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Enriquez v Ramos matters were minor ones and sufficiently explained, invoking the rule of res

FACTS: judicata. She likewise does not dispute her non-payment of the sum of
This is the second time that the party litigants have come to the SC on P200,000; she contends, however, that the roads had not yet been
basically same causes of action affecting the same deed of sale with real completed in accordance with the Ordinance of Quezon City. She contends
estate mortgage covenanted between them. that it had not been completed because the Ordinance requires the putting
Plaintiff-appellantRodorigo Enriquez averred that they sold to defendant- up of trees and water facilities. Neither said roads be considered in the
apelleeSocorro Ramos 20 subdivision lots in Quezon City for the sum of legal sense until their construction had not been accepted by the Capital
P235,056 which only P35,056 had been paid. The balance of P200,000 was City Planning Commission.
to be liquidated within two years from the date of execution of the deed of SC finds the posture of the defendant-appellee to be untenable.
sale, with interest at 6% for the first year and 12% thereafter until fully ISSUE:
paid. To secure the payment of the balance, the defendant-appellee WON Socorro Ramos fulfilled her obligations as stipulated in the deed of
executed in the same document a deed of mortgage in favor of the vendors mortgage
on several parcels of land variously situated in Quezon City, Pampanga and RULING:
Bulacan. The non-payment of the realty tax for a year and the non-registration of
In the deed of mortgage the stipulations are the following: the mortgaged property, within a reasonable time after the execution of a
During the term and existence of the mortgage, the Mortgagor shall duly contract may be considered minor matter, the failure to do so was
pay and discharge, at her expense, and on their maturity, all lawful taxes or sufficiently explained, and that the mortgagor promised the SC that
assessments levied or assessed upon the mortgaged property; positive remedial action would be taken. The Court opined that it cannot
Mortgagee may pay and discharge such taxes or assessments and insure however be taken as a license for the continued non-fulfillment by the
the security of the property, and any all sums so paid by the Mortgagee defendant-appellee of her contractual obligations. It was far from the
shall be repayable on demand with interest at 6% per annum and be a lien intention of the Court to allow or enable the litigants to utilize its decision
on the property mortgaged. as an instrument where solemnly covenanted obligations could be avoided.
If mortgage cannot be registered, the whole obligation shall immediately The continued violation by the defendant of the express terms of her
become due and demandable. contract can no longer be countenanced. Not only has the defendant failed
In the event that the Mortgagor should fail to pay the amount secured by to perform the mentioned obligations, but she has likewise failed to deliver
the mortgage or any part in accordance with the terms and conditions to the plaintiffs the sum of P50,000 which she promised to contribute to
stipulated, or fail to perform the conditions, the Mortgagee shall have the the latter for the construction of the roads on her lots in accordance with
right to foreclose the mortgage extrajudicially, and the Mortgagee be the ordinances of Quezon City. The deed of sale wit mortgage makes it the
appointed the attorney-in-fact of the Mortgagor, the full power to expres duty of the defendant to pay the realty taxes on the mortgaged lots,
substitute, to enter upon and take possession of the mortgaged property to register the mortgaged estates, and to contribute P50,000 for the
without any court order or authority, to sell and dispose of the same to the construction of roads on the purchased lots. By its express terms, if the
highest bidder at public auction after notice. defendant failed to fulfill these conditions her entire obligation was to
Plaintiff-appellant alleged that the defendant-appellee violated the terms become immediately due and demandable and the mortgage would have
of their agreement the option to foreclose the mortgage. These terms of the contract have the
Inspite repeated demands, the defendant-appelle refused to pay the sum force of law between the parties thereto.
of P200,000 within the stipulated period. The completion of the roads in question, based on the evidence, must be
The mortgage of Bulacan property was never registered regarded as having been sufficiently established. (Number 2 of the ruling,
The realty tax for 1959 on the lots mortgaged were not paid by the but is not that important)
defendant-appellee On the non-completion in the technical, legal sense because the
SC upheld the findings and conclusions of the trial court which ruled that completion has to be approved by an Administrative Agency was held by SC
the actual price of the lots sold to the defendant was only P185,056 instead as devoid of merit. There is nothing in the ordinance which makes the
of P253,056, and that only if and when the roads shall have been acceptance by the said agency a condition precedent may be considered
constructed pursuant to the ordinances of Quezon City may the period of constructed in accordance with the ordinance. (Number 3)
two years specified in the contract begin to run. This is pursuant to the On planting trees and installation f water facilities, SC said that there is
private deed entitled Explanation that the plaintiff certified the nothing in Ordinance 2969 which would indicate that a street may be
consideration of P50,000, representing Socorro Ramos contribution to the considered completed only when trees are planted on both sides of the
construction of the road in accordance with the provisions of the City street and water facilities are built on the subdivision. These are segregable
Ordinance of Quezon City. from the laying out and construction of roads and cannot be deemed
included within the scope of the latter. (Number 4)
Defendants contention:The non-payment of the 1959 realty tax and non- As to the lack of previous notice of completion and demand for payment,
registration, the Court held that it appear sufficiently explained in the brief the filing of the case is sufficient notice to the defendant of the completion
stating that her backpay certificates to the payment of the realty and of the roads in question and of the plaintiffs desire to be paid the purchase
income taxes but as she had not yet received certificates the payment of price of the questioned lots. The effect of such demand retroacts to the
the taxes was delayed. The registration of the Bulacan property, on the day of the constitution of the defendants obligation. Article 1187 provides
other hand, could not be undertaken because it was still then registered in that The effects of a conditional obligation to give, once the condition has
both her name and in the name of co-owner. The defendant promised that been fulfilled, shall retroact to the day of the constitution of the
she would pay the taxes in due time and undertake the needed segregation obligation The contracted obligation of the defendant under the fact of
and the annotation of the lien of the mortgage on the Bulacan property as the case at bar was to pay the balance of P200,00 within two years from
soon as the vendors proceeded with the construction of the roads on the the date the roads in question is completed. (Number 5)
purchased lots.
In the case at bar, plaintiff charged before CFI that the defendant has not
yet paid the sum of P200,000 despite the facts that the roads on the
questioned lots were completed; that the mortgage on the Bulacan
property has not yet been registered; that the realty taxes corresponding
to the years 1959 to 1963 on the mortgaged lots had not been paid.
Defendant admits that she has not paid the realty taxes and has not
registered the mortgage on the Bulacan property, but argues that these
FACTS: Petitioner Tan and private respondents (Mariano Singson and Petitioner then filed an instant petition for Certiorari assailing the decision
Visitacion Singson) entered into a Contract of Sale regarding the house and of the CA and that the respondents had committed a substantial breach of
lot owned by the latter, wherein, the property is subject to encumbrances their obligation. Petitioners maintain that since respondents were not
and liens. They have agreed on the price of Php.1,800,000.00 with the prepared to convey the title to the subject property on the date agreed
petitioner to advance an earnest money of Php.200,000.00 to enable the upon in view of the various liens and encumbrances thereon, the former
respondents to secure the cancellation of mortgage and lien annotated on are entitled to rescind the contract pursuant to Article 1191 of the Civil
the title of the property. The remaining balance of the agreed price is to be Code which states:
paid on June 21, 1984. As such, a check was handed to the respondents Art. 1191. The power to rescind obligations is implied in reciprocal ones,
from the petitioner and thereupon, they signed a receipt. In turrn, in case one of the obligors should not comply with what is incumbent
respondents gave to the petitioner the Xerox copy of the title and other upon him.
papers as well as the inventory of the furnishings of the house that are The injured party may choose between the fulfillment and the rescission
included in the sale. of the obligation, with the payment of damages in either case. He may
The petitioner together with her daughter and another person asked the also seek rescission, even after he has chosen fulfillment, if the latter
respondents to reduce the price to Php.1,750,000.00 which was agreed by should become impossible.
the respondents and so, another receipt was signed by them entitled The court shall decree the rescission claimed, unless there be just cause
Agreement. The respondents then received the advance payment of authorizing the fixing of a period.
Php.200,000.00. They then started paying the mortgage loan with the DBP This is understood to be without prejudice to the rights of third persons
to clear up the title of the subject property. They paid the bank in the full who have acquired the thing, in accordance with articles 1385 and 1388
payment of the mortgage loan. The DBP then executed a cancellation of and the Mortgage Law.
mortgage which was registered with the Registry of Property of Baguio.
On June 25, 1984, the petitioner with an Atty. then went to Baguio to ISSUE: WON, the petitioner is entitled to rescind the contract pursuant to
inquire about the status of the property, in which the respondents told Article 1191 of the Civil Code?
them that the DBP was taking some time processing their payments and
preparing the deed of cancellation of the mortgage. With that, they agreed RULING: No. The petition is void and unmeritorious. The power to rescind
on a two-week extension for the execution of the deed of sale. obligations is implied in reciprocal ones in case one of the obligors should
There were two versions on this matter. Respondents said that it was the not comply with what is incumbent upon him/her. Also, it is equally settled
petitioner who asked for the extension for she wasnt yet ready to pay for that, in the absence of a stipulation in the contrary, this power must be
the balance. On the other hand, petitioners contended that it was the revoked judicially. It cannot be exercised solely on a partys own judgment
respondents who asked for the extension because the title of the property that the other has committed a breach of obligation. Clearly, there is
wasnt yet cleared. The lower court ruled in favor of the petitioner because nothing in the contract that empowers the petitioner to rescind it without
the DBP had not yet indeed executed the deed of cancellation of mortgage resort to the courts, thus, petitioners action in unilaterally terminating the
and no title has yet been issued for the driveway although already paid for. contract is unjustified.
Upon the execution of the DBP of the deed of cancellation of mortgage by The alleged breach of the obligation by the respondents, which consists in
July 9, 1984, the respondents contacted the petitioner for the formal a mere delay for a few days in clearing the title to the property, cannot be
execution of the deed of sale. Yet, the respondents received a telegram considered substantial enough to warrant rescission of the contract.
from the petitioners Atty. to cancel the contract and demanded to return Review of the records indicates that the respondents had substantially
the advance payment of Php.200,000.00. Respondents Atty. sent a counter complied with their undertaking of clearing the title. Respondents, upon
letter calling the petitioner to perform her part of the contract because the receipt of the earnest money paid by petitioner, utilized the same to settle
title can now be transferred in her name upon the execution of the its obligations with DBP, thus, enabling them to secure a cancellation of the
contract of sale or else they will sue the petitioner. Yet, the petitioner existing mortgage.
already then filed in court for the recovery of the sum of money with It is a settled principle of law that rescission will not be permitted for a
damages (Rescission with damages). She contended that, she gave the slight or casual breach of the contract but only for such breaches as are so
advance payment to the respondents upon the latters assurance that they substantial and fundamental as to defeat the object of the parties in
could transfer to her the house and lot free from liens and encumbrances making the agreement. A court, in determining whether rescission is
including the furnishings and adjacent lot used for driveway on June 25, warranted, must exercise its discretion judiciously considering that the
1984, but time already passed without the respondents had fulfilled their question of whether a breach of a contract is substantial depends upon the
obligation as she discovered that the mortgage on the property was not attendant circumstances.
released or cancelled and the driveway was still a public land and could be In this case, it is true that as of June 25, 1984, the date set for the
validly transferred to her because the disposition thereof would require the execution of the final deed of sale, the mortgage lien in favor of DBP
signature of the Secretary of Agriculture and National Resources. annotated in the title has not yet been cancelled as it took DBP some time
in processing the papers relative thereto. However, just a few days after,
the cancellation of the DBP mortgage was entered by the Register of Deeds
RTC RULING. In favor of the petitioner and ordered for: and duly noted on the title. Time not being of the essence in the
1) Rescission of the contract agreement, a slight delay on the part of the respondents in the
2) Respondents to return to the petitioner the advance payment performance of their obligation is not sufficient ground for the resolution
she has given. of the agreement more so when the delay was not totally attributable to
3) Pay an interest of 12% per annum on Php200,000.00 from the them.
date of the filing of the complaint until fully paid, etc.
Upon appeal by the respondents, the CA reversed the ruling of the RTC,
ordered to:
1) Respondents to execute and sign an absolute deed of sale
conveying the petitioner free from lien and encumbrance the
house and lot covered by the Registry of Deeds together with the
furnishings, appliances and the adjacent lot used as driveway.
2) To pay the respondents the remaining balance of
Php.1,550,000.00 plus interest.
VELARDE v COURT OF APPEALS involved a reciprocal obligation wherein the obligation of one is a
FACTS: resolutory condition of the obligation of the other, the non-fulfillment of
David Raymundo [herein private respondent] is the absolute and registered which entitles the other party to rescind the contract (Songcuan vs. IAC,
owner of a parcel of land together with the house and other 191 SCRA 28).
improvements in Dasmarinas Makati. Defendant George Raymundo [herein Thus, the non-payment of the mortgage obligation by appellees
private respondent] is Davids father who negotiated with plaintiffs Velarde would create a right to demand payment or to rescind the
Velardes [herein petitioners] for the sale of said property, which was, contract.
however, under lease.
A deed of sale was executed by Raymundo as vendor and Verlardes as Hence this appeal,
vendee. ISSUES:
Prior to the sale, the parcel of land was mortgaged to BPI to secure the A. WON The Court of Appeals erred in holding that the non-
payment of loan of 1.8M payment of the mortgage obligation resulted in a breach of
Stipulation of the Deed of Sale: the contract.
1. Petitioners (Velardes) paid 800k and agreed to assume the B. WON The Court of Appeals erred in holding that the
mortgage obligations on the property in favor of the BPI in the rescission (resolution) of the contract by private
name of the Vendor (Raymundo) respondents was justified.
2. While the application for the assumption of the mortgaged
obligations in the property is not yet approved by the bank, the HELD:
mortgage obligation on the property are to be paid by the A. Yes.
vendee (Velardes) , in the name of the vendor (Raymundo) Petitionerdid not merely stop paying the mortgage obligations; they also
3. In the event that the vendee violates any of the conditions, the failed to pay the balance of the purchase price. As admitted by both
down payment of 800k and all the payments made to the bank parties, their agreement mandated that petitioners should pay the
on the mortgage loan shall be forfeited in favor of David purchase price balance of P1.8 million to private respondents in case the
Raymundo (respondent). Raymundo shall resume and complete request to assume the mortgage would be disapproved. Thus, on
the ownership and possession of the property sold by Deed of December 15, 1986, when petitioners received notice of the banks
Sale with assumption of mortgage and the same shall be deemed disapproval of their application to assume respondents mortgage, they
automatically cancelled and be of no force and effect, in the should have paid the balance of the P1.8 million loan.
same manner as if the same had never been executed or entered Instead of doing so, petitioners sent a letter to private respondents offering
into. to make such payment only upon the fulfillment of certain conditions not
For and in consideration of the foregoing premises, and the assumption of originally agreed upon in the contract of sale. Such conditional offer to pay
the mortgage obligations of 1.8M with the BPI, Velarde obligate herself to cannot take the place of actual payment as would discharge the obligation
strictly and faithfully comply with the following terms and conditions that of a buyer under a contract of sale.
until such time as my assumption of the mortgage obligations on the In a contract of sale, Private respondents had already performed their
property purchased is approved by the mortgagee bank they shall continue obligation through the execution of the Deed of Sale, which effectively
to pay the said loan in accordance with the terms and conditions of the transferred ownership of the property to petitioner through constructive
Deed of Real Estate Mortgage in the name of Mr. David A. Raymundo, the delivery. Deed of sale is equivalent to delivery.
original Mortgagor. Petitioners, on the other hand, did not perform their correlative obligation
Pursuant to the deed, Velardes paid BPI monthly interest on the loan for of paying the contract price in the manner agreed upon. Worse, they
three months. wanted private respondents to perform obligations beyond those
On December 15, 1986, Velardes where advised that the application for the stipulated in the contract before fulfilling their own obligation to pay the
Assumption of Mortgage with BPI was not approved. This prompted full purchase price.
Velardes not to make any further payments. B. Yes.
Raymundo, through counsel, wrote to Velardes informing the latter that Art. 1191. -- The power to rescind obligations is implied in reciprocal ones,
the non-payment to mortgage constitute non performance of obligation. in case one of the obligors should not comply with what is incumbent upon
Respondent sent Velardes a notarial notice of cancellation/rescission of the him.
intended sale of the subject property. The injured party may choose between fulfillment and the rescission of the
Velardes filed a complaint for specific performance to nullify the obligation, with the payment of damages in either case. He may also seek
cancellation, writ of possession and damages with RTC rescission even after he has chosen fulfillment, if the latter should become
RTC ruling: impossible.
The complaint was dismissed by judge Ynares-Santiago which later on In the present case, private respondents validly exercised their right to
promoted as CA judge. Meanwhile, on a motion for reconsideration, Judge rescind the contract, because of the failure of petitioners to comply with
Abad Santos granted petitioners Motion for Reconsideration and directed their obligation to pay the balance of the purchase price. Indubitably, the
the parties to proceed with the sale. He instructed petitioners to pay the latter violated the very essence of reciprocity in the contract of sale, a
balance of P1.8 million to private respondents who, in turn, were ordered violation that consequently gave rise to private respondents right to
to execute a deed of absolute sale and to surrender possession of the rescind the same in accordance with law.
disputed property to petitioners.
CA ruling:
Private respondents appealed to the CA. The court set aside the
decision of Judge Abad and reinstated Judge Ynares-Santiagos decision. It
was agreed that in case of violation of the mortgage obligation, the Deed of
Sale with Assumption of Mortgage would be deemed automatically
cancelled and of no further force and effect, as if the same had never been
executed or entered into.
In the case at bar, Raymundo sent Velarde a notarial notice dated
January 8, 1987 of cancellation/rescission of the contract due to the latters
failure to comply with their obligation. The rescission was justified in view
of Velardes failure to pay the price (balance). The agreement of the parties
2. No. The respondent prayed for the annulment of both the Deed of
FACTS: Conditional Sale and Deed of Sale with Assumption of Mortgage which are
Spouses Valdez (private respondents) are owners of a house and a the very bases of the supplemental agreements. By failing to pay the
parcel of land with an area of 155 sqm. Siy (petitioner) entered into a 12,000 and the balance of 4376 as stipulated in the contract, the petitioner
contract with spouses Valdez regarding said property. has committed breach of contract, which sufficiently and justly entitled the
The first agreement was a Deed of Conditional Sale(Exhibit A), respondents to ask for the rescission of the contracts.
where spouses Valdez sold the said property to Siy for P22,000. However,
the sale was subject to the condition that after the approval of the loan of Therefore, the decision of CA has been modified by the SC,
Siy with SSS and its payment to the respondents, the spouses shall deleting the award of damages from being excessive and ordered
immediately execute the Deed of Absolute Sale in favor of Siy. petitioner to pay P50.00 as monthly rentals with interest at legal rate
Siy applied for a loan with SSS through Home Financing Commission from March 1963 until such time he vacates the property.
(HFC). Since the property was mortgaged to GSIS, HFC asked both parties to
execute a Deed of Absolute Sale with Assumption of Mortgage, stating that
6,400 of the 22,000 has been paid, representing the amount petitioners University of the Philippines vs. Walfrido De Los Angeles, et al
incurred for the improvements. The remaining 15,600 balance to be paid September 29, 1970
upon approval of Siys loan.
Parties executed three more contracts: Facts:
1. First, Spouses agreed to sell property to Siy at 14,000, while On November 1960, UP and ALUMCO entered into a logging agreement
Siy must negotiates a loan with SSS to settle the amount 30 days from under which the latter (ALUMCO) was granted exclusive authority, for a
March, 17, 1963. period starting from the date of the agreement to December 31, 1965,
2. Second, Virginia Valdez disagreed with prior contract, second extendible for a further period of 5 years by mutual agreement to cut,
one was made, wherein, payment of the 14,000 should be on the 30th collect and remove timber from the Land Grant (Land Grant was
day form the execution of the contract, and that failure to do so shall segregated from public domain and given as an endowment of UP), in
make Siy liable for damages at P30.00/day of delay. consideration of payment to UP of royalties, forest fees, etc.
3. Last, spouses agreed to receive the partial amount of
P12,000 on the condition that the balance of P4,376 is completely As of December 1964, it had incurred an unpaid account of Php 219,362.94
paid 45 days after date fixed by them, failure to do so will make Siy despite repeated demands, it had failed to pay.
liable for damages at P20.00/day if delay until balance shall have
been fully paid. After it had received notice that UP would rescind or terminate the logging
Siy failed to pay both 12,000 and 4376 on the fixed date. Thus,when agreement, ALUMCO executed an instrument entitled Acknowledgement
Siys loan was about to be released, he asked for execution of the deed of of Debt and Proposed Manner of Payments. It was approved by the
absolute sale, which the spouses refused on the ground of Siys breach of President of UP and which stipulates that,
their last contract. In the event that the Debtor fails to comply with any of its
Siy filed for specific performance with writ of mandatory injunction to promises or undertakings this document, the Debtor agrees
compel the spouses to execute the necessary documents required by SSS. without reservation that the Creditor shall have the right and
RTC initially ruled in favor of Siy, citing Article 119 of NCC, in the power to consider the Logging Agreement dated Dec. 2,
reciprocal obligations in case one of the obligors should not comply with 1960 as rescinded without the necessity of any judicial suit,
what is incumbent upon him, the injured party may choose between
fulfillment or rescission of the obligation w/ payment of damages. In this ALUMCO continued its logging operations, but again incurred an unpaid
case, RTC believes that spouses can be compelled to fulfill the condition account in the amount of Php 61,311.74 in an addition to the indebtedness
agreed. that if had previously acknowledged.
However, after a few motion for reconsiderations by spouses, RTC
realized its error and ruled in favor of spouses. The wordings in the last On July 19, 1965, Petitioner UP informed ALUMCO that logging agreement
agreement showed evidence that the amount previously agreed upon had already considered as rescinded. UP filed a complaint against ALUMCO
(12,000) has not yet been paid, as well as the 4376 remaining balance. of the CFI for the collection or payment of the herein before stated sums of
Therefore, Siy has breached their last agreement and is liable for damages money and alleging the facts, together with other allegations; it prayed for
due to delay (Article 1170). The spouses (injured party) choose to rescind and obtained an order for preliminary attachment and injunction
the agreement. restraining ALUMCO from continuing its logging operations in the Land
CA affirmed this second decision in toto. Grant.
A petition to the Supreme Court by petitioner had raised the
following issues: Before the issuance of the aforesaid Preliminary Injunction, UP awarded to
Sta. Clara Lumber Company Inc. to take over the logging operations.
1. WON CA erred in ruling that the first decision of the RTC was final ALUMCO filed several motions but denied by the Court.
even before the second decision, thus, RTC no longer has jurisdiction to
render the second decision. On February 1966, respondent judge issued an order enjoining UP from
2. WON CA erred in sustaining the trial court in ordering the awarding logging rights over the concession to any party. UP received the
rescission of the agreement and payment of damages and attorneys fees order after it had already concluded its contract with Sta. Maria and said
company started logging operations.
1. No. The Court ruled that CA did not commit grave abuse of Court declared Petitioner UP in contempt of court and directed Sta. Clara
discretion in upholding the trial courts jurisdiction when it rendered the to refrain from conduction operations.
second decision. With respect to the second motion of the respondents,
which are merely supplementary pleadings which are only meant to supply Issue:WON Petitioner UP can treat its contract with ALUMCO rescinded,
deficiencies in aid of the original pleadings, it should not be treated as and may disregard the same before any judicial pronouncement to that
independent and separate form the original pleading. effect.
which took effect on September 14, 1972. Moreover, it is a matter of public
Ruling: policy to protect buyers of real estate on installment payments against
Yes. The Supreme Court ruled that UP and ALUMCO had expressly onerous and oppressive conditions.
stipulated in the Acknowledgment of Debt and Proposed Manner of As a consequence of the resolution by petitioners, rights to the lot should
Payments that upon the default of ALUMCO the creditor (UP) has the right be restored to private respondent or the same should be replaced by
and the power to rescind the logging agreement without any judicial suit. It another acceptable lot. However, considering that the property had
is not always necessary for the injured party to resort to court for rescission already been sold to a third person and there is no evidence on record that
of the contract. The party who deems the contract violated may consider it other lots are still available, private respondent is entitled to the refund of
resolved or rescinded, and act accordingly without previous court action, installments paid plus interest at the legal rate of 12% computed from the
but it proceeds at its own risk. For it is only the final judgment of the date of the institution of the action. It would be most inequitable if
corresponding court that will conclusively and finally settle whether the petitioners were to be allowed to retain private respondent's payments
action taken was or was not correct in law. and at the same time appropriate the proceeds of the second sale to
In fact, even without express provision conferring the power of cancellation
upon one contracting party, it has repeatedly held that a resolution of
reciprocal or synallagmatic contracts may be made extrajudicially unless
successfully impugned in court.

The SC abstains from making any pronouncement regarding the order

finding the petitioner UP in contempt of court. It has been appealed to the
CA and case is pending therein.


Petitioner Palay Inc. executed in favour of respondent Nazario Dumpit, a
contract to sell a parcel of land of the Crestview Heights Subdivision. The
sale price was 23,300 with 9% interest per annum, payable with a down
payment of P4, 600 and monthly installments of 246.42 until fully paid.
Paragraph 6 of the contract provided for automatic extrajudicial rescission
upon default in payment of any monthly installment after the lapse of 90
days from the expiration of the grace period of one month, without need
of notice and with forfeiture of all installments paid.
Respondent paid the down payment and several installments until
December 5, 1967 for installments up to September 1967.
Almost six (6) years later, private respondent wrote petitioner offering to
update all his overdue accounts with interest, and seeking its written
consent to the assignment of his rights to a certain Lourdes Dizon.
Replying, petitioners informed respondent that his Contract to Sell had
long been rescinded pursuant to paragraph 6 of the contract, and that the
lot had already been resold.
Questioning the validity of the rescission of the contract, respondent filed a
letter complaint with the National Housing Authority (NHA) for
reconveyance with an alternative prayer for refund.
Petitioners maintain that it was justified in cancelling the contract to sell
without prior notice or demand upon respondent in view of paragraph 6 of
the contract.
NHA, found the rescission void in the absence of either judicial or notarial
demand. On appeal, the said decision was affirmed by the Office of the
President. Thus, the present petition.
WON notice or demand may be dispensed with by stipulation in cancelling
a contract to sell.
No. The act of a party in treating a contract as cancelled should be made
known to the other. Resolution of reciprocal contracts may be made extra
judicially unless successfully impugned in Court. If the debtor impugns the
declaration, it shall be subject to judicial determination.
In this case, private respondent has denied that rescission is justified and
has resorted to judicial action. It is now for the Court to determine whether
resolution of the contract by petitioners was warranted.
The Court holds that resolution by petitioners of the contract was
ineffective and inoperative against private respondent for lack of notice of
resolution. The indispensability of notice of cancellation to the buyer was
to be later underscored in Republic Act No. 6551 entitled "An Act to
Provide Protection to Buyers of Real Estate on Installment Payments."
Camus v. Price Gaite v Fonacier

DefendantFonacier was the ownerof iron lode mineral claims.
Camus and price entered into a contract of lease wherein they clearly FonacierappointedGaite as his lawful attorney-in-fact to enter into a
stipulated that Price were to build a factory of strong materials and the contract with any individual or juridical person for the exploration and
subject building are to be insured and that the insured shall become the development of the mining claims.
property of Camus immediately upon the termination of the contract of Gaite in turn executed a general assignment conveying the
lease. It was also stipulated that Camus agrees to cause the necessary development and exploitation of said mining claims into the Larap Iron
filling, at his own expense, within a year from the execution of the contract, Mines, owned solely byhim. He began the development and exploitation of
the vacant portion of the along the river with an area of 500sqm and to the mining claims in question, and extracted what he estimated to be
erect the necessary concrete stone walls provided with barbed wires on approximately 24,000 metric tons of iron ore.
top. Fonacier decided to revoke the authority granted by him to Gaite,
and the latter assented subject to conditions. "Revocation of Power of
Price filed a case in court for specific performance due to the lessors Attorney and Contract" was executed, whereinGaite transferred to
failure to fill up the vacant portion and erect a concrete stone wall with Fonacier, all his rights and interests on the mineral claims, the right to use
barbed wires. Camus also filed an action for unlawful detainer against Price the business name "Larap Iron Mines", all the records relative to the mines,
for allegedly failing to pay rentals. These cases were jointly tried and the and all his rights and interests over the "24,000 tons of iron ore, more or
trial court rendered judgment that the lessee was to insure the factory less", in consideration of the sum of P75,000, P10,000 of which was paid
building and warehouse for P50,000 within in a month and the lessor was upon the signing of the agreement.
to fill up the low portion of the leased premises. To secure the payment of P65,000, Fonacier delivered to Gaite a
surety bond Fonacier as principal and the Larap Mines and Smelting Co.
Camus filed an appeal in the CA. and its stockholders, as sureties.
Gaite testified that when this bond was presented to him by
CA declared the contract extinguished but the parties were made to bear Fonacier together with the "Revocation of Power of Attorney and
this own losses (Article 1192). But since the lessee was still in possession of Contract", he refused to sign unless another bond was put up to secure the
the property, it was ordered to compensate the lessor in the sum of payment of the P65,000. A second bond was executed with the Far Eastern
P200.00 a month until it vacated the premises. Also, the contract having Surety and Insurance Co. as additional surety, but it provided that the
been expired in March 16, 1960, the factory building have automatically liability of the surety company would attach only when there had been an
become the properties of the Lessor. actual sale of iron ore by the Larap Mines for an amount of not less then
P65,000, and that it would automatically expire on December 8, 1955.
ISSUE/S: The two executed and signed the "Revocation of Power of
Attorney and Contract", Fonacier entered into a "Contract of Mining
WoN Price (lessor) first violated the contract. Operation" conveying unto the Larap Mines the right to develop, exploit,
and explore the mining claims in question, andthe complete title to the
Ruled: 24,000 tons of iron.
When the bond expired with respect to the Far Eastern Surety,
The SC declared the Lessor Camus prima facie to be first to commit a no sale of the approximately 24,000 tons of iron ore had been made, nor
breach in agreement, but this is only in the matter of the Lessees default in had the P65,000been paid to Gaite on the theory that they had lost right to
the payment of rentals. However, the Lessee failed to cover the said make use of the period given them when their bond, automatically expired.
buildings with insurance. Gaite filed the present complaint against them in the CFI for the payment
of the P65,000balance of the price of the ore.
Even assuming that the Lessees obligation to insure the property arose The defendants said that the obligation sued upon by Gaite was
after the completion of the building, as the Lessor also defaulted in the subject to a condition that the amount of P65,000 would be payable out of
performance of his corresponding duty, it cannot be determined with the first letter of credit covering the first shipment of iron ore and/or the
definiteness who of the parties committed the first infraction of the terms first amount derived from the local sale of the iron ore by the Larap Mines;
of contract. The SC upheld the conclusion reached by the CA that the that up to the time of the filing of the complaint, no sale of the iron ore had
parties were actually in pari delicto, and the contract deemed extinguished, been made, hence the condition had not yet been fulfilled; and that
with the parties suffering their own losses. consequently, the obligation was not yet due and demandable. Fonacier
also contended that only 7,573 tons of the estimated 24,000 tons of iron
The Lessee is still obligated to pay the P200.00 rental per month to the ore sold to him by Gaite was actually delivered, and counterclaimed for
Lessor and as a result of the termination of the contract, the lessor will more than P200,000 damages.
acquire the buildings constructed on the leased premises. The lower court rendered judgment in favor of Gaite ordering
defendants to pay him.Defendants appealed to the Court.

(1) WN the lower court erred in holding that the obligation of Fonacier to
pay Gaite the P65,000 (balance of the price of the iron ore in question)is
one with a period or term and not one with a suspensive condition; and
(2) WN there had been a short-delivery, as claimed by appellants, and that
they are entitled to the payment of damages.

(1)Court finds the lower court to be legally correct in holding that the
shipment or local sale of the iron ore is not a condition precedent (or
suspensive) to the payment of the balance of P65,000, but was only a
suspensive period or term. What characterizes a conditional obligation is
the fact that its efficacy or obligatory force (as distinguished from its Fernandez vs CA
demandability) is subordinated to the happening of a future and uncertain Facts:
event; so that if the suspensive condition does not take place, the parties - Private respondent Miguel Tanjaco as lessor, and petitioner
would stand as if the conditional obligation had never existed. That the Celso Fernandez as lessee entered into a ten year contract of
parties to the contract did not intend any such state of things to prevail is lease over a piece of land where petitioner would put up the then
supported by circumstances: proposed New Zamora Market. The parties agreed that the lease
a) The words of the contract express no contingency in the buyer's would be renewable for another 10 years at the option of both
obligation to pay: "The balance of P65,000will be paid out of the first letter parties under such terms, conditions, and rental reasonable at
of credit covering the first shipment of iron ores . . ." etc. There is no that time.
uncertainty that the payment will have to be made sooner or later; what is
undetermined is merely the exact date at which it will be made. The - Before the agreed term ended, respondent wrote to the
existence of the obligation to pay is recognized; only its maturity or petitioner about his intention not to extend further or renew the
demandability is deferred. lease which petitioner replied that he opted to renew the
b) A contract of sale is normally commutative and onerous: The fact that contract for another 10 years to recover all the expenses he
Gaite insisted on a bond a to guarantee payment of the P65,000, not only incurred in the construction of the market. In another letter,
upon a bond by Fonacier, the Larap Mines and the company's stockholders, respondent, through his lawyer, advised that respondent could
but also on one by a surety company; and the fact that appellants did put not accept petitioners unilateral action to renew the lease
up such bonds indicates that they admitted the definite existence of their because under the contract, any renewal or extension was only
obligation to pay the balance of P65,000. possible at the option of BOTH parties.
The previous sale or shipment of the ore was not a suspensive
condition for the payment of the balance of the agreed price, but was - Petitioner commenced an action against respondent alleging that
intended merely to fix the future date of the payment. petitioner was entitled to renew the lease contract and sought to
Another point of inquiry is whether Fonacier and his sureties are compel respondent to renew the lease agreement. The trial court
entitled to take full advantage of the period granted them for making the ruled in favor of the petitioner. Upon appeal by private
payment.Court agrees with the lower court that the appellant has forfeited respondents, the CA reversed the trial courts decision.
the right to compel Gaite to wait for the sale of the ore before receiving
payment of the balance of P65,000, because of their failure to renew the Issue: Whether or not petitioner can compel private respondent to renew
bond of the Far Eastern Surety or replace it with an equivalent guarantee. contract for another 10 years with the condition of the contract that
The expiration of the bonding company's undertaking substantially reduced stipulates that it is only renewable at the option of both parties.
the security of the vendor's rights as creditor for the unpaid P65,000, a Ruling:
security that Gaite considered essential and upon which he had insisted - No. The SC held that it agrees to the CAs reading that the
when he executed the deed of sale of the ore to Fonacier. intention to the parties to the lease agreement is clearly
The case squarely comes under paragraphs 2 and 3 of Article 1198 of the discernible in the words of the agreement. The CA read the above
Civil Code of the Philippines: contract language as compromising, not using technical terms or
"ART. 1198. The debtor shall lose every right to make use of the period: terms of legal art, but rather just plain and ordinary words.
(1) . . .
(2) When he does not furnish to the creditor the guaranties or securities - The contract clause may be seen to consist of two parts: first, the
which he has promised. contract is stipulated to be renewable for another ten years at
(3) When by his own acts he has impaired said guaranties or securities after the option of both parties, second, the contract is specified to
their establishment, and when through fortuitous event they disappear, be renewable under such terms, conditions, and rental
unless he immediately gives new ones equally satisfactory. reasonable at that time. THE FIRST PART OF THE CLAUSE
Appellants' failure to renew or extend the surety company's bond STRESSES THAT THE OPTION OR FACULTY TO RENEW WAS GIVEN,
upon its expiration plainly impaired the securities given to the creditor NOT TOT THE LESSEE ALONE NOR TO THE LESSOR BY HIMSELF,
(appelleeGaite), unless immediately renewed or replaced.Gaite acted BUT BOTH.
within his rights in demanding payment and instituting this action one year
from and after the contract was executed.

(2)The subject matter of the sale is, a determinate object, the mass, and
not the actual number of units or tons contained, so that all that was
required of the seller Gaite was to deliver in good faith to his buyer all of
the ore found in the mass, notwithstanding that the quantity delivered is
less than the amount estimated by them. Court affirmed.
Abesamis vs. Woodcraft Works, LTD. board feet, was coming to Dolores, Samar, to load on
June 25, 1951. Appellee readied the necessary quantity
FACTS: of logs but the vessel did not arrive. As a result, 60,000
1.The plaintiff, doing business under the name "East Samar board feet of logs which had been rafted broke loose
Lumber Mills," was the owner of a timberconcession and sawmill and were lost.
located at Dolores, Samar. 8.3. Third breach, by the end of July 1951 appellee had
2. The defendant Woodcraft Works, Ltd., entered into an sufficient logs ready for shipment in accordance with
agreement with the plaintiff to purchase from thelatter 300,000 the contract. But appellant, in spite of the
board feet of Philippine round logs at P60.00 per thousand board representations made by the former, failed to send a
feet. vessel on the aforesaid date. Logs totalling 800,000
3. Due to bad weather conditions and the failure of the board feet were destroyed by marine borers, causing a
defendant to send the necessary vessels to Dolores,Samar, only loss of P62,000.00, for which appellant should be held
13,068 board feet of logs were delivered. liable.
4. The parties entered into a new contract. The previous one was ISSUE: Whether or not appellant Woodcraft Works, Ltd. failed to comply
cancelled, with the plaintiff waiving all hisclaims thereunder. with its obligations under the contract, or more specifically, whether or not
Certain advances which had been given by the defendant to the it was obligated to furnish the vessel to receive the shipment of logs from
plaintiff, in theaggregate amount of P9,000.00, were transferred appellee.
to and considered as advances on the new contract. HELD: YES
5. It was stipulated that the defendant Woodcraft would The following circumstances show that it was appellant who was obligated
purchase from the plaintiff 1,700,000 board feet of logs of to furnish the vessel to receive theshipment of logs from appellee: (1) the
thespecifications stated in the contract 1,300,000 board feet at provisions in the contract, particularly with respect to wharfage
P78.00 per thousand and the rest atP70.00. It was also agreed dues,demurrage and condition of the weather and of the ship's machinery,
that the shipment was to be "before the end of July, but will not would have been of little concern toappellant and would not have been
commenceearlier than April with the option to make partial imposed by it if appellee were the one to furnish the vessel; (2)in the
shipment depending on the availability of logs andvessels." twoshipments of logs in March and April of 1961, the vessels were
6. Of the quantity of logs agreed upon, only two shipments were furnished by appellant;(3) in several telegraphiccommunications between
made, one in March and the other in April,1951, amounting to the parties, it was invariably appellee who requested information as to the
333,832 board feet and 128,825 board feet, respectively, or a arrival of thevessels and it was appellant who gave the information
total of 462,657 boardfeet. accordingly; and(4) during the trial, it was appellant'switness who
7. The plaintiff filed in the Court of First Instance of Leyte an explained at length the failure of appellant to furnish the necessary
action for rescission of the contract of January22, 1951 and for vessels.Where the obligation is reciprocal and with a term,neither party
recovery of damages in the sum of P155,000.00 by reason of the could demand performance nor incur in delaybefore the expiration of the
defendant's failure tocomply with its obligations. term. In case of fortuitous event before the expiration of the term,each
8. RTC Ruling - ordering the defendant to pay to the plaintiff for party in suchreciprocal obligation bears his own loss.
actual damages suffered by the latter in the amount of The judgment appealed from is affirmed, with the modification that
P145,623.03, plus the amount of P50,000.00 representing the appellant Woodcraft Works, Ltd. is sentenced to pay appellee the
plaintiff's actual loss of credit in the operation of his business, aggregate sum of P69,685.26 by way of damages, plus P5,000 as attorney's
and, another sum of P5,000.00 as attorney's fees. The defendant fees, without costs in this instance.
is likewise ordered to pay the costs. Defendant questioned such
ruling but appellee argued the following:
8.1.First, appellee maintains that due to the failure of
appellant to send a vessel to Dolores, Samar, the storm
on May 5, 1951 swept away almost all the logs then
awaiting shipment, amounting to 410,000 board feet,
valued at P73,537.77. On this point it should be noted
that under the contract shipment was to be made
before the end of July 1951, but not to commence
earlier than April of the same year. The obligation
between the parties was a reciprocal one, appellant to
furnish the vessel and appellee to furnish the logs. It
was also an obligation with a term, which obviously was
intended for the benefit of both parties, the period
having been agreed upon in order to avoid the stormy
weather in Dolores, Samar, during the months of
January to March. The obligation being reciprocal and
with a period, neither party could demand performance
nor incur in delay before the expiration of the period.
Consequently, when the typhoon struck on May 5,
1951 there was yet no delay on the part of appellant,
and the corresponding loss must be shouldered by
8.2. Second breach, it has been established that after
the storm of May 5, 1951 appellee continued its logging
operations. Appellant was advised of the quantity of
logs ready for shipment and was urged to send a vessel
to take delivery. It thereupon gave assurance that a
vessel, the "SS ALBAY," with a capacity of 450,000
Araneta vs The Philippine Sugar Estates Development Co. occupying the land in question. Thus, the time for the performance of the
1. J. M. Tuason & Co., Inc. is the owner of a big tract land situated in obligations of petitioner is hereby fixed at the date that all the squatters on
Quezon City. Through Gregorio Araneta, Inc., it sold a portion affected areas are finally evicted therefrom.
thereof for the sum of P430,514.00, to respondet.
The parties stipulated, among in the contract of purchase and
sale with mortgage, that the buyer will
Build on the said parcel land the Sto. Domingo Church and RADIOWEALTH FINANCE COMPANY vs. DEL ROSARIO 335 SCRA 288
while the seller for its part will FACTS:
Construct streets on the NE and NW and SW sides of the land
herein sold so that the latter will be a block surrounded by Spouses Vicente & Maria Del Rosario jointly & severally executed, signed
streets on all four sides; and the street on the NE side shall be and delivered in favor of Radiowealth Finance Company a promissory note
named "Sto. Domingo Avenue;" for P138,948. Thereafter, respondents defaulted on the monthly
2. The buyer finished the construction of Sto. Domingo Church and installments. Despite repeated demands, they failed to pay their obligation.
Convent, but the seller, which began constructing the streets, is Petitioner filed a complaint for the collection of sum of money before the
unable to finish the construction of the street in the Northeast RTC.
side named (Sto. Domingo Avenue) because a certain third-party, Trial court dismissed the complaint for the evidence presented were
by the name of Manuel Abundo, who has been physically merely hearsay.
occupying a middle part thereof, refused to vacate the same. CA reversed & remanded the case for further proceedings.
3. Hence, respondent filed its complaint against petitioner seeking
to compel the latter to comply with their obligation, as stipulated Petitioner claims that respondents are liable for the whole amount of their
in the above-mentioned deed of sale, and/or to pay damages in debt and the interest thereon, after they defaulted on the monthly
the event they failed or refused to perform said obligation. installments. Respondents counter that the installments were not yet due
4. Petitioner avers that the that the action was premature since its and demandable. They theorize that the action for immediate enforcement
obligation to construct the streets in question was without a of their obligation is premature because its fulfillment is dependent on the
definite period which needs to be fixed first by the court in a sole will of the debtor. Hence, they consider that the proper court should
proper suit for that purpose before a complaint for specific first fix a period for payment, pursuant to Articles 1180 and 1197 of the
performance will prosper. Civil Code.
5. The issues having been joined, the lower court proceeded with
the trial, and upon its termination, it dismissed plaintiff's ISSUE:
complaint upholding the defenses interposed by defendant. WON the installments had already became due and demandable? YES
6. Plaintiff moved to reconsider and modify the said decision,
praying that the court fix a period within which defendants will HELD:
comply with their obligation to construct the streets in question.
7. The trial court rendered a decision giving defendant Gregorio The act of leaving blank space the due date of the first installment did not
Araneta, Inc., a period of 2 years from notice hereof, within necessary mean that the debtors were allowed to pay as & when they
which to comply with its obligation under the contract could. If this was the intention of the parties, they should have so indicated
8. CA affirmed the decision of the lower court. in the promissory note. However, it did not reflect any such intention.
Whether or not the RTC and CA committed an error in setting the date of 2 While the specific date on which each installment would be due was left
years for the defendant to comply with their obligation to construct the blank, the note clearly provided that each installment should be payable
subject streets each month.
Yes. Article 1197 of the Civil Code involves a two-step process. The Court Furthermore, it also provided for an acceleration clause and a late payment
must first determine that "the obligation does not fix a period" (or that the penalty, both of which showed the intention of the parties that the
period is made to depend upon the will of the debtor)," but from the installment should be paid at a definite date. Had they intended that the
nature and the circumstances it can be inferred that a period was debtors could pay as & when they could, there would have been no need
intended" (Art. 1197, pars. 1 and 2). This preliminary point settled, the for these 2 clauses.
Court must then proceed to the second step, and decide what period was
"probably contemplated by the parties" So that, ultimately, the Court The installments had already became due & demandable is bolstered by
cannot fix a period merely because in its opinion it is or should be the fact that respondents started paying installments on the promissory
reasonable, but must set the time that the parties are shown to have note. The obligation of the respondents had matured & they clearly
intended. As the record stands, the trial Court appears to have pulled the defaulted when their checks bounced. Per the acceleration clause, the
two-year period set in its decision out of thin air, since no circumstances whole debt became due one month after the date of the note because the
are mentioned to support it. Plainly, this is not warranted by the Civil Code. check representing their first installment bounced.
In this connection, it is to be borne in mind that the contract shows that
the parties were fully aware that the land described therein was occupied
by squatters, because the fact is expressly mentioned therein. As the
parties must have known that they could not take the law into their own
hands, but must resort to legal processes in evicting the squatters, they
must have realized that the duration of the suits to be brought would not
be under their control nor could the same be determined in advance. The
conclusion is thus forced that the parties must have intended to defer the
performance of the obligations under the contract until the squatters were
duly evicted, as contended by the petitioner.
It follows that there is no justification in law for the setting the date of
performance at any other time than that of the eviction of the squatters
ALLEN V. PROVINCE OF ALBAY 3. No. Evidence is not sufficient to warrant an affirmative holding
FACTS: that petitioner is entitled to recover these items or either of
The Director of Public Works, representing the respondent Province of them.
Albay, duly executed a formal contract with petitioner Allen for the
construction of a reinforced concrete bridge over the Argos River. The Judgment appealed from is reversed and will be entered in favor of
petitioner in his proposal stated that, All work contemplated by this petitioner.
contract to be completed on or before 4 months after contractor furnishes
sand and gravel. Paragraph 4 of the contract stated that the completion of
the bridge will be on or before Sept. 1, 1913. Paragraph 5 provided that the
necessary steel for the completion of the bridge will be furnished by the
respondent provinces. Respondent issued a resolution providing that
construction of the bridge be finished on or before Nov. 1, 1913. However,
no time for commencement of construction work was provided. Petitioner
requested an extension until Feb. 15, 1914 to complete the construction
due to quarantine on animals used to deliver construction materials, thus
incurring delay on the delivery of cement and steel. Respondent agreed but
for a price, issuing resolution no. 383 wherein the final payment to
petitioner will be deducted the sum of P1,301.45 to cover for inspection
charges and operation and maintenance of ferry from Nov. 1, 1913 to Feb.
15, 1914. Respondent province, in exercising its right under the contract,
furnished all the steel at the shipside in Legaspi and was received by
petitioner on July 26, August 4 and Sept. 1, 1913.

This is a petition to recover the amount P1,301.45 withheld by respondent,

P200 overcharges on steel not delivered, P2,000 for damages cause by
respondents delay, and P878 for extra work and material furnished on the
bridge at respondents request. Judgment was held in favor of respondent,
dismissing the complaint. An appeal was made, hence this petition.

1. WON the contracting parties fixed Sept. 1 or Nov. 1 as the date of
completion agreed upon.
2. WON there was unreasonable delay to warrant the deduction of
P1,301.45 on petitioners final payment for the construction.
3. WON petitioner may recover the withheld amount and damages
from overcharges, delay and extra work and material furnished.

1. Nov. 1, 1913. The respondent provinces did intend that the date
for completion of work should be on such date. It was manifested
on the statement and resolution of the provincial board to fix the
time on Nov. 1 and the fact that the provinces deducted
inspection expenses and expenses for the operation of the ferry
from Nov. 1. The Director of Public Works did not comply with
these instructions as to the date as he and the petitioner-
contractor agreed that the date be on Sept. 1. Although not the
intention of the provinces the Director and petitioner ratified
the contract by their own acts furnishing the steel and making
2. No. the respondent provinces waived the contract time, whether
Sept.1 or Nov. 1, by their failure to deliver the steel promptly, by
reason of having placed the strict quarantine on animals by the
Bureau of Agriculture, by which the carabaos and cattle were to
be used as means to deliver the cement and steel, and that the
waiver operated to eliminate the definite date from which to
assess the liquidated damages. Where the strict performance on
the part of the contractor is prevented or waived by the other
party, a claim by such party of fines and penalties for delay or
failure cannot be sustained. The same rule applies in cases
containing liquidated damage clauses. We cannot apportion
such delay between the contracting parties and hold the
contractor liable in liquidated damages for the number of days
delayed by him in completing the bridge. The provinces have
proven no actual damages after Feb. 15 and thus, had no right to
withhold the P1,301.45.