PLDT v Jeturian
639-V of the Court of
Facts:
 PLDT adopted in 1923 a Plan for Employees’ Pension.
 Condition of pension: If they reach the age of 60 and served for 20 years.
 In 1945 the BOD adopted a resolution discontinuing the pension plan – some retirees did not
get the pension because they did not satisfy the conditions.
 PLDT argued that employees cannot compel them to continue program when it was based on
expectancy.
Issue:
WON the pre-war employees are entitled to the pension.
Held:
Yes. But with the exception of those who died or left before the outbreak of the war. The pension plan
was not a gratuity but an inducement for employees to continue indefinitely in service. The plan
ripened into a binding contract upon its implied acceptance of the employees. Acceptance is inferred
from their entering the employ of the company and staying after the plan was made known. PLDT
argues that it can only be held liable under the conditions expressly set in the pension plan. But the
Court held that the Company that violated the contract with its employees, by discontinuing the plan
without their consent, is not in the position to insist upon the terms of the very contract they have
breached.
PLDT vs. Jeturian—Pension bago gera.
PLDT adopted in 1923 a Plan for Emloyees Pension. In 1945 the BOD adopted a resolution discontinuing
the pension plan. Hence this action of Resp.
Issue: WON the pre-war employees are entitled to the pension.
Held: Yes. But with the exception of those who died or left before the outbreak of the war. The pension
plan was not a gratuity but an inducement for employees to continue indefinitely in service. The plan
ripened into a binding contract upon its implied acceptance of the employees. Acceptance is inferred
from their entering the employ of the company and staying after the plan was made known. PLDT
argues that it can only be held liable under the conditions expressly set in the pension plan. But the
Court held that the Company that violated the contract with its employees, by discontinuing the plan
without their consent, is not in the position to insist upon the terms of the very contract they have
breached.
PLDT vs Jeturian
Policy that employees who serve 20 years and reaching 60 yrs old. shall get a retirement benefit was
abolished. Employees who waited to be retired will not receive the benefit. The trial court said it is a
form of Constructive fulfilment. PLDT said that the right was only an expectancy. According to the SC
there is an action to preserve the right in a suspensive condition situation.
--- Subsequently, or on December 22, 1951, Crispin Jeturian and about sixty-three (63) other persons,
who had served the Company as its prewar employees, instituted in the Court of Industrial Relations a
proceeding for the collection of their proportionate shares in said Employees' Pension Plan, which had
been discontinued by a resolution dated November 6, 1945, unilaterally taken by the Board of
Directors of the Company, to be effective retroactively as of January 1, 1942. In due course, a decision
was, on February 23, 1954, rendered in said proceeding, docketed as Case No.
Industrial Relations, directing payment to the petitioners therein of their respective proportionate
shares in the aforementioned Employees' Pension Plan, as well as — to those who had not received
their 30-day notice of dismissal from the service of the Company before the resumption of its business
operations in 1946 — a severance pay equivalent to one month salary. With a slight modification,
immaterial to the case at bar, said decision was affirmed by the Supreme Court in Philippine Long
Distance Telephone Co. vs. Jeturian, et al., G.R. No. L-7756, decided on June 20, 1955. Page |
1
Central Philippine University vs. Court of Appeals
G.R. No. 112230. July 17, 1995
246 SCRA 511
FACTS:
In 1939, Don Ramon Lopez Sr. executed a deed of donation in favor of CPU together with the
following conditions:
a) The land should be utilized by CPU exclusively for the establishment & use of medical college;
b) The said college shall not sell transfer or convey to any 3rd party;
c) The said land shall be called “Ramon Lopez Campus” and any income from that land shall be put in
the fund to be known as “Ramon Lopez Campus Fund”.
However, on May 31, 1989, PR, who are the heirs of Don Ramon filed an action for annulment of
donation, reconveyance & damages against CPU for not complying with the conditions. The heirs also
argued that CPU had negotiated with the NHA to exchange the donated property with another land
owned by the latter.
Petitioner alleged that the right of private respondents to file the action had prescribed.
On 31 May 1991, the trial court held that petitioner failed to comply with the conditions of the
donation and declared it null and void. The court a quo further directed petitioner to execute a deed
of the reconveyance of the property in favor of the heirs of the donor, namely, private respondents
herein.
Petitioner appealed to the Court of Appeals which on 18 June 1993 ruled that the annotations at the
back of petitioner's certificate of title were resolutory conditions breach of which should terminate the
rights of the donee thus making the donation revocable.
The appellate court also found that while the first condition mandated petitioner to utilize the donated
property for the establishment of a medical school, the donor did not fix a period within which the
condition must be fulfilled, hence, until a period was fixed for the fulfillment of the condition,
petitioner could not be considered as having failed to comply with its part of the bargain. Thus, the
appellate court rendered its decision reversing the appealed decision and remanding the case to the
court of origin for the determination of the time within which petitioner should comply with the first
condition annotated in the certificate of title.
Petitioner now alleges that the Court of Appeals erred: (a) in holding that the quoted annotations in
the certificate of title of petitioner are onerous obligations and resolutory conditions of the donation
which must be fulfilled non-compliance of which would render the donation revocable; (b) in holding
that the issue of prescription does not deserve "disquisition;" and, (c) in remanding the case to the trial
court for the fixing of the period within which petitioner would establish a medical college. 2
ISSUE:
1) WON petitioner failed to comply the resolutely conditions annotated at the back of petitioner’s
certificate of title without a fixed period when to comply with such conditions? YES
2) WON there is a need to fix the period for compliance of the condition? NO
HELD:
1)
Under Art. 1181, on conditional obligations, the acquisition of rights as well the extinguishment or loss
of those already acquired shall depend upon the happening of the event which constitutes the
condition. Thus, when a person donates land to another on the condition that the latter would build
upon the land a school is such a resolutory one. The donation had to be valid before the fulfillment of
the condition. If there was no fulfillment with the condition such as what obtains in the instant case,
the donation may be revoked & all rights which the donee may have acquired shall be deemed lost &
extinguished.
More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the
opportunity to comply with the condition even if it be burdensome, to make the donation in its favor
forever valid. But, unfortunately, it failed to do so. Hence, there is no more need to fix the duration of
a term of the obligation when such procedure would be a mere technicality and formality and would
serve no purpose than to delay or lead to an unnecessary and expensive multiplication of suits.
Records are clear and facts are undisputed that since the execution of the deed of donation up to the
time of filing of the instant action, petitioner has failed to comply with its obligation as donee.
Petitioner has slept on its obligation for an unreasonable length of time. Hence, it is only just and
equitable now to declare the subject donation already ineffective and, for all purposes, revoked so
that petitioner as donee should now return the donated property to the heirs of the donor, private
respondents herein, by means of reconveyance.
2)
Under Art. 1197, when the obligation does not fix a period but from its nature & circumstance it can be
inferred that the period was intended, the court may fix the duration thereof because the fulfillment of
the obligation itself cannot be demanded until after the court has fixed the period for compliance
therewith & such period has arrived. However, this general rule cannot be applied in this case
considering the different set of circumstances existing more than a reasonable period of 50yrs has
already been allowed to petitioner to avail of the opportunity to comply but unfortunately, it failed to
do so. Hence, there is no need to fix a period when such procedure would be a mere technicality &
formality & would serve no purpose than to delay or load to unnecessary and expensive multiplication
of suits.
Under Art. 1191, when one of the obligors cannot comply with what is incumbent upon him, the
obligee may seek rescission before the court unless there is just cause authorizing the fixing of a
period. In the absence of any just cause for the court to determine the period of compliance there is
no more obstacle for the court to decree recission.
TRILLANA VS QUEZON COLLEGE, INC.
93 Phil. 383
FACTS:
Damasa Crisostomo wrote a letter to the Quezon College, Inc. for the subscription of shares of
stock of the said college wherein payment was to be made through money she was going to generate
from fishing. However, she died and as no payment appears to have been made on the subscription
mentioned in the foregoing letter, the Quezon College, Inc. presented a claim before the Court of First Page |
Instance in her testate proceeding, for the collection of the said sum of money. The claim was 2
dismissed by the trial court on the ground that the subscription in question was neither registered in
nor authorized by the Securities and Exchange Commission. From this order the Quezon College, Inc.
appealed.
ISSUE:
Was Damasa Crisostomo liable for the claim made by Quezon Colleges, Inc?
RULING:
No. The application sent by Damasa Crisostomo to the Quezon College, Inc. was written on a
general form indicating that an applicant will enclose an amount as initial payment and will pay the
balance in accordance with law and the rules or regulations of the College (babayaran kong lahat
pagkatapos manghuli ng isda). In the letter actually sent by Damasa Crisostomo, she not only did not
enclose any initial payment, but stated that "babayaran kong lahat pagkatapos na ako ay
makapagpahuli ng isda." The acceptance of Quezon College, Inc. was essential, because it would be
unfair to immediately obligate the Quezon College, Inc. under Damasa's promise to pay the price of
the subscription after she had caused fish to be caught. In other words, the relation between Damasa
Crisostomo and the Quezon College, Inc. had only thus reached the preliminary stage whereby the
latter offered its stock for subscription on the terms stated in the form letter, and Damasa applied for
subscription fixing her own plan of payment, a relation in the absence, as in the present case of
acceptance by the Quezon College, Inc. of the counter offer of Damasa Crisostomo, that had not
ripened into an enforceable contract.
The need for express acceptance on the part of the Quezon College, Inc. imperative, in view
of the proposal of Damasa Crisostomo to pay the value of the subscription after she had harvested
fish, a condition obviously dependent upon her sole will and, therefore, facultative in nature, rendering
the obligation void, under article 1115 of the old Civil Code (1182 of NCC).
FORM:
June 1, 1948
The BOARD OF TRUSTEES
Quezon College
Manila
Gentlemen:

Please enter my subscription to dalawang daan (200) shares of your capital stock with a par value of
P100 each. Enclosed you will find (Babayaran kong lahat pagkatapos na ako ay makapag-pahuli ng
isda) pesos as my initial payment and the balance payable in accordance with law and the rules and
regulations of the Quezon College. I hereby agree to shoulder the expenses connected with said
shares of stock. I further submit myself to all lawful demands, decisions or directives of the Board of
Trustees of the Quezon College and all its duly constituted officers or authorities (ang nasa itaas ay
binasa at ipinaliwanag sa akin sa wikang tagalog na aking nalalaman).
Very respectfully,
(Sgd.) DAMASA CRISOSTOMO
Signature of subscriber
Nilagdaan sa aming harapan:
JOSE CRISOSTOMO
EDUARDO CRISOSTOMO
OSMEÑA VS. RAMA
JOHNSON, September 9, 1909
NATURE
APPEAL from a judgment of the Court of First Instance of Cebu.
FACTS
-15 Nov 1890: Doña Rama executed and delivered to Victoriano Osmeña a contract (EXHIBIT A) which
stated that she received P200 in cash from Don Osmeña which she would pay in sugar in
January/February the next year at the price on the day of delivering the sugar into the Don’s
warehouses + Interest w/ rate of half a cuartillo per month on each peso from Nov 15 to the day of
the settlement; if ever the Doña could not pay in full, a balance shall be struck, showing the amount
outstanding at the end of each June, including interest, and outstanding balance of the respondent
would be considered as capital which the respondent would pay in sugar. The respondent also
promised that she would sell to Don Osmeña all her sugar that would be harvested, and as security,
she pledged all her present and future property, and as a special security, she would give her house in
Pagina. The contract was signed by 2 witnesses.
-27 Oct. 1891: Defendant asked a further loan from the Don of P70, P50 of which would be loaned to
Don Peñares, and the P70 would be paid in sugar.
-Some time after the execution and delivery of the above contracts, Don Osmeña died. In the
settlement and division of the property of his estate the above contracts became the property of one
of his hieirs, Agustina Rafols. Later(no date given) the said Agustina Rafols ceded to the present
plaintiff all of her right and interest in said contracts.
-( my copy is missing some paragraphs, can’t find a copy in the internet so just look at your copies for
the periods between the death of Don Osmeña and March 15)
-15 March 1902: Doña Rama recognized her obligations in the said contract with Don Osmeña, stating
in the contract she executed (EXHIBIT C) that if her house in Pagina would be sold she would use the
money to pay for her debts.
-26 June 1906: Doña Tomasa did not pay the amount due so the plaintiff commenced this action in
CFI Cebu.
CFI deci judgment in favor of the plaintiff and against the defendant for the sum of P200 with interest
at the rate of 18 3/4 per cent per annum, from the 15th day of November, 1890, and for the sum of
P20, with interest at the rate of 181 per cent per annum, from the 27th day of October, 1891, until the
said sums were paid.
Plaintiff’s Claim the execution and delivery of the above contracts, the demand for payment, and the
failure to pay on the part of the defendant, and the prayer for a judgment for the amount due on the
said contracts. (own testimony – I don’t know if Agustina is a guy – my copy said “the plaintiff himself”) Page |
Defendant’s defense general denial and setting up the special defense of prescription. (no evidence 3
presented)
ISSUE
WON the proof presented during the trial in CFI is sufficient for the lower court to recognize the debt
of Doña Rama, provided that she imposed the condition that she would pay her debts upon selling
her house?
HELD
YES, the proof presented is sufficient.
Ratio A condition imposed upon a contract by the promisor, the performance of which depends upon
his exclusive will, is void, in accordance with the provisions of article 1115 of the Civil Code.
Reasoning It was suggested during the discussion of the case in this court that, in the acknowledgment
of the indebtedness made by the defendant, she imposed the condition that she would pay the
obligation if she sold her house. If that statement found in her acknowledgment of the indebtedness
should be regarded as a condition, it was a condition which depended upon her exclusive will, and is,
therefore, void. (Art. 1115, Civil Code.) The acknowledgment, therefore, was an absolute
acknowledgment of the obligation and was sufficient to prevent the statute of limitation from barring
the action upon the original contract.
Dispositive We are satisfied, from all of the evidence adduced during the trial, that the judgment of the
lower court should be affirmed. So ordered.
AYSON-SIMON VS. ADAMOS 131 SCRA 439
FACTS:
On December 13, 1943, Nicolas Adamos and Vicente Feria defendants-appellants herein purchased
two lots from Juan Porciuncula. Porciuncula’s successor in interest sought for the annulment and
cancellation of the sale which the court a quo favorably ruled.

In the meantime during the pendency of
the above mentioned case, defendants-appellants sold to Generosa Ayson Simon the lots in question.
Due to the failure of defendants appellants to comply with their commitment to have the subdivision
plan of the lots approved and to deliver to deliver the titles and possession to Generosa, the latter
filed suit for specific performance. As a result of the sale of the lot to said defendants sppellants being
null and void, there is impossibity that they can comply with their commitment to Generosa, the latter
then seek the rescission of the contract plus damages.

The defendants-appellants contend that
Generosa’s action had prescribed, considering that she had only four years from May 29, 1946 to
rescind the transaction.
ISSUE:
Whether or not the action to rescind the obligation has prescribed.

HELD:
Article 1191 of the Civil Code provides that an injured party may also seek rescission if the fulfillment
should have become impossible. The cause of action to claim rescission arises when the fulfillment of
the obligation became impossible when the court declared that the sale was null and void. The
Generosa cannot be assailed on the ground that she slept on her rights.
AYSON-SIMON VS. ADAMOS AND FERIA
G.R. NO. L-39378 AUGUST 28, 1984
FACTS:
Defendants, Nicolas Adamos and Vicente Feria, purchased two lots forming part of the Piedad Estate
in Quezon City, from Juan Porciuncula. Thereafter, the successors-in-interest of the latter filed Civil
Case No. 174 for annulment of the sale and the cancellation of TCT No. 69475, which had been issued
to defendants-appellants by virtue of the disputed sale. The Court rendered a Decision annulling the
sale.The said judgment was affirmed by the Appellate Court and had attained finality.
Meanwhile, during the pendency of the case above, defendants sold the said two lots to Petitioner
Generosa Ayson-Simon for Php3,800.00 plus Php800.00 for facilitating the issuance of the new titles in
favor of petitioner. Due to the failure of the defendants to deliver the said lots, petitioner filed a civil
case for specific performance. The trial court rendered judgment to petitioner’s favor. However,
defendants could not deliver the said lots because the CA had already annulled the sale of the two
lots in Civil Case No . 174. Thus, petitioner filed another civil case for the rescission of the contract.
Defendants were contending that petitioner cannot choose to rescind the contract since petitioner
chose for specific performance of the obligation. Also, even though petitioner can choose to rescind
the contract, it would not be possible, because it has already prescribed.
ISSUES:
1. Can petitioner choose to rescind the contract even after choosing for the specific performance of
the obligation?
2. Had the option to rescind the contract prescribed?
RULING:
1. Yes. The rule that the injured party can only choose between fulfillment and rescission of the
obligation, and cannot have both, applies when the obligation is possible of fulfillment. If, as in this
case, the fulfillment has become impossible, Article 1191 allows the injured party to seek rescission even
after he has chosen fulfillment.
2. No. Article 1191 of the Civil Code provides that the injured party may also seek rescission, if the
fulfillment should become impossible. The cause of action to claim rescission arises when the
fulfillment of the obligation became impossible when the Court of First Instance of Quezon City in Civil
Case No. 174 declared the sale of the land to defendants by Juan Porciuncula a complete nullity and
ordered the cancellation of Transfer Certificate of Title No. 69475 issued to them. Since the two lots
sold to plaintiff by defendants form part of the land involved in Civil Case No. 174, it became
impossible for defendants to secure and deliver the titles to and the possession of the lots to plaintiff.
But plaintiff had to wait for the finality of the decision in Civil Case No. 174,
According to the certification of the clerk of the Court of First Instance of Quezon City (Exhibit "E-2"),
the decision in Civil Case No. 174 became final and executory "as per entry of Judgment dated May 3,
1967 of the Court of Appeals." The action for rescission must be commenced within four years from
that date, May 3, 1967. Since the complaint for rescission was filed on August 16, 1968, the four year
period within which the action must be commenced had not expired.
RATIO:
The appeal is without merit. The Trial Court presided by then Judge, later Court of Appeals Associate
Justice Luis B. Reyes, correctly resolved the issues, reiterated in the assignments of error on appeal, as Page |
follows: 4
Defendants contend (1) that the fulfillment and the rescission of the obligation in
reciprocal ones are alternative remedies, and plaintiff having chosen fulfillment in
Civil Case No. Q- 7525, she cannot now seek rescission; and (2) that even if
plaintiff could seek rescission the action to rescind the obligation has prescribed.
The first contention is without merit. The rule that the injured party can only
choose between fulfillment and rescission of the obligation, and cannot have
both, applies when the obligation is possible of fulfillment. If, as in this case, the
fulfillment has become impossible, Article 1191 3 allows the injured party to seek
rescission even after he has chosen fulfillment.
True it is that in Civil Case No. 7275 the Court already rendered a Decision in
favor of plaintiff, but since defendants cannot fulfill their obligation to deliver the
titles to and possession of the lots to plaintiff, the portion of the decision
requiring them to fulfill their obligations is without force and effect. Only that
portion relative to the payment of damages remains in the dispositive part of the
decision, since in either case (fulfillment or rescission) defendants may be
required to pay damages.
The next question to determine is whether the action to rescind the obligation
has prescribed.
Article 1191 of the Civil Code provides that the injured party may also seek
rescission, if the fulfillment should become impossible. The cause of action to
claim rescission arises when the fulfillment of the obligation became impossible
when the Court of First Instance of Quezon City in Civil Case No. 174 declared
the sale of the land to defendants by Juan Porciuncula a complete nullity and
ordered the cancellation of Transfer Certificate of Title No. 69475 issued to them.
Since the two lots sold to plaintiff by defendants form part of the land involved
in Civil Case No. 174, it became impossible for defendants to secure and deliver
the titles to and the possession of the lots to plaintiff. But plaintiff had to wait for
the finality of the decision in Civil Case No. 174, According to the certification of
the clerk of the Court of First Instance of Quezon City (Exhibit "E-2"), the decision
in Civil Case No. 174 became final and executory "as per entry of Judgment
dated May 3, 1967 of the Court of Appeals." The action for rescission must be
commenced within four years from that date, May 3, 1967. Since the complaint
for rescission was filed on August 16, 1968, the four year period within which the
action must be commenced had not expired.
Defendants have the obligation to return to plaintiff the amount of P7,600.00
representing the purchase price of the two lots, and the amount of P800.00
which they received from plaintiff to expedite the issuance of titles but which
they could not secure by reason of the decision in Civil Case No. 174. Defendant
has to pay interest at the legal rate on the amount of P7,600.00 from May 29,
1946, when they received the amount upon the execution of the deeds of sale,
 and legal interest on the P800.00 from August 1, 1966, when they received the
same from plaintiff. 4
WHEREFORE, the appealed judgment of the former Court of First Instance of Manila, Branch XX, in
Civil Case No. 73942, dated June 7, 1969, is hereby affirmed in toto. Costs against defendants-
appellants.
UNIVERSITY OF THE PHILIPPINES, petitioner, vs. WALFRIDO DE LOS ANGELES, Quezon City CFI
Judge, et al., respondents [1970]
 Act 3608: public land was given as a Land Grant to UP as endowment to raise additional
income for its support
 Nov. 2, 1960: UP & ALUMCO (Associated Lumber Mfg. Co. Inc.) entered into a logging
agreement granting ALUMCO exclusive authority to cut, collect & remove timber from the
land grant & payment to UP of royalties, forest fees, etc. until Dec. 31, 1965 & extendible for
5 yrs by mutual agreement.
 Dec. 8, 1964: ALUMCO incurred unpaid account of P219,362.94 w/c they failed to pay
despite several demands. UP sent ALUMCO a notice to rescind/terminate the agreement.
ALUMCO then executed an instrument, “Acknowledgement of Debt & Proposed Manner of
Payments” stipulating that outstanding balance shall be paid in full no later than June 30,
1965 & if they fail to do so, UP has the power to consider the agreement rescinded w/out
need of any judicial suit & UP shall be entitled to P50,000.00 for liquidated damages.
 Logging operations continued but ALUMCO incurred more unpaid accounts w/c amounted
to P61,133.74 (Dec. 9, 1964-July 15, 1965) on top of the outstanding balance from Dec. 8,
1964.
 July 19, 1965: UP informed ALUMCO that it has considered as rescinded & of no further
legal effect the logging agreement. UP then instituted a complaint against ALUMCO to
collect aforementioned sums of money. Court granted an order restraining ALUMCO from
continuing its logging operations.
 Prior to the court’s order, UP advertised an invitation to bid to take in a new concessionaire
to replace ALUMCO w/c was subsequently awarded to Sta. Clara Lumber Co. Contract was
signed on Feb. 16, 1966.
 ALUMCO filed a petition enjoining UP from conducting the bidding w/c led to the issuance
of the following Court orders:
1. UP enjoined from awarding logging rights to any other party. Order was received on Feb.
25, 1966, after contract w/Sta. Clara was signed.
2. UP was held in contempt of court & Sta. Clara Lumber was directed to refrain from
exercising logging rights.
3. UP’s motion for reconsideration was denied.
 ALUMCO’s defense/contentions:
1. It blamed former gen. manager Cesar Guy in not turning over management thus rendering
it unable to pay.
2. Failure to pursue the manner of payment was caused by rotten logs w/c could not be sold
to Sta. Clara Lumber Co. Inc. w/whom they had a contract to buy & sell.
3. UP’s unilateral rescission w/o court order was invalid.
4. UP’s supervisor did not allow them to cut new logs unless the logs cut during Guy’s
management were sold.
5. UP’s supervisor stopped all logging operations on July 15, 1965.
6. It proposed several offers to resume operations but UP did not reply.
Issues & Ratio:
1. WON a final court decree is necessary before UP can rescind the contract. – NO.
 ALUMCO specifically allowed UP to rescind the contract if it fails to pay not later
than June 30, 1965 in the “Acknowledgement of Debt & Proposed Manner of
Payments” it executed.
 CC Art. 1191 & Froilan v. Pan Oriental Shipping Co.: the law does not prohibit
parties from entering into an agreement that violation of the terms would cause Page |
cancellation of the contract even w/o court intervention. Injured party need not 5
always resort to the court for rescission of contract.
 Of course, it should be made known to the other party & it is always subject to
the scrutiny & review by the proper court. Meaning, the party who deems the
contract violated may consider it rescinded & act w/o previous court action BUT
IT PROCEEDS AT ITS OWN RISK. Since only the final judgment of the
corresponding court will conclusively & finally settle whether the action taken
was or was not correct in law.
 This does not contradict previous SC rulings declaring that judicial action is
necessary for the resolution of a reciprocal obligation. As mentioned, only final
judgment of the court will finally settle whether rescission was proper or not. But
either party can consider the contract as rescinded if their agreement provides
for such, however it’s subject to judicial invalidation.
 Rule requiring judicial action won’t be rendered nugatory since the other party
can always resort to the courts in case the rescinder abuses its power or commits
an error.
 Supreme Court of Spain interpretation of Spanish Civil Code Art. 1124 (similar to
CC Art. 1191): resolution of reciprocal/synallagmatic contracts may be made
extrajudicially unless successfully impugned in court.
2. WON 1st court order enjoining UP from awarding logging rts to another party was proper. –
NO, there was grave abuse of discretion since it decided w/out first receiving evidence on
the issues & it subsequently refused to dissolve the injunction.
 UP made out a prima facie case of breach of contract & defaults in payment by ALUMCO
as proven by a court order stopping ALUMCO’s logging operations.
 ALUMCO profited from its operations previous to the agreement.
 Excuses/defenses offered are not sufficient excuse for non-payment.
 Whatever prejudices ALUMCO may suffer is susceptible of compensation in damages.
3. Issue WRT contempt of court was not discussed since such was pending w/ the Court of
Appeals.
Holding: 1st court order granting ALUMCO’s petition for injunction set aside. Remanded for further
proceedings.
University of the Philippines v. De Los Angeles
G.R. No. L-28602 September 29, 1970
Facts: On November 2, 1960, UP and ALUMCO entered into a logging agreement under which
the latter was granted exclusive authority, for a period starting from the date of the agreement to 31
December 1965, extendible for a further period of five (5) years by mutual agreement, to cut, collect
and remove timber from the Land Grant, in consideration of payment to UP of royalties, forest fees,
etc.; that ALUMCO cut and removed timber there from but, as of 8 December 1964, it had incurred an
unpaid account of P219,362.94, which, despite repeated demands, it had failed to pay; that after it had
received notice that UP would rescind or terminate the logging agreement, ALUMCO executed an
instrument, entitled "Acknowledgment of Debt and Proposed Manner of Payments," dated 9
December 1964, which was approved by the president of UP, which expressly states that, upon default
by the debtor ALUMCO, the creditor (UP) has “the right and the power to consider the Logging
Agreement as rescinded without the necessity of any judicial suit.”
ALUMCO continued its logging operations, but again incurred an unpaid account. On July 19, 1965,
petitioner UP informed respondent ALUMCO that it had, as of that date, considered as rescinded and
of no further legal effect the logging agreement that they had entered in 1960. UP filed a complaint
against ALUMCO for the collection or payment of the herein before stated sums of money and it
prayed for and obtained an order for preliminary attachment and preliminary injunction restraining
ALUMCO from continuing its logging operations in the Land Grant. Respondent ALUMCO contended
that it is only after a final court decree declaring the contract rescinded for violation of its terms that
U.P. could disregard ALUMCO's rights under the contract and treat the agreement as breached and of
no force or effect.
Issue: Whether or not petitioner U.P. can treat its contract with ALUMCO rescinded and may disregard
the same before any judicial pronouncement to that effect.
Held: UP and ALUMCO had expressly stipulated in the "Acknowledgment of Debt and Proposed
Manner of Payments" that, upon default by the debtor ALUMCO, the creditor (UP) has "the right and
the power to consider, the Logging Agreement as rescinded without the necessity of any judicial suit."
In connection with Article 1191 of the Civil Code, the Court stated in Froilan vs. Pan Oriental Shipping
Co that “there is nothing in the law that prohibits the parties from entering into agreement that
violation of the terms of the contract would cause cancellation thereof, even without court
intervention. In other words, it is not always necessary for the injured party to resort to court for
rescission of the contract.”
It must be understood that the act of party in treating a contract as cancelled or resolved on account
of infractions by the other contracting party must be made known to the other and is always
provisional, being ever subject to scrutiny and review by the proper court. If the other party denies
that rescission is justified, it is free to resort to judicial action in its own behalf, and bring the matter to
court. Then, should the court, after due hearing, decide that the resolution of the contract was not
warranted, the responsible party will be sentenced to damages; in the contrary case, the resolution will
be affirmed, and the consequent indemnity awarded to the party prejudiced.
ROQUE VS. LAPUS
96 SCRA 741
FACTS:
Sometime in 1964, plaintiff and defendant entered into an agreement of sale covering Lots 1, 2 and 9,
Block 1, of said property, payable in 120 equal monthly installments at the rate of P16.00, P15.00 per
square meter, respectively. In accordance with said agreement, defendant paid to plaintiff the sum of
P150.00 as deposit and the further sum of P740.56 to complete the payment of four monthly
installments covering the months of July, August, September, and October, 1954.
On January 24, 1955, defendant requested plaintiff that he be allowed to abandon and substitute Lots
1, 2 and 9, the subject with Lots 4 and 12, Block 2 of the Rockville Subdivision, which are corner lots, to
which request plaintiff graciously acceded. The evidence discloses that defendant proposed to plaintiff
modification of their previous contract to sell because he found it quite difficult to pay the monthly
installments on the three lots, and besides the two lots he had chosen were better lots, being corner Page |
lots. In addition, it was agreed that the purchase price of these two lots would be at the uniform rate 6
of P17.00 per square meter payable in 120 equal monthly installments, with interest at 8% annually on
the balance unpaid. Pursuant to this new agreement, defendant occupied and possessed Lots 4 and
12, and enclosed them, including the portion where his house now stands, with barbed wires and
adobe walls. However, aside from the deposit of P150.00 and the amount of P740.56, which were paid
under their previous agreement, defendant failed to make any further payment on account of the
agreed monthly installments for the two lots in dispute, under the new contract to sell. Plaintiff
demanded upon defendant not only to pay the stipulated monthly installments in arrears, but also to
make up-to-date his payments, but defendant refused to comply with plaintiff's demands.
On or about November 3, 1957, plaintiff demanded upon defendant to vacate the lots in question and
to pay the reasonable rentals thereon at the rate of P60.00 per month from August, 1955. On January
22, 1960, petitioner Felipe C, Roque filed the complaint against defendant Nicanor Lapuz for rescission
and cancellation of the agreement of sale between them involving the two lots in question and prayed
that judgment be rendered ordering the rescission and cancellation of the agreement of sale, the
defendant to vacate the two parcels of land and remove his house therefrom and to pay to the
plaintiff the reasonable rental thereof at the rate of P60.00 a month from August 1955 until such time
as he shall have vacated the premises, and to pay the sum of P2,000.00 as attorney's fees, costs of the
suit and award such other relief or remedy as may be deemed just and equitable in the premises.
Defendant filed a Motion to Dismiss on the ground that the complaint states no cause of action, which
motion was denied by the court. Thereafter, defendant filed his Answer alleging that he bought three
lots from the plaintiff containing an aggregate area of 1,200 sq. meters and previously known as Lots 1,
2 and 9 of Block 1 of Rockville Subdivision at P16.00, P15.00 and P15.00, respectively, payable at any
time within ten years. Defendant admits having occupied the lots in question.
As affirmative and special defenses, defendant alleges that the complaint states no cause of action;
that the present action for rescission has prescribed; that no demand for payment of the balance was
ever made; and that the action being based on reciprocal obligations, before one party may compel
performance, he must first comply what is incumbent upon him.
As counterclaim, defendant alleges that because of the acts of the plaintiff, he lost two lots containing
an area of 800 sq. meters and as a consequence, he suffered moral damages in the amount of
P200.000.00; that due to the filing of the present action, he suffered moral damages amounting to
P100,000.00 and incurred expenses for attorney's fees in the sum of P5,000.00.
Plaintiff filed his Answer to the Counterclaim and denied the material averments thereof.
RTC Judgment
in favor of plain. plaintiff and against the defendant, as follows:
(a) Declaring the agreement of sale between plaintiff and defendant involving the lots in question
(Lots 4 and 12, Block 2 of the approved subdivision plan of the Rockville Subdivision) rescinded,
resolved and cancelled;
(b) Ordering defendant to vacate the said lots and to remove his house therefrom and also to pay
plaintiff the reasonable rental thereof at the rate of P60.00 per month from August, 1955 until he shall
have actually vacated the premises; and
(c) Condemning defendant to pay plaintiff the sum of P2,000.00 as attorney's fees, as well as the costs defendants move that since their co-makers have died, claim should be also against the estates
of the suit. (Record on Appeal, p. 118)
(a) Declaring the agreement of sale between plaintiff and defendant involving the lots in question of such. This was denied by the court.
(Lots 4 and 12, Block 2 of the approved subdivision plan of the Rockville Subdivision) rescinded,
resolved and cancelled; HELD:
(b) Ordering defendant to vacate the said lots and to remove his house therefrom and also to pay
plaintiff the reasonable rental thereof at the rate of P60.00 per month from August, 1955 until he shall Page |
have actually vacated premises; and Where an instrument containing the words “I promise to pay” is signed by 7
(c) Condemning defendant to pay plaintiff the sum of P2,000.00 as attorney's fees, as well as the costs
two or more persons, they are deemed to be jointly and severally liable
of the suit. (Record on Appeal. p. 118)
thereon. By virtue of this provision found in Section 17, and as the
The Court of Appeals rendered its decision that the defendant Nicanor Lapuz is granted a period of promissory note was executed jointly and severally by the parties, the payee of the
ninety (90) days from entry hereof within which to pay the balance. Hence, this appeal.
promissory note had the right to hold any one of the them responsible for the payment of the
ISSUE: amount of the note.

Can private respondent be entitled to the Benefits of the third paragraph of Article 1191, New Civil
Full Text
Code, for the fixing of period
PHILIPPINE NATIONAL BANK, plaintiff-appellee,
vs.
RULING:
CONCEPCION MINING COMPANY, INC., ET AL., defendants-appellants.
Ramon B. de los Reyes for plaintiff-appellee.
No. Respondent as obligor is not entitled to the benefits of paragraph 3 of Art. 1191, NCC Having been
Demetrio Miraflor for defendants-appellants.
in default and acted in bad faith, he is not entitled to the new period of 90 days from entry of
LABRADOR, J.:
judgment within which to pay petitioner the balance of P11,434.44 with interest due on the purchase
Appeal from a judgment or decision of the Court of First Instance of Manila, Hon. Gustavo Victoriano,
price of P12,325.00 for the two lots. To allow and grant respondent an additional period for him to pay
presiding, sentencing defendants Concepcion Mining Company and Jose Sarte to pay jointly and
the balance of the purchase price, which balance is about 92% of the agreed price, would be
severally to the plaintiff the amount of P7,197.26 with interest up to September 29, 1959, plus a daily
tantamount to excusing his bad faith and sanctioning the deliberate infringement of a contractual
interest of P1.3698 thereafter up to the time the amount is fully paid, plus 10% of the amount as
obligation that is repugnant and contrary to the stability, security and obligatory force of contracts.
attorney's fees, and costs of this suit.
Moreover, respondent's failure to pay the succeeding 116 monthly installments after paying only 4
The present action was instituted by the plaintiff to recover from the defendants the face of a promissory
monthly installments is a substantial and material breach on his part, not merely casual, which takes
note the pertinent part of which reads as follows:
the case out of the application of the benefits of pa paragraph 3, Art. 1191, N.C.C.
Manila, March 12, 1954
NINETY DAYS after date, for value received, I promise to pay to the order of the Philippine National
Pursuant to Art. 1191, New Civil Code, petitioner is entitled to rescission with payment of damages
Bank . . . .
which the trial court and the appellate court, in the latter's original decision, granted in the form of
In case it is necessary to collect this note by or through an attorney-at-law, the makers and indorsers
rental at the rate of P60.00 per month from August, 1955 until respondent shall have actually vacated
shall pay ten percent (10%) of the amount due on the note as attorney's fees, which in no case shall be
the premises, plus P2,000.00 as attorney's fees. The Court affirmed the same to be fair and
less than P100.00 exclusive of all costs and fees allowed by law as stipulated in the contract of real
reasonable. The Court also sustained the right of the petitioner to the possession of the land, ordering
estate mortgage. Demand and Dishonor Waived. Holder may accept partial payment reserving his right
thereby respondent to vacate the same and remove his house therefrom.
of recourse again each and all indorsers.
(Purpose — mining industry)
PNB vs. Concepcion Mining CONCEPCION MINING COMPANY, INC.,
By:
FACTS: (Sgd.) VICENTE LEGARDA
President
(Sgd.) VICENTE LEGARDA
A case for collection of a sum of money was filed against defendants in (Sgd.) JOSE S SARTE
connection with a promissory note they issued with others. The "Please issue check to —
Mr. Jose S. Sarte"
Upon the filing of the complaint the defendants presented their answer in which they allege that the co-
maker the promissory note Don Vicente L. Legarda died on February 24, 1946 and his estate is in the
process of judicial determination in Special Proceedings No. 29060 of the Court of First Instance of
Manila. On the basis of this allegation it is prayed, as a special defense, that the estate of said deceased
Vicente L. Legarda be included as party-defendant. The court in its decision ruled that the inclusion of
said defendant is unnecessary and immaterial, in accordance with the provisions of Article 1216 of the
Deny Civil Code and section 17 (g) of the Negotiable Instruments Law.
A motion to reconsider this decision was denied and thereupon defendants presented a petition for
relief, asking that the effects of the judgment be suspended for the reason that the deceased Vicente L.
Legarda should have been included as a party-defendant and his liability should be determined in
pursuance of the provisions of the promissory note. This motion for relief was also denied, hence
defendant appealed to this Court.
Section 17 (g) of the Negotiable Instruments Law provides as follows:
SEC. 17. Construction where instrument is ambiguous. — Where the language of the instrument is
ambiguous or there are omissions therein, the following rules of construction apply:
xxx xxx xxx
(g) Where an instrument containing the word "I promise to pay" is signed by two or more persons, they
are deemed to be jointly and severally liable thereon.
And Article 1216 of the Civil Code of the Philippines also provides as follows:
ART. 1216. The creditor may proceed against any one of the solidary debtors or some of them
simultaneously. The demand made against one of them shall not be an obstacle to those which may
subsequently be directed against the others so long as the debt has not been fully collected.
In view of the above quoted provisions, and as the promissory note was executed jointly and severally
by the same parties, namely, Concepcion Mining Company, Inc. and Vicente L. Legarda and Jose S.
Sarte, the payee of the promissory note had the right to hold any one or any two of the signers of the
promissory note responsible for the payment of the amount of the note. This judgment of the lower
court should be affirmed.
Our attention has been attracted to the discrepancies in the printed record on appeal. We note, first,
that the names of the defendants, who are evidently the Concepcion Mining Co., Inc. and Jose S. Sarte,
do not appear in the printed record on appeal. The title of the complaint set forth in the record on
appeal does not contain the name of Jose Sarte, when it should, as two defendants are named in the
complaint and the only defense of the defendants is the non-inclusion of the deceased Vicente L.
Legarda as a defendant in the action. We also note that the copy of the promissory note which is set
forth in the record on appeal does not contain the name of the third maker Jose S. Sarte. Fortunately,
the brief of appellee on page 4 sets forth said name of Jose S. Sarte as one of the co-maker of the
promissory note. Evidently, there is an attempt to mislead the court into believing that Jose S. Sarte is no
one of the co-makers. The attorney for the defendants Atty. Jose S. Sarte himself and he should be held
primarily responsible for the correctness of the record on appeal. We, therefore, order the said Atty. Jose
S. Sarte to explain why in his record on appeal his own name as one of the defendants does not appear
and neither does his name appear as one of the co-signers of the promissory note in question. So
ordered.
IMPERIAL INSURANCE INC. VS. DAVID
133 SCRA 317, November 21, 1984
FACTS:
Felicisimo V. Reyers and his wife Emilia T. David,
herein defendant-appellant, executed 2 indemnity
agreements in favor of appellee The Imperial Insurance
Inc, jointly and severally to assure indemnification of the
latter of whatever liability it may incur in connection with
its posting the security bonds to lift the attachments in 2
civil cases instituted for the amount of P60, 000 and
P40,000, for the benefit of Felicisimo V. Reyes.
The spouses jointly and severally, executed
another indemnity agreement in favor of appellee to assure Page |
indemnification of the latter under a homestead bond for 8
the sum of P7, 500.00 it had executed jointly and severally
with them in favor of the Development Bank of the
Philippines.
Felicisimo later died and Special Proceedings
entitled “In the Matter of the Intestate Estate of Felicisimo
V. Reyes,” commenced. His wife qualified and took her
oath of office as the administratix of the said intestate
estate.
Meanwhile, judgment was rendered in the two
Civil Cases against the spouses. Appellee made demands
on Emilia David to pay the amounts of P60,000 and P40,
000 under the surety bonds and arrears in premiums
thereon. A motion to dismiss was filed by the appellant on
the ground the plaintiff’s cause of action, if there be any,
have been barred for its failure to file its claims against the
estate of the deceased Felicisimo V. Reyes in due time. She
contends that appellee’s claim should have been presented
according to Rule 86 of the Revised Rules of Court and its
failure to do so operates to bar its claim forever.
After trial, the court rendered judgment against
the herein appellant Emilia T. David.
1. to pay the plaintiff under the first cause of action, the amount of P60,000.00 with interest at legal
rate from the filing of the complaint until fun payment shall be effected; and a further sum of
P1,522.50 annually from June 20, 1961 until termination of this case, said amount representing
premiums and documentary stamps in the surety bond, Exh. "B", with interest at legal rate from the
filing of the complaint until full payment is made;
2. to pay the plaintiff under the second cause of action, the amount of P40,000.00 with
interest at the legal rate from the filing of the complaint until full payment shag be made; and a
further sum of P1,105.00 annually from June 20, 1961 until termination of this case, said amount
representing premiums and documentary stamps on the surety bond Exh. "B", with interest at the
legal rate from the filing of the complaint until full payment is made;
3. to pay the plaintiff under the third cause of action the amount of P153.33 annually for a period of 4
years from June 29, 1962 representing premiums and documentary stamps on the Homestead Bond
Exh. "C-1" with interest at the legal rate from the filing of the complaint until full payment is made;
4. to pay the plaintiff in concept of attorney's fees the sum of P20,000.00, representing 20% of the
principal claim of plaintiff; plus cost. (pp. 39-40, Rollo)
ISSUE:
Can the creditor choose to proceed against the
surviving solidary debtor instead of bringing an action in
accordance with Rule 86 (sec. 5) of the Revised Rules of
Court?

RULING:
Yes. Under the law and well-settled jurisprudence,
when the obligation is a solidary one, the creditor may
bring his action in toto against any of the debtors obligated Page |
in solidum. In the case at bar, appellant signed a joint and 9
several obligation with her husband in favor of herein
appellee; as a consequence, the latter may demand from
either of them the whole obligation. As distinguished from
a joint obligation where each of the debtor is entitled only
for a proportionate part of the debt and the creditor is
entitled only to a proportionate part of the credit, in a
solidary obligation the creditor may enforce the entire
obligation against one of the debtors. Moreover, in the case
of Philippine International Surety vs. Gonzales, “Where the
obligation assumed by several persons is joint and several,
each of the debtors is answerable for the whole obligation
with the right to seek contribution from his co-debtors.”
Article 1216 of the Civil Code also states that, “The creditor
may proceed against any one of the solidary debtors or
some or all of them simultaneously. The demand made
against one of them shall not be an obstacle to those
which may subsequently be directed against the others, so
long as the debt has not been fully collected.” There is
nothing improper, as held in Manila Surety & Fidelity Co.
vs. Villarama, in the creditor’s filing of an action against
the surviving solidary debtor alone, instead of instituting a
proceeding for the settlement of the deceased debtor
wherein his claim would be filed.