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Visayan Sawmill Company Inc. vs. Court of AppealsG.R. No. 83851; March 3, 1993Davide, Jr, J.

Whether or not the petitioner corporation violated the terms and conditions of the

contract

No. The petitioner corporation's obligation to sell is unequivocally subject to a positivesuspensive condition, i.e., the private respondent's opening, making or indorsing of anirrevocable and unconditional letter of credit. The former agreed to deliver the scrap irononly upon payment of the purchase price by means of an irrevocable and unconditionalletter of credit. Otherwise stated, the contract is not one of sale where the buyer acquired ownership over the property subject to the resolutory condition that thepurchase price would be paid after delivery. Thus, there was to be no actual sale untilthe opening, making or indorsing of the irrevocable and unconditional letter of credit.

ince what obtains in the case at bar is a mere promise to sell, the failure of the private

respondent to comply with the positive suspensive condition cannot even be considereda breach ! casual or serious ! but simply an event that prevented the obligation of petitioner corporation to convey title from acquiring binding force.

The obligation of the petitioner corporation to sell did not arise" it therefore cannot becompelled by specific performance to comply with its prestation. #n short, $rticle %%&% of the ivil ode does not apply" on the contrary, pursuant to $rticle %(&) of the ivil

ode, the petitioner corporation may totally rescind, as it did in this case, the contract.

Deiparine, Jr. vs. Court of Appeals

G.R. No. 96643; April 23, 1993Cr !, J.

Whether or not the contract may be validly rescinded under Article ! of theCivil Code

*es. The construction contract falls squarely under the coverage of $rticle %%&%because it imposes upon +eiparine the obligation to build the structure and upon the

arungays the obligation to pay for the project upon its completion. $rticle %%&%, unlike $rticle % -(, is not predicated on economic prejudice to one of the parties but on breachof faith by one of them that violates the reciprocity between them. The violation of reciprocity between +eiparine and the arungay spouses, to wit, the breach caused by+eiparine's failure to follow the stipulated plans and specifications, has given the

arungay spouses the right to rescind or cancel the contract. $rticle %) ( cannotsupport the petitioner's position either, for this contemplates a voluntary withdrawal bythe owner without fault on the part of the contractor, who is therefore entitled toindemnity, and even damages, for the work he has already commenced. There is nosuch voluntary withdrawal in the case at bar. On the contrary, the arungays have beenconstrained to ask for judicial rescission because of the petitioner's failure to comply

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with the terms and conditions of their contract. The other applicable provisions are/ $rticle %)%0 . . . $rticle %)%( . . . $rticle %) ) . . . #t is a basic principle in humanrelations, acknowledged in $rticle %& of the ivil ode, that 1every person must, in theperformance of his duties, act with justice, give everyone his due, and observe honestyand good faith.1 This admonition is reiterated in $rticle %%(&, which states that

1obligations arising from contracts have the force of law between the contracting partiesand should be complied with in good faith.1 The petitioner has ignored thesee2hortations and is therefore not entitled to the relief he seeks..

Irin"an vs. Court of AppealsG.R. No. 1291"#; $ep%e&'er 26, 2""1( i) &'i*+, J..Whether or not the contract of sale was validly rescinded

*es. 3ven if the right to rescind is made available to the injured party, the obligation isnot ipso facto erased by the failure of the other party to comply with what is incumbentupon him. The party entitled to rescind should apply to the court for a decree of rescission. The right cannot be e2ercised solely on a party4s own judgment that theother committed a breach of the obligation. The operative act which produces theresolution of the contract is the decree of the court and not the mere act of the vendor.

ince a judicial or notarial act is required by law for a valid rescission to take place, theletter written by respondent declaring his intention to rescind did not operate to validlyrescind the contract. #n our view when private respondent filed an action for 5udicial

onfirmation of 6escission and +amages before the 6T , he complied with therequirement of the law for judicial decree of rescission.

Vda. de #istica vs. $a"uiatG.R. No. 13#9"9; Dece&'er 11, 2""3

a*+a*i'a*, J.

Whether or not the petitioner is entitled to rescind the contract

No. #n a contract of sale, the remedy of an unpaid seller is either specific performanceor rescission. 7nder $rticle %%&% of the ivil ode, the right to rescind an obligation ispredicated on the violation of the reciprocity between parties, brought about by a breachof faith by one of them. 6escission, however, is allowed only where the breach issubstantial and fundamental to the fulfillment of the obligation.

#n the present case, the failure of respondents to pay the balance of the purchase pricewithin ten years from the e2ecution of the +eed did not amount to a substantial breach.#n the 8asulatan, it was stipulated that payment could be made even after ten yearsfrom the e2ecution of the ontract, provided the vendee paid % percent interest. The

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stipulations of the contract constitute the law between the parties" thus, courts have noalternative but to enforce them as agreed upon and written.

#aria %achica, etc. vs. &re"orio Araneta

4# -G 5699; A + )% 19, 1949

Whether or not Araneta should be compelled to accept the payment

*es. The contract does not prohibit if it is done before. $ term is fi2ed and 9it ispresumed to have been established for the benefit of the creditor as sell as that of thedebtor, unless from its tenor or from other circumstances it should appear that the termsas established for the benefit of one or the other.: ;$rt. %% ), now %%&< ivil ode=. $ndthe contract specifically provides that 9these periods of payment have been agreed for the benefit of the vendor and the vendee.: uch mutual benefit has been interpreted toconsist of the time granted a debtor to find means to comply with his obligation, and the

fruits, such as interest, accruing to the creditor.>urther, the acceleration clause in the contract signed by the parties state that 9in theevent of defaults in payment of any amount due, either for capital or interest, the wholebalance shall automatically become due and payable, and the vendor shall have theright to foreclose the mortgage in its entirety.: ?hile the clause is standard onecontained in most mortgage deeds where the mortgage loan is payable in severalinstallments, still we cannot escape the conclusion, derived from the clause itself, thatpayments may be made by the vendee before the dates stated in the contract .

'once de %eon vs. Santia"o Sy(uco Inc.G.R. No. /3316. -c%o'er 31, 19510a %i)%a A*+elo, J.

Whether or not the consi"nation is made by the plaintiff valid in the li"ht of thelaw and the stipulations a"reed upon in the two promissory notes si"ned by theplaintiff

No. #n order that cogsignation may be effective, the debtor must first comply with certainrequirements prescribed by law. The debtor must show ;%= that there was a debt due"; = that the consignation of the obligation had been made bacause the creditor to whomtender of payment was made refused to accept it, or because he was absent for incapacitated, or because several persons claimed to be entitled to receive the amountdue ;$rt. %%)

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of the complaint to compel its acceptance on the part of the creditor can be consideredsufficient notice of the consignation to the creditor, nevertheless, it appears that at leasttwo of the above requirements have not been complied with. Thus, it appears thatplaintiff, before making the consignation with the clerk of the court, failed to giveprevious notice thereof to the person interested in the performance of the obligation. #t

also appears that the obligation was not yet due and demandable when the money wasconsigned, because, as already stated, by the very e2press provisions of the documentevidencing the same, the obligation was to be paid within one year after @ay (, %&0-,and the consignation was made before this period matured. The failure of these tworequirements is enough ground to render the consignation ineffective. $nd it cannot becontended that plaintiff is justified in accelerating the payment of the obligation becausehe was willing to pay the interests due up to the date of its maturity, because, under thelaw, in a monetary obligation contracted with a period, the presumption is that the sameis deemed constituted in favor of both the creditor and the debtor unless from its tenor or from other circumstances it appears that the period has been established for thebenefit of either one of them ;$rt. %% ), ivil ode=. Aere no such e2ception or

circumstance e2ists.

)uce vs. Court of AppealsG.R. No. 136913; Ma 12, 2""" Davide, Jr., C.J.

Whether or not the *this lease shall be for a period of + years, sub(ect to renewalfor years- ma e stipulation automatic and subse/uent to parties

No. There is nothing in the stipulations in the contract and the parties4 actuation that

shows that the parties intended an automatic renewal or e2tension of the term of thecontract. 3ven the 6T conceded that the issue of automatic renewal is debatable. Thefact that the lessee was allowed to introduce improvements on the property is notindicative of the intention of the lessors to automatically e2tend the contract.

onsidering the original %(Byear duration of the contract, structures would havenecessarily been constructed, added, or built on the property, which in its previous statewas an idle (

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&re"orio Araneta, Inc. vs. 'hil. Su"ar 0states Dev1t. Co. %td.G.R. No. /22558; Ma 31, 196# Re e), J.0. ., J.

Whether or not there was a period fi2ed

*es. The fi2ing of a period by the courts under $rticle %%&) of the ivil ode of theChilippines is sought to be justified on the basis that petitioner ;defendant below= placedthe absence of a period in issue by pleading in its answer that the contract withrespondent Chilippine ugar 3states +evelopment o., Ftd. gave petitioner Dregorio

$raneta, #nc. 1reasonable time within which to comply with its obligation to construct andcomplete the streets.1 Neither of the courts below seems to have noticed that, on thehypothesis stated, what the answer put in issue was not whether the court should fi2 thetime of performance, but whether or not the parties agreed that the petitioner shouldhave reasonable time to perform its part of the bargain. #f the contract so provided, then

there was a period fi2ed, a 1reasonable time"1 and all that the court should have donewas to determine if that reasonable time had already elapsed when suit was filed if ithad passed, then the court should declare that petitioner had breached the contract, asaverred in the complaint, and fi2 the resulting damages. On the other hand, if thereasonable time had not yet elapsed, the court perforce was bound to dismiss the actionfor being premature. Gut in no case can it be logically held that under the plea abovequoted, the intervention of the court to fi2 the period for performance was warranted, for

$rticle %%&) is precisely predicated on the absence of any period fi2ed by the parties.3ven on the assumption that the court should have found that no reasonable time or noperiod at all had been fi2ed ;and the trial court's amended decision nowhere declaredany such fact= still, the complaint not having sought that the ourt should set a period,

the court could not proceed to do so unless the complaint in as first amended" for theoriginal 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 defendantwas already answerable in damages.

Dranting, however, that it lay within the ourt's power to fi2 the period of performance,still the amended decision is defective in that no basis is stated to support theconclusion that the period should be set at two years after finality of the judgment. Thelist paragraph of $rticle %%&) is clear that the period cannot be set arbitrarily.