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Taylor vs. Uy Tieng Piao | G.R. No. L-16109 | October 2, 1922 | Ponente: Street, J.

Nature of Case: Potestative condition


Petitioners(s): M.D. Taylor (plaintiff-appellant)
Respondent(s): Uy Tieng Piao and Tan Liuan (doing business under the firm name Tan Liuan & Company)
*Uy Tieng Piao (defendant-appellant)

SUMMARY: Plaintiff contracted his sevices to Tan Liuan and Co., as superintendent of an oil factory to which the latter will establish. Among the stipulations
in the contract is the clause wherein defendant can cancel the contract with plaintiff if the machinery to be installed in the said factory fails, for any reason, to
arrive in Manila within a period of 6 months. Defendant availed of this option to cancel since said machinery did not in fact arrive. Plaintiff now comes to the
court stating that stipualtion is illegal as contemplated in Articles 1256 and 1119 of the Civil Code. Court decided in favor of the defendant stating that a
condition which is facultative and resolutory at the same time is valid even though the condition is made to depend upon the will of the obligor.

FACTS
appeal from the CFI of the city of Manila wherein court awarded plaintiff P300 as damages for breach of contract
- plaintiff appeals on the gounf that the amount of damages awarded is inadequate
- defendant appeals on the ground that he is not liable at all
December 12, 1918 plaintiff was contracted as superintendent of an oil factory for Tan Liuan and Co.
- period of the contract will be 2 years from the date mentioned
- salary of P600/month for the first year and P700/month on the second year
- with electric light and water for domestic consumption, and a residence to live in or in lieu thereof P60/month
During the time of their agreement, the machinery to be used for the factory had not yet been acquired, although 10
expellers had already been ordered from US
- among the stipulations inserted in the contract was a provision to the following effect:
It is understood and agreed that should the machinery to be installed in the said factory fail, for any reason, to arrive in the city of Manila within a
period of six months from date hereof, this contract may be cancelled by the party of the second part at its option, such cancellation, however, not to
occur before the expiration of such six months.

The machinery failed to arrive within 6 months from the making of the contract
- reason as to what happened is not stipulated
- however, preponderance of evidence shows that defendants either cancelled the order for the machinery or were
unable to finance the said project (since in the first months of 1919, the oil business no longer promised large returns)
June 28, 1919 availing themselves of the option given in the stipulation, defendants communicated in writing to the
plaintiff the fact that they decided to rescind the contract, effective June 30
plaintiff instituted this action to recover damages for P13,000 (salary and perquisites due and to become due under the
contract)
- plaintiff contends that defendants will only have the right to rescind the contract if the cause as to why the machinery
did not arrive is not due to their fault but upon circumstances beyond their will or act
- plaintiff relies on the following articles:
Article 1256 of the Civil Code, which is to the effect that the validity and fulfillment of contracts cannot be left to the
will of one of the contracting parties, and to Article 1119, which says that a condition shall be deemed fulfilled if the
obligor intentionally impedes its fulfillment

ISSUE(S) + RULING
WON it is lawful to have a stipulation wherein the condition is made to depend upon the will of the obligor YES
(but not all the time)

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the language of the contract (for any reason) which gives defendants the right of cancellation is broad enough to cover
any case of the nonarrival of the machinery, due to whatever cause
- language used in the stipulation should be given effect in its ordinary sense, without technicality or circumvention
Article 1256 of the Civil Code creates no impediment to the stipulation in a contract for personal service of a resolutory
condition permitting the cancellation of the contract by one of the parties
- Article 1256 contemplates a situation wherein the contract will be valid only if its stipulated conditions arise (and such
conditions are left to the will of one of the parties)
- in the case at bar, the contract stipulates a resolutory condition (meaning, upon the happening of such condition, the
contract will be cancelled which is not what Article 1256 talks about)
it is entirely licit to leave the fulfillment of the contract to the will of either of the parties in the negative form of rescission
for in such supposed case, neither is the article inrfinged nor is there any lack of equality between the persons contracting
- as long as the validity and the fulfillment of the contract is not left to the will of one of them
there is nothing in Article 1256 which will make it necessary to give another meaning to the stipulation of the parties for any
reason
- to impose another interpretation (for any reason not having its origin in the will or acts of the defendants) would
constitute an unjustifiable invasion of the power of the parties to establish the terms which they deem advisable, a
right which is expressed in article 1255 of the Civil Code and constitutes one of the most fundamental conceptions
of contract right enshrined in the Code
With regard to Article 1119 (where the obligor intentionally impedes the fulfillment of a condition which would entitle the
obligee to exact performance from the obligor; and an assumption underlying the provision is that the obligor prevents the
obligee from performing some act which the obligee is entitled to perform as a condition precedent to the exaction of what is
due to him), the act that is considered unwarranted and unlawful should involve a breach of the implied terms of the contract
- the Article can have no application to an external contingency which, like that involved in this case, is lawfully within
the control of the obligor
a condition which is facultative and resolutory may be valid even though the condition is made to depend upon the
will of the obligor
with regard to damages, CFI committed no error in rejecting the plaintiffs claim for damages sought for the period
subsequent to the expiration of the first six months
- however, it overlooked the item of P60, which represents commutation of house rent for the month of June 1919
- in addition to P300 awarded by the CFI, plaintiff is entitled to another P60

The judgment appealed from will be modified by declaring that the defendants shall pay to the plaintiff the sum of P360,
instead of P300, as allowed by the lower court, and as thus modified the judgment will be affirmed with interest from
November 4, 1919.

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