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Javier vs. Court of Appeals

FACTS: Private respondent is a holder of an ordinary timber license issued by the Bureau of Forestry covering 2,535hectares. He executed a Deed of Assignment in favor of petitioners, to wit;

Leonardo Tiro for and in consideration of P120,000 assign, transfer, and convey, absolutely andforever unto Jose Javier and Estrella Javier his shares of stocks in the Timberwealth Corporation;payment shall be in the following manner:

1) P20,000 upon signing of this contract;2) The balance of P100,000 shall be paid every shipment of export logs actually produced from

the forest concession of Timberwealth Corporation

At the time the said deed of assignment was executed, private respondent had a pending application for an additionalforest concession an area of 2,000 hectares southwest of and adjoining the area of the concession subject of the deedof assignment. Hence, they entered into another Agreementwhich states that Leonardo Tiro transfers his rights toTimberwealth Corporation over a forest concession which is now pending application and approval as additional area tohis existing license area. And that, for and in consideration of the aforementioned transfer of rights to TimberwealthCorp., Javiers do hereby undertake to pay Tiro, as soon as said additional area is approved and transferred toTimberwealth the sum of P30,000 which shall form part of their paid up capital stock.

However, petitioners failed to pay the balance due under the two deeds of assignment, Tiro then filed an action againstJaviers based on the said contracts for the payment of P83,138.15 with interest 6% per annum until full payment plusattorneys fees. Consequently, Javiers filed their answer admitting the due execution of the contracts but interposing thespecial defense of nullity thereof since private respondent failed to comply with his contractual obligations and further

that they failed to materialize.HELD: The true consideration of said deed was the transfer of the forest concession of private respondent topetitioners for P120,000.00. This finding is supported by the previous and simultaneous and subsequent acts of theparties which are properly cognizable indicia of their true intention. It thereby reveals the cause stated in thequestioned deed of assignment is false. Where the parties of the contract have given it a practical construction bytheir conduct as by acts in partial performance, such construction may be considered by the court in construing thecontract, determining its meaning and ascertaining the mutual intention of the parties at the time of contracting. Theparties practical construction of their contract has been characterized as a clue or index to, or as evidence of theirintention or meaning and as an important, significant, convincing, persuasive, or influential factor in determining theproper construction of the agreement. Thus, the deed of assignment of Feb 15, 1966 is a relatively simulated contractwhich states a false cause or consideration or one where the parties conceal their true agreement. A contract with afalse consideration is not null and void per se. UnderArticle 1346 of the Civil Code, a relatively simulated contract,when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs,

public order or public policy binds the parties to their real agreement. Thus, petitioners (Javiers) are liable to Tirofor the sale and transfer in their favor of the Tiros forest concession.

As to the alleged nullity of the second agreement, Javiers cannot be held liable. The efficacy of said deed ofassignment is subject to the condition that the application of private respondent for an additional area for forestconcession be approved by the Bureau of Forestry. Since private respondent did not obtain that approval, said deedproduces no effect. When a condition is subject to a suspensive condition (obtaining the approval of thecorporation), its birth or effectivity can take place only if and when the event which constitutes the conditionhappens or is fulfilled. IF the suspensive condition does not take place, the parties would stand as if theconditional obligation had never existed.

The said agreement is a bilateral contract which gave rise to reciprocal obligations, that is, the obligation ofprivate respondent to transferhis rights in the forest concession over the additional area and, on the other hand, theobligation of petitioners to pay P30,000.00. The demandability of the obligation of one party depends upon the

fulfillment of the obligation of the other. In this case, the failure of one party to comply with his obligation negates hisright to demand performance from petitioners. Delivery and payment in a contract of sale are so interrelated andintertwined with each other that without delivery of the goods there is no corresponding obligation to pay.

Under Article 1461 of the Civil Code, the efficacy of sale of a mere hope or expectancy is deemed subjectto the condition that the thing will come into existence.

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ELEIZEGUI vs LAWN TENNIS CLUB

FACTS: About: lease of a piece of land for a fixed consideration and to endure at the will of the lessee. By the contractof lease the lessee is expressly authorized to make improvements upon the land, by erecting buildings of bothpermanent and temporary character, by making fills, laying pipes, and making such other improvements as might beconsidered desirable for the comfort and amusement of the members.

Lessors allegation: Article 1569 of the Civil Code may judicially dispossess the lessee upon the expiration of theconventional term or of the legal term

Conventional term: the one agreed upon by the parties

If there is a conventional term, the judge cannot apply the legal term fixed in subsidium to cover a case in which theparties have made no agreement with respect to the duration of the lease

If there was an agreed duration, a conventional term, then the legal term the term fixed in article 1581 has noapplication; the contract is the supreme law of the contracting parties.In this case, the law interprets the presumptive intention of the parties, they having said nothing in the contract withrespect to its duration.

Legal term: fixed for leases by articles 1577 and 1581.

ISSUE: Was there, or was there not, a conventional term, a duration, agreed upon in the contract in question?

GRRRRRRRRRRRRRRRRRRRRRRR!!!!!!!!!!!

ENCARNACION vs. BALDOMAR

FACTS: Vicente Encarnacion owner of the house numbered 589 Legarda St, Manila. Some six years ago leased saidhouse to Jacinta Baldomar and her son, Lefrado Fernando, upon a month-to-month basis for the monthly rental of P35.After Manila was liberated in the last war, plaintiff Encarnacion notified defendants, the said mother and son, to vacatethe house because plaintiff needed it for his offices as a result of the destruction of the building where said plaintiff hadsaid offices before. Despite this demand, defendants insisted on continuing their occupancy.

MTC entered judgment for restitution and payment of rental at rate of P35 a month from May until defendantscompletely vacate the premises.

Court of First Instance in Manila defendants filed a motion to dismiss on the ground that the municipal court had nojurisdiction over the subject matter. Motion denied.

Gravamen (grievance; formal complaint) of the defense by defendants, the contract which they had celebrated withplaintiff since the beginning authorized them to continue occupying the house indefinitely and while they should faithfully

fulfill their obligation as respects the payment of the rentals, and that this agreement had been ratified when anotherejectment case between the parties filed during the Japanese regime.

HELD: The defense set up by defendant Lefrado Fernando would leave to the sole and exclusive will of one of thecontracting parties the validity and fulfillment of the contract of lease, within the meaning of article 1308 of the CivilCode since the performance and fulfillment of the contract would then depend solely and exclusively upon their free anduncontrolled choice between continuing paying the rentals or not, completely depriving the owner of all say in thematter. If this defense were to be abowed so long as defendants elected to continuing the payment of the rentals theowner would never be able to discontinue it; conversely, although the owner should desire the lease to continue, thelessees could effectively thwart his purpose if they should prefer to terminate the contract by the simple expedient ofstopping payment of the rentals. This of course, is prohibited by Article 1308 which states that the contracts must bindboth contracting parties; its validity or compliance cannot be left to the will of one of them.

The continuance and fulfillment of the contract of lease cannot be made to depend solely and exclusively upon

the free and uncontrolled choice of the lessees between continuing paying the rentals or not, completely depriving theowner of all say in the matter.

DUCUSIN vs. COURT OF APPEALS

FACTS: Petitioner Agapito Ducusin leased to private respondent, Virgilio Baliola, married to Lilia Baliola, a one-doorapartment unit. One of their stipulations is the termination of the contract, to wit: The term of this contract shall be in amonth to month basis on February 19, 1975 until terminated by the lessor on the ground that his children need thepremises for their own use or residence or upon any ground provided for in accordance with law. The Baliola spousesoccupied the apartment until Ducsin sent a Notice to Terminate Lease Contract to private respondents Baliolas

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terminating the lease and giving them days within which to vacate the premises for the reason that his two children weregetting married and will the apartment for their own use and residence. A second letter was sent by Ducsin making aninquiry on any action the latter had taken on the previous notice to terminate the lease contract. Respondents made noreply but wrote a letter to the Secretary of National Defense reporting that Ducusin was intent on evicting them from theleased premises.

Ducusin filed an action for ejectment against the Baliola spouses in the City Court of Manila, alleging thathaving constructed the apartment complex for the use and residence of his children if and when they decide to marryand live independently and that the apartment having been allotted to his son, Agapito Ducusin, Jr., the said unit is notneeded by Agapito Jr. who is now getting married and that he has decided to live independently. The complaint foreviction alleged that the lessees have violated the terms of the contract by subleasing the premises; that the lesseeshave not used the premises solely for residential purposes but have used the same as factory and/or they haveneglected to undertake repairs of the apartment and the premises according to their agreement.

The City Court of Manila decided in favor of the lessor Ducusin on the ground that the defendants contract withthe plaintiff has already terminated with the notice of termination sent by the plaintiff to the defendants on the groundthat he needs the premises for his own children; ordering the defendants and all persons claiming possession underthem to vacate the premises and surrender possession to the plaintiffs.

Lessees appealed to the Court of First Instance of Manila. The court affirmed the decision of the City Court ofManila. Lessees then went to the Court of Appeals.

ISSUE: whether or not an owner of a leased premises can unilaterally terminate the contract of lease under the termsand conditions stated therein; whether or not the happening of the resolutory condition re: the need of the immediate

members of the family of the lessor of the leased premises has been established by a preponderance of evidence.

RULING: The parties to the contract of lease agreed that the obligations arising from the said contract shall beextinguished due to the following causes: 1) termination, 2) when the lessor elects to terminate, etc. The validity of theterms and conditions in a contract is governed by the ff Civil Code provisions:

Article 1308. The contract must bind both contracting parties; its validity or compliance cannot be left to the willof one of them

Article 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the conditionalobligation shall be void. If it depends upon chance or upon the will of a third person, the obligation shall take effect inconformity with the provisions of this Code.

The resolutory condition in the contract of lease re: the need of the lessors children of the leased premises is nota condition the happening of which is dependent solely upon the will of the lessor. The happening of thecondition depends upon the will of a third person the lessors children. Whenever the latter require the use ofthe leased premises for their own needs, then the contract of lease shall be deemed terminated. The validity of thesaid condition as agreed upon by the parties stands.

Period length of existence; duration; series of years, months or days in which something is completed

Definite having distinct or certain limits; determinate in extent or character; limited; fixed

Definite period refers to a portion of time certain or ascertainable as to its beginning, duration and termination

UY TONG vs SILVA

RULING: Debts arose prior to bankruptcycannot be set-offagainst the installments of rent falling due from theinsolvent after bankruptcy.

A debt of the bankrupt arising prior to the bankruptcycannot be set offagainst installments of rent falling due afterbankruptcy, although the installments are payable under a written lease in effect before the bankruptcy

ForCOMPENSATION to take place, it is necessary that over neither of them (the two debts) there be any retentionor controversy, commenced by third persons and communicated in due time to the debtor.

Set off not allowed if it will give undue preference over other creditors of person declared bankrupt.

Article 1279

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BOSQUE vs YU CHIPCO

FACTS: Yu Chipco, defendant, entered into a contract to construct a house and to complete the same within four (4)months after the contract was signed and delivered for Juan Bosque, plaintiff. The construction was actuallycommenced. However, Bosque made changed in and additions to the original plans of the house, which changes wereagreed to by Chipco, and a new contract was made.

Yet, Chipco was prevented from continuing his work because Bosque failed to secure a permit to make the additions.Thus, Chipco was delayed for several weeks.

Expenses: Timber (Bosque) Php132.00; labor and additions (Chipco) Php500.00

Under the first agreement, Bosque was to make four (4) equal payments for the construction of the house, eachpayment to be made when the house was in a certain state of completion. The evidence sustains that it had passed thestate of completion when the Bosque was to make the first payment upon the original contract. Bosque does not allegenor attempt to prove that he made any payments upon the second contract for the addition to the original building.

Consequently, the house was totally destroyed by a baguio before its completion.

LOWER COURTS RULING: Each of the parties failed to comply with their respective obligation; the plaintiff will nothave his building and the defendant will not receive his contract price. The lower court refused to allow either one ajudgment since it balances the failure of one of the parties to comply with his obligation with the failure of the other tocomply with his part of the original contract.

The defendant may recover of the plaintiff the sum of Php368.00, being the difference between Php200 and Php132.

SCS RULING:Affirmed. Even though the court did not expressly pronounce that the parties were absolved from any

further obligation, yet, by the very terms of the judgment the said parties must necessarily be absolved from any furtheraction upon the said contract. It is clear that Bosque did not perform the undertaking which he was bound by the termsof his agreement to perform; consequently, he is not entitled to insist upon the performance of the contract by thedefendant or to recover damages by reason of his own breach.

PEREZ vs. CA

FACTS: Juan Perez, et.al., a usufructuary of a parcel of land called Papaya Fishpond.

Luis Keh lessee of the Papaya Fishpond for 5yrs

Condition: the first 5-yr period the annual rental would be Php150,000 and for the next 5yrs, Php175,000.00. Thecontract states that the lessee cannot sublease the fishpond nor assign his rights to anyone.

Luis Crisostomo reached only the 5

th

grade; businessman engaged in the operation of fishponds. His friendspersuaded him to take over the operation of Papaya Fishpond as they were (including Luis Keh) already losing moneyin its operation. Crisostomo acceded to the agreement. Hence, they executed a written agreement, called as pakiaobuwiswhereby Crisostomo would take possession of the fishpond of the amount Php128,000.00.

Repairs and improvements Php486,562.65

In 1979, petitioners Tansinin and Juan Perez, in the company of men bearing armalites, went to the fishpond andpresented Crisostomo a letter showing that Keh had surrendered possession of the fishpond to the usufructuaries.

Crisostomo filed for injunction and damages; issuance of restraining order.

Lower Court granted the restraining order.