MAGDALENA ESTATE V MYRICK to continue in the payment of the stipulated

monthly
FACTS: installments, to retain the amounts paid to him
Magdalena Estate, Inc. sold to Louis Myrick lots on account
No. 28 and 29 of Block 1, Parcel 9 of the San of the purchase price. The claim therefore, of
Juan the petitioner
Subdivision, San Juan, Rizal. Their contract of that it has the right to forfeit said sums in its
sale favor is
provides that the Price of P7,953 shall be untenable. Under Article 1124 of the Civil Code,
payable in 120 however,
equal monthly installments of P96.39 each on he may choose between demanding the
the second fulfillment of the
day of every month beginning the date of contract or its resolution. These remedies are
execution of the alternative
agreement. and not cumulative, and the petitioner in this
case, having
In pursuance of said agreement, the vendee elected to cancel the contract cannot avail
made himself of the
several payments amounting to P2,596.08, the other remedy of exacting performance. As a
last being consequence
due and unpaid was that of May 2, 1930. By of the resolution, the parties should be
reason of this, restored, as far as
the vendor, through its president, notified the practicable, to their original situation which can
vendee that, be
in view of his inability to comply with the terms approximated only be ordering the return of the
of their things
contract, said agreement had been cancelled, which were the object of the contract, with
relieving him their fruits and
of any further obligation thereunder, and that of the price, with its interest, computed from
all amounts the date of
paid by him had been forfeited in favor of the institution of the action.
vendor. To
this communication, the vendee did not reply,
and it
appears likewise that the vendor thereafter did
not require
him to make any further disbursements on
account of the
purchase price. UNIVERSAL FOOD CORPORATION VS. CA
33 SCRA 1
ISSUE:
Was the petitioner authorized to forfeit the FACTS:
purchase price paid? This is a petition for certiorari by the UFC
against
RULING: the CA decision of February 13, 1968 declaring
No. The contract of sale contains no provision the BILL
authorizing the vendor, in the event of failure of OF ASSIGNMENT rescinded, ordering UFC to
the vendee return to
Magdalo Francisco his Mafran sauce trademark of
and to pay Assignment, Magdalo Francisco was appointed
his monthly salary of P300.00 from Dec. 1, 1960 Chief
until the Chemist with a salary of P300.00 a month.
return to him of said trademark and formula. Magdalo
Francisco kept the formula of the Mafran sauce
In 1938, plaintiff Magdalo V. Francisco, Sr. secret to
discovered a formula for the manufacture of a himself. Thereafter, however, due to the alleged
food scarcity
seasoning (sauce) derived from banana fruits and high prices of raw materials, on November
popularly 28, 1960,
known as MAFRAN sauce. It was used Secretary-Treasurer Ciriaco L. de Guzman of
commercially since UFC issued a
1942, and in the same year plaintiff registered Memorandum duly approved by the President
his and General
trademark in his name as owner and inventor Manager Tirso T. Reyes that only Supervisor
with the Ricardo
Bureau of Patents. However, due to lack of Francisco should be retained in the factory and
sufficient that the
capital to finance the expansion of the business, salary of plaintiff Magdalo V. Francisco, Sr.,
in 1960, should be
said plaintiff secured the financial assistance of stopped for the time being until the corporation
Tirso T. should
Reyes who, after a series of negotiations, resume its operation. On December 3, 1960,
formed with President and
others defendant Universal Food Corporation General Manager Tirso T. Reyes, issued a
eventually memorandum to
leading to the execution on May 11, 1960 of the Victoriano Francisco ordering him to report to
aforequoted "Bill of Assignment" (Exhibit A or the factory
1). and produce "Mafran Sauce" at the rate of not
less than
On May 31, 1960, Magdalo Francisco entered 100 cases a day so as to cope with the orders of
into the
contract with UFC stipulating among other corporation's various distributors and dealers,
things that he and with
be the Chief Chemist and Second Vice-President instructions to take only the necessary daily
of UFC employees
and shall have absolute control and supervision without employing permanent employees.
over the Again, on
laboratory assistants and personnel and in the December 6, 1961, another memorandum was
purchase issued by
and safekeeping of the chemicals used in the the same President and General Manager
preparation instructing the
of said Mafran sauce and that said positions are Assistant Chief Chemist Ricardo Francisco, to
permanent recall all
in nature. daily employees who are connected in the
production of
In line with the terms and conditions of the Bill Mafran Sauce and also some additional daily
employees Francisco is not entitled to rescission valid?
for the production of Porky Pops. On December
29, 1960, RULING:
another memorandum was issued by the
President and 1. No. Certain provisions of the bill would lead
General Manager instructing Ricardo Francisco, one to believe that the formula itself was
as Chief transferred. To
Chemist, and Porfirio Zarraga, as Acting quote, “the respondent patentee "assign,
Superintendent, transfer and
to produce Mafran Sauce and Porky Pops in full convey all its property rights and interest over
swing said
starting January 2, 1961 with further Mafran trademark and formula for MAFRAN
instructions to hire SAUCE
daily laborers in order to cope with the full blast unto the Party of the Second Part," and the last
operation. paragraph states that such "assignment,
Magdalo V. Francisco, Sr. received his salary as transfer and
Chief conveyance is absolute and irrevocable (and) in
Chemist in the amount of P300.00 a month only no case
until his shall the PARTY OF THE First Part ask, demand
services were terminated on November 30, or sue
1960. On for the surrender of its rights and interest over
January 9 and 16, 1961, UFC, acting thru its said
President and MAFRAN trademark and mafran formula."
General Manager, authorized Porfirio Zarraga
and Paula “However, a perceptive analysis of the entire
de Bacula to look for a buyer of the corporation instrument and the language employed therein
including would lead
its trademarks, formula and assets at a price of one to the conclusion that what was actually
not less ceded and
than P300,000.00. Due to these successive transferred was only the use of the Mafran
memoranda, sauce formula.
without plaintiff Magdalo V. Francisco, Sr. being This was the precise intention of the parties.”
recalled
back to work, he filed the present action on The SC had the following reasons to back up the
February 14, above conclusion. First, royalty was paid by UFC
1961. Then in a letter dated March 20, 1961, to
UFC requested Magdalo Francisco. Second, the formula of said
said plaintiff to report for duty, but the latter Mafran
declined the sauce was never disclosed to anybody else.
request because the present action was already Third, the Bill
filed in acknowledged the fact that upon dissolution of
court. said Corporation, the patentee rights and
interests of said
ISSUES: trademark shall automatically revert back to
1. Was the Bill of Assignment really one that Magdalo
involves transfer of the formula for Mafran Francisco. Fourth, paragraph 3 of the Bill
sauce itself? declared only
2. Was petitioner’s contention that Magdalo the transfer of the use of the Mafran sauce and
not the in nature.
formula itself which was admitted by UFC in its
answer.
Fifth, the facts of the case undeniably show that
what was
transferred was only the use. Finally, our Civil
Code allows
only “the least transmission of right, hence,
what better
way is there to show the least transmission of ANGELES VS. CALASANZ
right of the 135 SCRA 323
transfer of the use of the transfer of the
formula itself.” FACTS:
On December 19, 1957, defendants-appellants
2. No. Petitioner’s contention that Magdalo Ursula Torres Calasanz and plaintiffs-appellees
Francisco’s petition for rescission should be Buenaventura Angeles and Teofila Juani entered
denied into a
because under Article 1383 of the Civil Code of contract to sell a piece of land located in Cainta,
the Rizal for
Philippines rescission can not be demanded the amount of P3,920.00 plus 7% interest per
except when annum. The
the party suffering damage has no other legal plaintiffs-appellees made a downpayment of
means to P392.00 upon
obtain reparation, was of no merit because “it is the execution of the contract. They promised to
predicated pay the
on a failure to distinguish between a rescission balance in monthly installments of P41.20 until
for breach fully paid,
of contract under Article 1191 of the Civil Code the installment being due and payable on the
and a 19th day of
rescission by reason of lesion or economic each month. The plaintiffs-appellees paid the
prejudice, under monthly
Article 1381, et seq.” This was a case of installments until July 1966, when their
reciprocal aggregate
obligation. Article 1191 may be scanned without payment already amounted to P4,533.38.
disclosing
anywhere that the action for rescission On December 7, 1966, the defendants-
thereunder was appellants
subordinated to anything other than the wrote the plantiffs-appellees a letter requesting
culpable breach of the
his obligations by the defendant. Hence, the remittance of past due accounts. On January 28,
reparation of 1967, the
damages for the breach was purely secondary. defendants-appellants cancelled the said
Simply put, contract because
unlike Art. 1383, Art. 1191 allows both the the plaintiffs failed to meet subsequent
rescission and payments. The
the payment for damages. Rescission is not plaintiffs’ letter with their plea for
given to the reconsideration of the
party as a last resort, hence, it is not subsidiary said cancellation was denied by the defendants.
 the plaintiffsappellees
The plaintiffs-appellees filed a case before the to the effect that the terms of a contract must
Court of First Instance to compel the defendant be
to execute interpreted against the party who drafted the
in their favor the final deed of sale alleging inter same,
alia that especially where such interpretation will help
after computing all subsequent payments for effect justice
the land in to buyers who, after having invested a big
question, they found out that they have already amount of
paid the money, are now sought to be deprived of the
total amount including interests, realty taxes same thru the
and prayed application of a contract clever in its
incidental expenses. The defendants alleged in phraseology,
their condemnable in its lopsidedness and injurious
answer that the plaintiffs violated par. 6 of the in its effect
contract to which, in essence, and its entirety is most unfair
sell when they failed and refused to pay and/or to the
offer to pay buyers.
monthly installments corresponding to the
month of Thus, since the principal obligation under the
August, 1966 for more than 5 months, thereby contract is only P3,920.00 and the plaintiffs-
constraining the defendants to cancel the said appellees
contract. have already paid an aggregate amount of
P4,533.38, the
The Court of First Instance rendered judgment courts should only order the payment of the
in few remaining
favor of the plaintiffs, hence this appeal. installments but not uphold the cancellation of
the
ISSUE: contract. Upon payment of the balance of
Has the Contract to Sell been automatically and P671.67 without
validly cancelled by the defendants-appellants? any interest thereon, the defendant must
immediately
RULING: execute the final deed of sale in favor of the
No. While it is true that par.2 of the contract plaintiffs and
obligated the plaintiffs-appellees to pay the execute the necessary transfer of documents, as
defendants the provided
sum of P3,920 plus 7% interest per annum, it is in par.12 of the contract.
likewise
true that under par 12 the seller is obligated to
transfer the
title to the buyer upon payment of the said
price.

The contract to sell, being a contract of

adhesion,
must be construed against the party causing it.
The
Supreme Court agree with the observation of
 appellants by
virtue of the disputed sale. The Court rendered
a Decision
annulling the saleThe 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
AYSON-SIMON VS. ADAMOS AND FERIA performance of the obligation. Also, even
G.R. NO. L-39378 AUGUST 28, 1984 though
petitioner can choose to rescind the contract, it
FACTS: would not
Defendants, Nicolas Adamos and Vicente Feria, be possible, because it has already prescribed.
purchased two lots forming part of the Piedad
Estate in ISSUES:
Quezon City, from Juan Porciuncula. Thereafter, 1. Can petitioner choose to rescind the contract
the even after choosing for the specific
successors-in-interest of the latter filed Civil performance of the obligation?
Case No. 174 2. Had the option to rescind the contract
for annulment of the sale and the cancellation prescribed?
of TCT No.
69475, which had been issued to defendants- RULING:
1. Yes. The rule that the injured party can commenced
only choose between fulfillment and rescission within four years from that date, May 3, 1967.
of the Since the
obligation, and cannot have both, applies when complaint for rescission was filed on August 16,
the 1968, the
obligation is possible of fulfillment. If, as in this four year period within which the action must
case, the be
fulfillment has become impossible, Article 1191 commenced had not expired.
allows the injured party to seek rescission even
after he has chosen
fulfillment.

2. No. Article 1191 of the Civil Code provides SINGSON ENCARNACION VS. BALDOMAR
that the injured party may also seek rescission, 77 PHIL 470
if the
fulfillment should become impossible. The FACTS:
cause of action Vicente Singson Encarnacion leased his house to
to claim rescission arises when the fulfillment of Jacinta Baldomar and her son, Lefrando
the Fernando upon a
obligation became impossible when the Court month-to-month basis. After Manila was
of First liberated in the
Instance of Quezon City in Civil Case No. 174 last war, Singson Encarnacio notified Baldomar
declared the and her
sale of the land to defendants by Juan son Fernando to vacate the house because he
Porciuncula a needed it for
complete nullity and ordered the cancellation of his office as a result of the destruction of the
Transfer building
Certificate of Title No. 69475 issued to them. where he had his office before. Despite the
Since the two demand, the
lots sold to plaintiff by defendants form part of Baldomar and Fernando continued their
the land occupancy.
involved in Civil Case No. 174, it became
impossible for The defense of Baldomar and Fernando was
defendants to secure and deliver the titles to that the
and the contract with Singson Encarnacion authorized
possession of the lots to plaintiff. But plaintiff them to
had to wait continue occupancy indefinitely while they
for the finality of the decision in Civil Case No. should
174, faithfully fulfill their obligation with respect to
According to the certification of the clerk of the payment of
Court of rentals. Singson Encarnacion contended that
First Instance of Quezon City (Exhibit "E-2"), the the lease had
decision always and since the beginning been upon a
in Civil Case No. 174 became final and executory month-tomonth
"as per basis.
entry of Judgment dated May 3, 1967 of the
Court of ISSUE:
Appeals." The action for rescission must be Was it tenable for Singson Encarnacion to
discontinue fixed consideration and to endure at the will of
the lease of Baldomar and her son?
the lessee.
RULING:
The continuance and fulfillment of the contract By the contract of lease the lessee is expressly
of lease
cannot be made to depend solely and authorized
exclusively upon the
free and uncontrolled choice of the lessees to make improvements upon the land, by
between
continuing paying the rentals or not, completely erecting
depriving
the owner of all say in the matter. The defense buildings of both permanent and temporary
of Baldomar
and Fernando would leave to the sole and character, by
exclusive will of
one of the contracting parties the validity and making fills, laying pipes, and making such other
fulfillment of
the contract of lease, within the meaning of improvements as might be considered desirable
Article 1256 of
the Civil Code. For if this were allowed, so long for the
as the
lessee elected to continue the lease by comfort and amusement of the members.
continuing the
payment of the rentals the owner would never
be able to
discontinue the lease; conversely, although the With respect to the term of the lease the
owner
should desire the lease to continue, the lessee present
could
effectively thwart his purpose if he should question has arisen. In its decision three
prefer to
terminate the contract by the simple expedient theories have been presented: One which
of stopping
payment of the rentals. makes the duration depend upon the will of the

lessor, who, upon one month's notice

ELEIZEGUI VS MANILA LAWN TENNIS CLUB
given to the lessee, may terminate the lease so
G.R. 967
stipulated;
FACTS:
another which, on the contrary, makes it

dependent upon
This suit concerns the lease of a piece of land
the will of the lessee, as stipulated; and the
for a
third, in considers

accordance with which the right is reversed to that it is governed by the article relied upon by

the courts to the

fix the duration of the term. plaintiffs, which is of the following tenor:

"When the term

The first theory is that which has prevailed in has not been fixed for the lease, it is understood

the to be for

judgment below, as appears from the language years when an annual rental has been fixed, for

in which months

the basis of the decision is expressed: "The when the rent is monthly. . . ." The second

court is of the clause of the

opinion that the contract of lease was contract provides as follows: "The rent of the

terminated by the said land is

notice given by the plaintiff on August 28 of last fixed at 25 pesos per month."

year . . . ."

And such is the theory maintained by the ISSUE:

plaintiffs, which Was there a conventional term, a duration,

expressly rests upon article 1581 of the Civil agreed

Code, the law upon in the contract in question?

which was in force at the time the contract was

entered RULING:

into (January 25, 1890). The judge, in giving to Yes. The obligations which, with the force of

this notice law,

the effect of terminating the lease, undoubtedly the lessors assumed by the contract entered
into, so far as lessors spoke in

pertaining to the issues, are the following: vain that their words are to be disregarded a

"First. . . . They claim which

lease the above-described land to Mr. can not be advanced by the plaintiffs nor upheld

Williamson, who by any

takes it on lease . . . for all the time the court without citing the law which detracts all

members of the legal force

said club may desire to use it . . . Third. . . . the from such words or despoils them of their literal

owners of sense.

the land undertake to maintain the club as SHARE

tenant as long

as the latter shall see fit, without altering in the

slightest

degree the conditions of this contract, even

though the

estate be sold."

In view of these clauses, it can not be said that

there is no stipulation with respect to the

duration of the

lease, or that, notwithstanding these clauses,

article 1581,

in connection with article 1569, can be applied.

If this were

so, it would be necessary to hold that the