"yerDs ris2. 9o claim of whatsoever nat"re will be considered after /

ho"rs from date of delivery.



he parties intended to fix a period for payment of the appellantDs obli#ation b"t failed to

do so. <nder article 11 of the new !ivil !ode$ the !o"rt may fix it. a2in# into

consideration that from 10 9ovember 1F$ the first sale$ and K0 ;"ne 1FK$ the last

sale$ to the present$ more than six and nearly seven years already have elapsed$ the

appellant who does not deny her obli#ation m"st be ordered to pay the appellee the

amo"nt she still owes it within fifteen (1F% days from the date the ?"d#ment shall have

become final.

>ith the sli#ht modification ?"st mentioned$ the ?"d#ment appealed from is affirmed$ with

costs a#ainst the appellant.

AONCILLO S FAIER

http:***.la*phil.net>#d>#!is>#!i'(')a#$'(')$!Ml-'%''M'(').ht/l



CAIA& 'S #(&

Antecedents

On March 17, 1975, the petitioner and her brother Celedonio Calilap constituted a

real estate mortgage over two parcels of land covered by Transfer Certificate of

Title TCT! "o# T$1%&117 and TCT "o#T$1%'9(9, both of the )egistry of *eeds of

+ulacan, to secure the performance of their loan obligation with respondent

*evelopment +an of the -hilippines *+-!# ./0 ith the principal obligation being

ultimately unpaid, *+- foreclosed the mortgage# The mortgaged parcels of land

were then sold to *+- as the highest bidder# The one$year redemption period

e2pired on 3eptember 1, 1941#

ISSE

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I

Appeal under Rule 45 is

limited to questions of law only

http://sc.judiciary.gov.ph/jurisprudence/2011/november2011/157330.htm#_ftn5




The petitioners submissions, that her testimonial evidence sufficiently

established the facts behind the e2ecution of the deed of conditional sale, and that

she had not fully understood the terms contained in the deed of conditional sale,involved uestions of fact, for the consideration and resolution of them would

definitely reuire the appreciation of evidence# s such, her petition for review is

dismissible for raising factual issues# nder )ule &5 of the Rules of Court, only

uestions of law may be the proper subDect of an appeal in this Court# The version

of 3ection 1 of )ule &5 in force at the time the petitioner commenced her present

recourse on pril (4, (''/ e2pressly so stated, to witE

3ection 1# Filing of petition with Supreme Court # party desiring toappeal by certiorari from a Dudgment or final order or resolution of the

Court of ppeals, the 3andiganbayan, the )egional Trial Court or other

courts whenever authoriFed by law, may file with the 3upreme Court a

verified petition for review on certiorari# The petition shall raise only

questions of law which must be distinctly set forth# 1a, (a! emphasis

supplied!./(0

To be sure, we have not laced in reminding that in e2ercising its power of

review the Court is not a trier of facts and does not normally undertae the re$

e2amination of the evidence presented by the contending parties during the trial of

the case# :or that reason, the findings of facts of the C are conclusive and binding

on the Court#

;t is true that the Court has recogniFed several e2ceptions, in which it has

undertaen the review and re$appreciation of the evidence# mong the e2ceptions

have beenE a! when the findings of the C are grounded entirely on speculation,

surmises or conDecturesG b! when the inference made by the C is manifestly

mistaen, absurd or impossibleG c! when there is grave abuse of discretion on the

part of the CG d ! when the Dudgment of the C is based on a misapprehension of

factsG e! when the findings of facts of the C are conflictingG f ! when the C, in

maing its findings, went beyond the issues of the case, or its findings are contrary

to the admissions of both the appellant and the appelleeG g ! when the findings of

the C are contrary to those of the trial courtG h! when the findings of the C are





conclusions without citation of specific evidence on which they are basedG i! when

the facts set forth in the petition as well as in the petitioners main and reply briefs

are not disputed by the respondentG j! when the findings of fact of the C are

premised on the supposed absence of evidence and contradicted by the evidence on

recordG and k ! when the C manifestly overlooed certain relevant facts notdisputed by the parties, which, if properly considered, would Dustify a different

conclusion#.//0

lthough the petitioner submits that the C made findings of fact not

supported by the evidence on record, this case does not fall under any of the

recogniFed e2ceptions# er claim that she had established the circumstances to

prove her having been misled into signing the deed of conditional sale was

unfounded, for the findings of fact of the C rested on the records, as the following

e2cerpt from the assailed decision of the C indicatesE ppellant would lie this Court to believe that she was misled by

appellee *+-s representatives into signing the *eed of Conditional 3ale

even if her original intention was to buy bac only one of the properties,

i#e#, that which was covered by TCT "o# T$1%&117# owever, a closer

scrutiny of the evidence on record reveals that aside from her bare

allegations as to the circumstances leading to the signing of said

Deed of Conditional ale! the appellant has not presented other

evidence! testimonial or documentary! to support or corroborate her

claims# On the other hand, appellee *+- has presented the letter datedugust /1, 194( signed by appellant herself and addressed to the

Manager of the cuired ssets Management *epartment of the

appellee *+-, e2pressing her intentions to buy bac her foreclosed

properties# In fact! she offered therein to pay a total of "#5$!%%%&%%

for the two properties with "55!5%%&%% to be advanced by her as

deposit and the balance to be paid in five '5( years under a quarterly

amorti)ation plan& aid letter has not been categorically denied by

the appellant as during her testimony she merely feigned any

recollections of its content# Moreover, it is well$settled that bad faith

cannot be presumed and must be established by clear and convincingevidence#./&0 emphasis supplied!

The petitioner apparently relied solely on her bare testimony to establish her

allegation of having been misled, and did not present other evidence for the

purpose# 3he seemingly forgot that, firstly, her bare allegation of having been







misled was not tantamount to proof, and that, secondly, she, as the party alleging a

disputed fact, carried the burden of proving her allegation#./50 ;n other words,

her main duty was to establish her allegation by preponderance of evidence,

because her failure to do so would result in her defeat#

./%0

las, she did notdischarge her burden#

On the other hand, the records contained clear indicia of her real

intention vis--vis her reacuisition of the two foreclosed properties# The letters and

telegrams she had dispatched to *+- e2pressed the singular intention to

repurchase both lots, not Dust the one covered by TCT "o# 1%&711# That intention

even became more evident and more definite when she set down the payment

terms for the repurchase of both lots in her letter of ugust /1, 194(# =iven all

these, the C rightly concluded that her written communications to *+- had

revealed her earnest desire to re$acuire both foreclosed properties#

II

Article #**+ of the Civil Code

did not apply to the petitioner

The petitioner would have us consider that she had not given her full consent to the

deed of conditional sale on account of her lac of legal and technical nowledge#

;n effect, she pleads for the application of rticle 1//( of the Civil Code, which

providesE

rticle 1//(# hen one of the parties is unable to read, or if the contract

is in a language not understood by him, and mistae or fraud is alleged,

the person enforcing the contract must show that the terms thereof have been fully e2plained to the former#

e cannot accede to the petitioners plea#

The pertinent terms of the deed of conditional sale readE








"O T6)6:O)6 for and in consideration of the foregoing premises

and for the total sum of O"6 "*)6* :;:T> 36<6" TO3"*

-63O3 -157,'''#''!, -hilippine Currency, to be fully paid as

hereinafter set forth, the <6"*O) agrees to convey by way of sale and

the <6"*66 agrees to buy the above stated properties covered by TCT

"os# T$1%'9(9 and T$1%&117, more particularly described at the bac hereof under the following terms and conditionsE

That the downpayment shall be -55,5'' and the balance

of -1'1,5'' to be paid in five 5! years on the uarterly

amortiFation plan at 15H interest per annum the first

amortiFation of -7,/'&#15 shall be due and payable / mos# from

the date of e2ecution of the *eed of Conditional 3ale and all

subseuent amortiFations shall be due and payable every three

/! months thereafterG

That if the vendee fails to sign the sale document within 15

days from date of receipt of our notice of approval of the offer,

the approval hereof shall be deemed automatically revoed and

the deposit forfeited in accordance with the rules and regulations

of the +an#

The <endeeIs may pay the whole or part of the account under

this contract at anytime during the term hereofG provided,

however, that if the vendeeIs is in default in the payment of atleast si2 monthly amortiFations, if payable monthlyG two

uarterly amortiFations, if payable uarterlyG one semi$annual

and annual amortiFation if payable semi$annually and annually,

the <endor may, in its option, declare the whole account due and

payable#

222

The title to the real estate property and all improvements

thereon shall remain in the name of the vendor until after the

purchase price, advances and interest shall have been fully paid#

The <endeeIs agrees that in the event of his failure to pay theamortiFations or installments as herein provided for, the contract

shall, at the option of the <endor, be deemed and considered

annulled, and he shall forfeit, and by these presents, hereby

waives whatever right he might have acuired to the said

property# The <endor shall then be at liberty to dispose of same

as if this contract has never been madeG and in the event of such



annulment, all sums of money paid under the contract shall be

considered and treated as rentals for the use of the property, and

the <endeeIs waives all rights to as or demand the return

thereof and he further agrees to vacate peacefully and uietly

said property, hereby waiving in favor of the <endor whatever

e2penses he may have incurred in the property in the form of improvement or under any concept, without any right to

reimbursement whatsoever#

222

;t is hereby agreed, covenanted and stipulated by and

between the parties hereto that should the <endor decide to

rescind this contract in view of the failure of the <endeeIs to pay

the amortiFationIinstallments, when due, or otherwise failIs to

comply with any of the terms and conditions herein stipulated,

and the <endeeIs refuseIs to peacefully deliver the possession of

the property hereinbove mentioned to the <endor, thereby

obliging the <endor to file suit in court with the view to taing

possession thereof, the <endeeIs hereby agreeIs to pay all the

e2penses of the suit incident thereto, all the damages that may be

incurred thereby, as well as attorneys fees which it is hereby

agreed, shall be 1'H of the total amount due and outstanding,

but in no case shall it be less than -1''#''#./70

;t is uite notable that the petitioner did not specify which of the stipulations of thedeed of conditional sale she had difficulty or deficiency in understanding# er

generaliFed averment of having been misled should, therefore, be brushed aside as

nothing but a last attempt to salvage a hopeless position# Our impression is that the

stipulations of the deed of conditional sale were simply worded and plain enough

for even one with a slight nowledge of 6nglish to easily understand#

The petitioner was not illiterate# 3he had appeared to the trial court to be

educated, its cogent observation of her as lettered supra, at p# 7 hereof! being

based on how she had composed her correspondences to *+-# er testimony also

revealed that she had no difficulty understanding 6nglish, as the following e2cerpt

showsE

TT># C;3O"





J E Mrs# itness, last time you identified the document, captioned as

*eed of Conditional 3ale which was e2ecuted last @anuary (1,

194/, it was read in 6nglish language, correctK

E >es, sir#

J E And! could you testify in this Court without in need of interpreter,

E -es! sir&

J E o! you are aware or comfortable with the .nglish languageK

E -es! sir#./40

"or was the petitioners ignorance of the true nature of the deed of conditional sale

probably true# +y her own admission, she had ased the ban officer why she had been made to sign a deed of conditional sale instead of an absolute sale, which in

itself reflected her full discernment of the matters subDect of her dealings with

*+-, to witECO)TE

J E "ow, before you signed this Deed of Conditional ale sometime

on /anuary +#! #01*! did you read this document,

E -es! your 2onor! and I even told the officer of the 3an! that whyit should be a Deed of "robitional ale when in fact it should

be a Deed of Absolute ale because I paid already the full

amount of "55!5%%&%% for the property covered by TCT o&

#64##$ and they told me that after a few amortiFations on the

other property, they are going to release the property which was

paid in full but did not push through, >our onor#./90

Thereby revealed was her distinctive ability to

understand written and spoken 6nglish, the language in which the terms of thecontract she signed had been written#

Clearly, rticle 1//( of the Civil Code does not apply to the petitioner#

ccording to Lim v. Court of ppeals,.&'0 the provision came into being because a









siFeable percentage of the countrys populace had comprised of illiterates, and the

documents at the time had been written either in 6nglish or 3panish, vi! E

;n calibrating the credibility of the witnesses on this issue, we tae

our mandate from rticle 1//( of the Civil Code which providesE henone of the parties is unable to read, or if the contract is in a language not

understood by him, and mistae or fraud is alleged, the person enforcing

the contract must show that the terms thereof have been fully e2plained

to the former# This substantive law came into being due to the finding

of the Code Commission that there is still a fairly large number of

illiterates in this country! and documents are usually drawn up in

.nglish or panish& It is also in accord with our state policy of

promoting social 7ustice& It also supplements Article +4 of the Civil

Code which calls on court to be vigilant in the protection of the

rights of those who are disadvantaged in life#.&10 6mphasis supplied!

III

D3" validly e8ercised its right to rescind the

deed of conditional sale upon the petitioners default

The petitioner argues that despite the right to rescind due to nonpayment being

stipulated in the deed of conditional sale, *+- could not e2ercise its right because

her nonpayment of an obligation constituted only a slight or casual breach that did

not warrant rescission# Moreover, she posits that rticle 1191.&(0 of the Civil

Code empowers the court to fi2 the period within which the obligor may comply

with the obligation#

The petitioners argument lacs persuasion#

:irstly, a contract is the law between the parties# bsent any allegation and proof that the contract is contrary to law, morals, good customs, public order or

public policy, it should be complied with in good faith#.&/0 s such, the petitioner,

being one of the parties in the deed of conditional sale, could not be allowed to

conveniently renounce the stipulations that she had nowingly and freely agreed

to#









3econdly, the issue of whether or not *+- validly e2ercised the right to

rescind is a factual one that the )TC and the C already passed upon and

determined# The Court, which is not a trier of facts, adopts their findings, andsustains the e2ercise by *+- of its right to rescind following the petitioners failure

to pay her si2 monthly amortiFations, and after her being given due notice of the

notarial rescission#.&&0 s a conseuence of the valid rescission, *+- had the legal

right to thereafter sell the property to a person other than the petitioner, lie CruF#

;n turn, CruF could validly sell the property to Cabantog and Trinidad, which he

did#

nd, thirdly, rticle 1191 of the Civil Code did not prohibit the parties from

entering into an agreement whereby a violation of the terms of the contract would

result to its cancellation# ;n "angilinan v. Court of ppeals,.&50 the Court upheld the

vendors right in a contract to sell to e2traDudicially cancel the contract upon failure

of the vendee to pay the installments and even to retain the sums already paid,

holdingE

.rticle 1191 of the Civil Code0 maes it available to the inDured party

alternative remedies such as the power to rescind or enforce fulfillment

of the contract, with damages in either case if the obligor does notcomply with what is incumbent upon him# There is nothing in this law

which prohibits the parties from entering into an agreement that a

violation of the terms of the contract would cause its cancellation

even without court intervention& The rationale for the foregoing is

that in contracts providing for automatic revocation! 7udicial

intervention is necessary not for purposes of obtaining a 7udicial

declaration rescinding a contract already deemed rescinded by

virtue of an agreement providing for rescission even without 7udicial

intervention! but in order to determine whether or not the rescission

was proper& 9here such propriety is sustained! the decision of thecourt will be merely declaratory of the revocation! but it is not itself

the revocatory act& :oreover! the vendors right in contracts to sell

with reserved title to e8tra7udicially cancel the sale upon failure of

the vendee to pay the stipulated installments and retain the sums

and installments already received has long been recogni)ed by the

well;established doctrine of *0 years standing& The validity of the







stipulation in the contract providing for automatic rescission upon

non;payment cannot be doubted& It is in the nature of an agreement

granting a party the right to rescind a contract unilaterally in case

of breach without need of going to court& Thus! rescission under

Article ##0# was inevitable due to petitioners failure to pay the

stipulated price within the original period fi8ed in the agreement&

CC<RDI=>-, the petition for review is D.I.D for lac of merit, and the

decision of the Court of ppeals promulgated on @une (1, (''( is A??IR:.D#

-;8;-;"O T686-O"6 CO)- <3 )*;OM);"6 "6TO)B

The ?acts and the Case

On *ecember 11, 199% petitioner -ilipino Telephone Corporation -iltel!

e2pressed its willingness, on purely best effort, to buy in 1997 from respondent

)adiomarine "etwor, ;nc# 3martnet! /'',''' units of various brands of cellular

phones and accessories Motorola, Mitsubishi, and 6ricsson!#.10

On the following day, *ecember 1(, 199%, -iltel agreed to sell to 3martnet a

/,5''$suare meter lot,.(0 nown as the <algoson -roperty, in Maati City for -5%'

million# 3martnet agreed to pay -iltel -14' million as down payment with the

balance of -/4' million to be partly set off against the obligations that -iltel was to

incur from its proDected purchase of cellular phones and accessories from

3martnet# 3martnet agreed to settle any unpaid portion of the purchase price of the

land after the set off on or about pril /', 1997#

The contract to sell between the parties providesE

The total consideration of :;<6 "*)6* 3;?T> M;88;O"

-63O3 -5%',''','''#''! shall be paid by the <6"*66 .3martnet0,

without the need of any demand, to the <6"*O) .-iltel0 in the

following mannerE

http://sc.judiciary.gov.ph/jurisprudence/2011/august2011/160322.htm#_ftn2






a! a downpayment in the amount of O"6 "*)6* 6;=T>

M;88;O" -14',''','''#''! -63O3, to be paid on or before *ecember

(4, 199%G

b! ny and all outstanding payables which the <6"*O) .-iltel0

owes to the <6"*66 .3martnet0 in consideration of the cellular phoneunits and accessories ordered by the <6"*O) .-iltel0 and delivered by

the <6"*66 .3martnet0 between the initial downpayment date i#e#

*ecember (4, 199% and pril /', 1997, shall be credited to the

<6"*66 .3martnet0 as additional payment of the purchase price#

c! The remaining balance, after deducting a! and b! above, shall

be paid on or about pril /', 1997# ;t is e2pressly understood however,

that the <6"*O) .-iltel0 shall submit to the <6"*66 .3martnet0, on

or about pril (', 1997, a 3tatement of ccount updating the deliveries

of cellular phones and its outstanding amount in order that the <6"*66

.3martnet0 can prepare the final payment# ;n this way, the amount of

final payment shall be made to the <6"*O) .-iltel0 on or before pril

/', 1997# 3hould the <6"*O) .-iltel0 be delayed in the submission of

the said 3tatement on the stipulated date, the date of payment of the

remaining balance shall be automatically adDusted for a period euivalent

to the number of days by which the <6"*O) .-iltel0 is delayed in the

submission thereof#./0

The parties also agreed on a rescission and forfeiture clause.&0 which

provided that, if 3martnet fails to pay the full price of the land within the stipulated period and within five days after receipt of a notice of delinuency, it would

automatically forfeit to -iltel 1'H of the -14' million down payment or -14

million and the contract shall be without force and effect#

3martnet failed to pay the -/4' million balance of the purchase price on or

about the date it fell due# On *ecember 19, 1997 -iltel returned -5' million to

3martnet, a portion of the -14' million down payment that it received# 3martnet

later reuested -iltel for the return of the remaining -1/' million but the latter failed to do so#.50

On *ecember 1, 1999 3martnet filed a complaint.%0 against -iltel for

rescission of their contract to sell involving the <algoson -roperty or its partial

specific performance before the )egional Trial Court )TC! .70 of Maati City in













Civil Case 99$('&1# 3martnet alleged, among other things, that it withheld

payment of the balance of the purchase price of the subDect property because -iltel

reneged on its commitment to purchase from 3martnet /'',''' units of cellular

phones and accessories#

3martnet ased the court to a! order -iltel to convey to 3martnet at least

/(H interest in the <algoson -roperty, representing the value of its down payment

of -14' million or, in the alternative, order -iltel to return to 3martnet its -14'

million down payment plus interestG b! order -iltel to pay

3martnet -41,/'',7%&#9%, representing the value of the /'',''' units of various

cellular phones which it acuired pursuant to -iltels commitment to buy them but

which commitment -iltel disregarded, plus interest, as actual and compensatory

damagesG and c! order -iltel to pay 3martnet -5'','''#'' in attorneys fees#

;n its answer with counterclaims,.40 -iltel claimed that the agreement to

purchase cellular phones and accessories was not part of its contract with 3martnet

for the sale of the <algoson -roperty and that -iltel committed to buy euipment

from 3martnet only on a best effort basis# :or this reason, -iltel pointed out,

3martnet did not have the power to rescind the contract to sell the <algoson

-roperty and, hence, cannot invoe that contracts rescission and forfeitureclause# -iltel sought full payment by 3martnet of the purchase price for the

<algoson -roperty, moral damages, e2emplary damages, and litigation e2penses#

On October /, (''' 3martnet filed a motion for partial summary

Dudgment.90 for the return of the down payment it paid -iltel# The )TC granted the

motion on "ovember 1/, ('''.1'0 and ordered -iltel to return the -14' million

down payment that it received less the forfeited amount of -14 million and the

cash advance of -5' million or a net of -11( million, with interest at %H per

annum from the time of the e2traDudicial demand on it on October (', 1994 until

finality of the Dudgment and an additional 1(H legal interest after the Dudgment

becomes final and e2ecutory until the same is satisfied# -iltel filed a motion for

reconsideration which the )TC denied for lac of merit on @anuary /', (''1#









On March 15, (''1 3martnet filed a manifestation and motion, withdrawing

its two remaining causes of action and praying for the issuance of a writ of

e2ecution# On March (', (''1 it filed an alternative motion for e2ecution pendingappeal of the )TCs partial decision#

On pril &, (''1 -iltel filed with the Court of ppeals C! .110 a special civil

action for certiorari with application for a temporary restraining order and a writ of

preliminary inDunction# -iltel alleged that the )TC presiding Dudge, )einato =#

Juilala, gravely abused his discretion when he issued a partial summary Dudgment

in the case and denied -iltels motion for reconsideration# +ut the C dismissed the

petition, prompting -iltel to challenge such dismissal before this Court in =#)#

15('9(#

Meantime, on pril (/, (''1 the )TC granted a! 3martnets motion to

withdraw its remaining causes of action and b! its motion for e2ecution pending

appeal#.1(0 Conseuently, a writ of e2ecution was issued on pril (&, (''1#

On pril (5, (''1 -iltel filed a notice of appeal to the C from the Dudgmentof "ovember 1/, (''' and from the pril (/, (''1 Order that allowed e2ecution

pending appeal# The appeal to the C was doceted as C$=#)# C< 714'5#

On pril (%, (''1 -iltel filed with the )TC a motion to defer e2ecution

pending appeal upon the posting of a supersedeas bond# The )TC denied the

motion# -iltel filed a motion for reconsideration but the court denied it on ugust

1&, (''1.1/0 and directed -iltel to pay 1(H interest on the Dudgment amount from

pril (/, (''1, when it allowed the e2ecution pending appeal#-iltel filed a

supplemental notice of appeal to the C from this last order#

On @une 11, (''/ the C dismissed -iltels appeal in C$=#)# C< 714'5#.1&0 The appellate court held that the )TC did not err when it granted summary

Dudgment since there were no genuine issues involved in the case# The C said that











3martnets failure to pay the balance of the purchase price ipso facto avoids the

contract to sell# ith the denial of its motion for reconsideration,.150-iltel filed this

petition under )ule &5 of the )ules of Court#

Meantime, the Court in =#)# 15('9( .1%0 denied -iltels petition on ugust &,

('1'# The Court affirmed the Cs ruling in C$=#)# 3- %&155 that appeal, and

not certiorari, is the proper remedy# Moreover, it held that -iltel committed forum

shopping when it filed a petition for certiorari and a notice of appeal to assail the

same resolutions and orders of the )TC#

ith the denial of =#)# 15('9(, the Court is now left with this petition

assailing the Cs dismissal of -iltels appeal in C$=#)# C< 714'5#

The Issue "resented

The core issue for resolution is whether or not there are genuine issues of

fact to be tried in this case#

The Courts Ruling

genuine issue of fact is that which reuires the presentation of evidence, as

distinguished from a sham, fictitious, contrived or false issue# hen the facts as

pleaded appear uncontested or undisputed, then there is no real or genuine

issue# 3ummary Dudgment is proper in such a case#.170

ere, -iltel contends that summary Dudgment is out of place because the

parties raise factual issues of fraud and breach of contract# lthough their contract

has a built$in rescission and forfeiture clause, this becomes operative only upon the

occurrence of the following conditionsE 1! -iltel sends a 3tatement of ccount to

3martnetG (! 3martnet fails to pay within 1' days from receipt of the statementG /!









-iltel sends a "otice of *elinuency to 3martnetG and &! 3martnet fails to pay

within five days from receipt of the notice#

The rescission and forfeiture clause thus readsE

;n case the <6"*66 fails to fully pay, within the stipulated

period, the balance of the total consideration under rticle (c! of this

Contract to 3ell, the <6"*O) shall send a notice of delinuency to the

<6"*66# :ailure on the part of the <6"*66 to pay within five 5!

days from receipt of said notice, ten 1'H! percent of the downpayment

or 6;=T66" M;88;O" -63O3 -14,''','''#''! -63O3, -hilippine

Currency shall automatically be forfeited in favor of the <6"*O) and

the Contract to 3ell shall be without force and effect#.140

"otably, however, both -iltel and 3martnet admit that they entered into a

contract to sell covering the <algoson -ropertyG that 3martnet agreed to pay

-iltel -5%' million for it, with a down payment of -14' millionG and that 3martnet

failed to pay the balance of the purchase price on or about pril /', 1997#

ith these common admissions, it is clear that there are no genuine issues of

fact as to the e2istence and nature of the contract to sell as well as 3martnetsfailure to pay the balance of the purchase price within the agreed period# Thus, the

)TC was correct in sipping trial and deciding the case through a summary

Dudgment based on the undisputed facts#

3martnets allegations respecting fraud and breach of contract referred to

what appears to be -iltels non$binding promise to buy cellular phones and

accessories from 3martnet# These are matters independent of the parties agreement

concerning -iltels sale of the <algoson -roperty to 3martnet# The contract to sell of

such property was not legally lined or made dependent on the aborted cellular

phone deal between the parties# ;ndeed, 3martnet dropped with leave of court its

causes of action relating to such deal#





ll that matters is that since 3martnet failed to pay the balance of the

purchase price, automatic rescission set in and this placed -iltel under an

obligation to return the down payment it received, less the portion that it forfeited

due to 3martnets default#Conseuently, it is but proper for -iltel to fully abide bysuch obligation# -iltel cannot avoid rescission since it in fact partially abided by

rescissions conseuences when it returned to 3martnet on *ecember 19,

1997 a -5' million portion of the down payment it received#

+y returning part of the down payment, it is clear that -iltel recogniFed that

the contract to sell the <algoson -roperty had reached the point of automatic

rescission# -iltel is, therefore, in estoppel to deny rescission based on a claim that it

had not yet sent a statement of account or a notice of delinuency to 3martnet

regarding the latters default# 3uch statement of account and notice of delinuency

had become academic#

-iltel argues that 3martnet cannot, as a defaulting buyer, rescind the contract

to sell between them by the simple act of refusing to pay# +ut, 3martnets

nonpayment of the full price of the property was not an act of rescission# ;t was but

an event that rendered the contract to sell without force and effect# ;n a contract tosell, the prospective seller binds himself to part with his property only upon

fulfillment of the condition agreed, in this case, the payment in full of the purchase

price# ;f this condition is not fulfilled, the seller is then released from his obligation

to sell#

s the Court said in #eirs of Ca$etano "angan and Consuelo "angan v.

"erreras,.190 the payment of the purchase price in a contract to sell is a positive

suspensive condition, the failure of which is not a breach but a situation that results

in the cancellation of the contract# 3trictly speaing, therefore, there can be no

rescission or resolution of an obligation that is still non$e2istent due to the non$

happening of the suspensive condition#.('0







8iewise, a cause of action for specific performance does not arise where the

contract to sell has been cancelled due to nonpayment of the purchase price#.(10 3martnet obviously cannot demand title to the <algoson -roperty because it did

not pay the purchase price in full# :or its part, -iltel also cannot insist on full payment since 3martnets failure to pay resulted in the cancellation of the contract

to sell# ;ndeed, in the case of $ala Life ssurance, %nc. v. Ra$ &urton 'evt. Corp.,.((0 the Court reDected the sellers demand for full payment and instead ordered it to

refund to the buyer all sums previously paid# The order to refund is correct based

on the principle that no one should unDustly enrich himself at the e2pense of

another#.(/0

8astly, the Court sustains the Cs imposition of 1(H interest pursuant to our

ruling in (astern Shipping Lines, %nc. v. Court of ppeals#.(&0









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