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
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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.
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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
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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
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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(.
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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!!%.
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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<=+
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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% &;+$.
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$. 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
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#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
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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!+
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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
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:"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
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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
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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
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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
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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
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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
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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
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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 $!ades /ade the
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nst!#tin the!e i/pssi"le.
5. A!din$ 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.
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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$!ee/ent, !ese!+ed in the +end! and is nt t pass t the +endee #ntil #ll
pa0/ent the p#!hase p!ie. In a nt!at t sell, the pa0/ent the p#!hase
p!ie is a psiti+e s#spensi+e nditin, the ail#!e *hih is nt a "!eah, as#al
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! se!i#s, "#t a sit#atin that p!e+ents the "li$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&(O
A(6O, defendants-appellees.
Vicente Sotto for appellants.
Camus Delgado for appellees.
%#&&, J.:
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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.
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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
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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
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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
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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.
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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
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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
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+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.
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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.
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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
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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
T6 O"O)+86 CO)T O: --683 COMM;TT6* 36);O3
"* )6<6)3;+86 6))O) 6" ;T *;3)6=)*6* T6
T63T;MO";8 6<;*6"C6 **C6* +> T6 -6T;T;O"6),
;C C86)8> *6T;86* T6 T)T 3))O"*;"= T6
6?6CT;O" O: T6 *66* O: CO"*;T;O"8 386 O: T63+@6CT 8OT TO )63-O"*6"T C)A, "* T6 8TT6) TO
CO$)63-O"*6"T3 C+"TO= "* T;6"A "88 "* <O;*
;;
T6 CO)T O: --683 COMM;TT6* )6<6)3;+86 6))O)
6" ;T ::;)M6* T6 *6C;3;O" O: T6 8O6) CO)T
-O8*;"= T6 )63-O"*6"T +"B3 )63C;33;O" O: T6
*66* O: CO"*;T;O"8 386 CO"3;*6);"= TT T6
-6T;T;O"6) * 8)6*> -;* 3+3T"T;8 MO"T
O: --1'','''#'' O) +OT TO$T;)* O: T6 :88CO"3;*6)T;O" O: --157,'''#''#
I
Appeal under Rule 45 is
limited to questions of law only
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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
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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$settled that bad faith
cannot be presumed and must be established by clear and convincingevidence#./&0 emphasis supplied!
The petitioner apparently relied solely on her bare testimony to establish her
allegation of having been misled, and did not present other evidence for the
purpose# 3he seemingly forgot that, firstly, her bare allegation of having been
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misled was not tantamount to proof, and that, secondly, she, as the party alleging a
disputed fact, carried the burden of proving her allegation#./50 ;n other words,
her main duty was to establish her allegation by preponderance of evidence,
because her failure to do so would result in her defeat#
./%0
las, she did notdischarge her burden#
On the other hand, the records contained clear indicia of her real
intention vis--vis her reacuisition of the two foreclosed properties# The letters and
telegrams she had dispatched to *+- e2pressed the singular intention to
repurchase both lots, not Dust the one covered by TCT "o# 1%&711# That intention
even became more evident and more definite when she set down the payment
terms for the repurchase of both lots in her letter of ugust /1, 194(# =iven all
these, the C rightly concluded that her written communications to *+- had
revealed her earnest desire to re$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
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"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$1%&117, more particularly described at the bac hereof under the following terms and conditionsE
That the downpayment shall be -55,5'' and the balance
of -1'1,5'' to be paid in five 5! years on the uarterly
amortiFation plan at 15H interest per annum the first
amortiFation of -7,/' shall be due and payable / mos# from
the date of e2ecution of the *eed of Conditional 3ale and all
subseuent amortiFations shall be due and payable every three
/! months thereafterG
That if the vendee fails to sign the sale document within 15
days from date of receipt of our notice of approval of the offer,
the approval hereof shall be deemed automatically revoed and
the deposit forfeited in accordance with the rules and regulations
of the +an#
The <endeeIs may pay the whole or part of the account under
this contract at anytime during the term hereofG provided,
however, that if the vendeeIs is in default in the payment of atleast si2 monthly amortiFations, if payable monthlyG two
uarterly amortiFations, if payable uarterlyG one semi$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
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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"
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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
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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#
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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
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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
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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
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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%	%, 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#
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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
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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$in rescission and forfeiture clause, this becomes operative only upon the
occurrence of the following conditionsE 1! -iltel sends a 3tatement of ccount to
3martnetG (! 3martnet fails to pay within 1' days from receipt of the statementG /!
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-iltel sends a "otice of *elinuency to 3martnetG and &! 3martnet fails to pay
within five days from receipt of the notice#
The rescission and forfeiture clause thus readsE
;n case the <6"*66 fails to fully pay, within the stipulated
period, the balance of the total consideration under rticle (c! of this
Contract to 3ell, the <6"*O) shall send a notice of delinuency to the
<6"*66# :ailure on the part of the <6"*66 to pay within five 5!
days from receipt of said notice, ten 1'H! percent of the downpayment
or 6;=T66" M;88;O" -63O3 -14,''','''#''! -63O3, -hilippine
Currency shall automatically be forfeited in favor of the <6"*O) and
the Contract to 3ell shall be without force and effect#.140
"otably, however, both -iltel and 3martnet admit that they entered into a
contract to sell covering the <algoson -ropertyG that 3martnet agreed to pay
-iltel -5%' million for it, with a down payment of -14' millionG and that 3martnet
failed to pay the balance of the purchase price on or about pril /', 1997#
ith these common admissions, it is clear that there are no genuine issues of
fact as to the e2istence and nature of the contract to sell as well as 3martnetsfailure to pay the balance of the purchase price within the agreed period# Thus, the
)TC was correct in sipping trial and deciding the case through a summary
Dudgment based on the undisputed facts#
3martnets allegations respecting fraud and breach of contract referred to
what appears to be -iltels non$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#
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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
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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