MANILA METAL CONTAINER CORPORATION, petitioner

REYNALDO C. TOLENTINO, intervenor,

vs.
PHILIPPINE NATIONAL BANK, respondent,
DMCI-PROJECT DEVELOPERS, INC., intervenor
G.R. No. 166862 December 20, 2006

FACTS:

Petitioner was the owner of a 8,015 square meter parcel of land and to secure a
P900,000.00 loan it had obtained from respondent PNB, petitioner executed a real estate
mortgage over the lot. Respondent PNB later granted petitioner a new credit accommodation of
P1,000,000.00; and, on November 16, 1973, petitioner executed an Amendment of Real Estate
Mortgage over its property. On March 31, 1981, petitioner secured another loan of P653,000.00
from respondent PNB, payable in quarterly installments of P32,650.00, plus interests and other
charges.
PNB filed a petition for extrajudicial foreclosure of the real estate mortgage and sought to
have the property sold at public auction for P911,532.21, petitioner's outstanding obligation to
respondent PNB as of June 30, 1982, plus interests and attorney's fees. After due notice and
publication, the property was sold at public auction where respondent PNB was declared the
winning bidder for P1,000,000.00. The period to redeem the property was to expire on February
17, 1984. Petitioner sent a letter dated August 25, 1983 to respondent PNB, requesting that it be
granted an extension of time to redeem/repurchase the property. Respondent PNB informed
petitioner that the request had been referred to its Pasay City Branch for appropriate action and
recommendation
Petitioner reiterated its request for a one year extension from February 17, 1984 within
which to redeem/repurchase the property on installment basis. It reiterated its request to
repurchase the property on installment. Meanwhile, some PNB Pasay City Branch personnel
informed petitioner that as a matter of policy, the bank does not accept "partial redemption”.
Since petitioner failed to redeem the property, the Register of Deeds cancelled TCT No.
32098 and issued a new title in favor of respondent PNB. Petitioner's offers had not yet been
acted upon by respondent PNB.
Meanwhile, the Special Assets Management Department (SAMD) had prepared a
statement of account, and as of June 25, 1984 petitioner's obligation amounted to P1,574,560.47.
This included the bid price of P1,056,924.50, interest, advances of insurance premiums,
advances on realty taxes, registration expenses, miscellaneous expenses and publication cost.
When apprised of the statement of account, petitioner remitted P725,000.00 to respondent PNB
as "deposit to repurchase," and an Official Receipt was issued. The SAMD recommended to the
management of respondent PNB that petitioner be allowed to repurchase the property for
P1,574,560.00. In a letter dated November 14, 1984, the PNB management informed petitioner
that it was rejecting the offer and the recommendation of the SAMD. It was suggested that
petitioner purchase the property for P2,660,000.00, its minimum market value. Respondent PNB
gave petitioner until December 15, 1984 to act on the proposal; otherwise, its P725,000.00
deposit would be returned and the property would be sold to other interested buyers.
Petitioner, however, did not agree to respondent PNB's proposal. Instead, it wrote another
letter dated December 12, 1984 requesting for a reconsideration. Respondent PNB replied in a
letter dated December 28, 1984, wherein it reiterated its proposal that petitioner purchase the
property for P2,660,000.00. PNB again informed petitioner that it would return the deposit
should petitioner desire to withdraw its offer to purchase the property. On February 25, 1985,
petitioner, through counsel, requested that PNB reconsider its letter dated December 28, 1984.
Petitioner declared that it had already agreed to the SAMD's offer to purchase the property for
P1,574,560.47, and that was why it had paid P725,000.00. Petitioner warned respondent PNB
that it would seek judicial recourse should PNB insist on the position.
On June 4, 1985, respondent PNB informed petitioner that the PNB Board of Directors
had accepted petitioner's offer to purchase the property, but for P1,931,389.53 in cash less the
P725,000.00 already deposited with it. Petitioner did not respond, so PNB requested petitioner in
a letter dated June 30, 1988 to submit an amended offer to repurchase. Petitioner rejected
respondent's proposal in a letter dated July 14, 1988. It maintained that respondent PNB had
agreed to sell the property for P1,574,560.47, and that since its P725,000.00 downpayment had
been accepted, respondent PNB was proscribed from increasing the purchase price of the
property. Petitioner averred that it had a net balance payable in the amount of P643,452.34.
Respondent PNB, however, rejected petitioner's offer to pay the balance of P643,452.34 in a
letter dated August 1, 1989.
Petitioner filed a complaint against respondent PNB for "Annulment of Mortgage and
Mortgage Foreclosure, Delivery of Title, or Specific Performance with Damages.” Respondent
PNB averred, as a special and affirmative defense, that it had acquired ownership over the
property after the period to redeem had elapsed. It claimed that no contract of sale was perfected
between it and petitioner after the period to redeem the property had expired. The trial court
rendered judgment dismissing the amended complaint and respondent PNB's counterclaim. It
ordered respondent PNB to refund the P725,000.00 deposit petitioner had made. The trial court
ruled that there was no perfected contract of sale between the parties; hence, petitioner had no
cause of action for specific performance against respondent. The Court of Appeals affirmed the
RTC’s decision.

ISSUE:
Whether or not petitioner and respondent PNB had entered into a perfected contract for
petitioner to repurchase the property from respondent.

RULING:

The ruling of the appellate court that there was no perfected contract of sale between the
parties is correct.
It appears that although respondent requested petitioner to conform to its amended
counter-offer, petitioner refused and instead requested respondent to reconsider its amended
counter-offer. Petitioner's request was ultimately rejected and respondent offered to refund its
P725,000.00 deposit. In sum, then, there was no perfected contract of sale between petitioner and
respondent over the subject property.
 PALATTAO VS. COURT OF APPEALS
381 SCRA 681 MAY 7, 2002

FACTS:

Petitioner Yolanda Palattao entered into a lease contract whereby she leased to private
respondent a house and a 490-square-meter lot located in 101 Caimito Road, Caloocan City,
covered by a Transfer Certificate of Title and registered in the name of petitioner. The duration
of the lease contract was for three years, commencing from January 1, 1991, to December 31,
1993, renewable at the option of the parties. The agreed monthly rental was P7,500.00 for the
first year; P 8,000.00 for the second year: and P8,500.l00 for the third year. The contract gave
respondent lessee the first option to purchase the leased property.

During the last year of the contract, the parties began negotiations for the sale of the
leased premises to private respondent. In a letter, petitioner offered to sell to private respondents
413.28 square meters of the leased lot at P 7,800.00 per square meter, or for the total amount of
P3,223,548.00. Private respondents replied on April 15, 1993 wherein he informed petitioner that
he “shall definitely exercise his option to buy” the leased property. Private respondent, however,
manifested his desire to buy the whole 490-square meters inquired from petitioner the reason
why only 413.28 square meters of the leased lot were being offered for sale. In a letter dated
November 6, 1993, petitioner made a final offer to sell the lot at P7,500.00 per square meter with
a down payment of 50% upon the signing of the contract of conditional sale, the balance payable
in one year with a monthly lease/interest payment P 14,000.00 which must be paid on or before
the fifth day every month that the balance is still outstanding. Private respondents accepted
petitioners offer and reiterated his request for respondent accepted petitioner’s offers and
reiterated his request for clarification as to the size of the lot for sale. Petitioner acknowledged
private respondent’s acceptance of the offer in his letter dated November 10, 1993.

Petitioner gave private respondent on or before November 24, 1993, within which to pay
the 50% downpayment in cash or manager’s check. Petitioner stressed that failure to pay the
downpayment on the stipulated period will enable petitioner to freely sell her property to others.
Petitioner likewise notified private respondent, that she is no longer renewing the lease
agreement upon its expiration on December 31, 1993.

Private respondent did not accept the terms proposed by petitioner. Neither were there
any documents of sale nor payment by private respondent of the required downpayment. Private
respondent wrote a letter to petitioner on November 29, 1993 manifesting his intention to
exercise his option to renew their lease contract for another three years, starting January 1, 1994
to December 31, 1996. This was rejected by petitioner, reiterating that she was no longer
renewing the lease. Petitioner demanded that private respondent vacate the premises, but the
latter refused.

Hence, private respondent filed with the Regional Trial Court a case for specified
performance seeking to compel petitioner to sell to him the leased property. Private respondent
further prayed for the issuance of a writ preliminary injunction to prevent petitioner from filing
an ejectment case upon the expiration of the lease contract on December 31, 1993.
 During the proceedings in the specific performance case, the parties agreed to maintain
the status quo. After they failed to reach an amicable settlement, petitioner filed the instant
ejectment case before the Metropolitan Trial Court. In his answer, private respondent alleged that
he refused to vacate the leased premises because there was a perfected contract of sale of the
leased property between him and petitioner. Private respondent argued that he did not abandon
his option to buy the leased property and that his proposal to renew the lease was but an
alternative proposal to the sale. He further contended that the filing of the ejectment case violated
their agreement to maintain the status quo.

ISSUE:

Whether or not there was a valid consent in the case at bar.

RULING:

There was no valid consent in the case at bar.

Contracts that are consensual in nature, like a contract of sale, are perfected upon mere
meeting of the minds. Once there is concurrence between the offer and the acceptance upon the
subject matter, consideration, and terns of payment, a contract is produced. The offer must be
certain. To convert the offer into a contract, the acceptance must be absolute and must not
qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance
of any sort from the proposal. A qualified acceptance, or one that involves a new proposal,
constitutes a counter-offer and is a rejection of the original offer. Consequently, when something
is desired which is not exactly is proposed in the offer, such acceptance is not sufficient to
generate consent because any modification or variation from the terms of the offer annuals the
offer.

In the case at bar, while it is true that private respondent informed petitioner that he is
accepting the latter’s offer to sell the leased property, it appears that they did not reach an
agreement as to the extent of the lot subject of the proposed sale.

Letters reveal that private respondent did not give his consent to buy only 413.28 square
meters of the leased lot, as he desired to purchase the whole 490 square-meter- leased premises
which, however, was not what was exactly proposed in petitioner’s offer. Clearly, therefore,
private respondent’s acceptance of petitioner’s offer was not absolute, and will consequently not
generate consent that would perfect a contract.

ABS-CBN BROADCASTING CORPORATION VS. COURT OF APPEALS

301 SCRA 573
G.R. No. 128690 January 21, 1999

FACTS:
 In 1990, ABS-CBN and VIVA executed a Film Exhibition Agreement whereby Viva
gave ABS-CBN an exclusive right to exhibit some Viva films. Viva, through defendant Del
Rosario, offered ABS-CBN, through its vice-president Charo Santos-Concio, a list of three film
packages (36 title) from which ABS-CBN may exercise its right of first refusal under the afore-
said agreement. ABS-CBN, however through Mrs. Concio, "can tick off only ten titles" (from the
list) "we can purchase" and therefore did not accept said list. The titles ticked off by Mrs. Concio
are not the subject of the case at bar except the film "Maging Sino Ka Man."

On February 27, 1992, defendant Del Rosario approached ABS-CBN’s Ms. Concio, with
a list consisting of 52 original movie titles (i.e., not yet aired on television) including the 14 titles
subject of the present case, as well as 104 re-runs (previously aired on television) from which
ABS-CBN may choose another 52 titles, as a total of 156 titles, proposing to sell to ABS-CBN
airing rights over this package of 52 originals and 52 re-runs for P60,000,000.00 of which
P30,000,000.00 will be in cash and P30,000,000.00 worth of television spots.

On April 2, 1992, defendant Del Rosario and ABS-CBN’s general manager, Eugenio
Lopez III discussed the package proposal of VIVA. Mr. Lopez testified that he and Mr. Del
Rosario allegedly agreed that ABS-CBN was granted exclusive film rights to fourteen (14) films
for a total consideration of P36 million; that he allegedly put this agreement as to the price and
number of films in a "napkin" and signed it and gave it to Mr. Del Rosario. On the other hand,
Del Rosario denied having made any agreement with Lopez regarding the 14 Viva films; denied
the existence of a napkin in which Lopez wrote something; and insisted that what he and Lopez
discussed at the lunch meeting was Viva’s film package offer of 104 films (52 originals and 52
re-runs) for a total price of P60 million.

Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for Finance discussed
the terms and conditions of Viva’s offer to sell the 104 films, after the rejection of the same
package by ABS-CBN. On the following day, Del Rosario received a draft contract from Ms.
Concio which contains a counter-proposal of ABS-CBN on the offer made by VIVA including
the right of first refusal to 1992 Viva Films. However, the proposal was rejected by the Board of
Directors of VIVA and such was relayed to Ms. Concio.
On April 29, 1992, after the rejection of ABS-CBN and following several negotiations
and meetings defendant Del Rosario and Viva’s President Teresita Cruz, in consideration of P60
million, signed a letter of agreement dated April 24, 1992, granting RBS the exclusive right to air
104 Viva-produced and/or acquired films including the fourteen films subject of the present case.

On 27 May 1992, ABS-CBN filed before the RTC a complaint for specific performance
with a prayer for a writ of preliminary injunction and/or temporary restraining order against
private respondents Republic Broadcasting System (now GMA Network Inc.) On 28 May 1992,
the RTC issued a temporary restraining order.

The RTC then rendered decision in favor of RBS and against ABS-CBN. On appeal, the
same decision was affirmed. Hence, this decision.

ISSUE:
 Whether or not there exists a perfected contract between ABS-CBN and VIVA.

RULING:

A contract is a meeting of minds between two persons whereby one binds himself to give
something or render some service to another [Art. 1305, Civil Code.] for a consideration. There
is no contract unless the following requisites concur:
(1) consent of the contracting parties;
(2) object certain which is the subject of the contract; and
(3) cause of the obligation, which is established. [Art. 1318, Civil Code.]

A contract undergoes three stages:

(a) preparation, conception, or generation, which is the period of negotiation and
bargaining rending at the moment of agreement of the parties;
(b) perfection or birth of the contract, which is the moment when the parties come to
agree on the terms of the contract; and
(c) consummation or death, which is the fulfillment or performance of the terms
agreed upon in the contract.

In the present case, when Mr. Del Rosario of Viva met Mr. Lopez of ABS-CBN on 2
April 1992 to discuss the package of films, said package of 104 VIVA films was VIVA’s offer to
ABS-CBN to enter into a new Film Exhibition Agreement. But ABS-CBN, sent through Ms.
Concio, counter-proposal in the form a draft contract proposing exhibition of 53 films for a
consideration of P35 million. This counter-proposal could be nothing less than the counter-offer
of Mr. Lopez during his conference with Del Rosario at Tamarind Grill Restaurant. Clearly,
there was no acceptance of VIVA’s offer, for it was met by a counter-offer which substantially
varied the terms of the offer.

Furthermore, ABS-CBN made no acceptance of VIVA’s offer hence, they underwent

period of bargaining. ABS-CBN then formalized its counter-proposals or counter-offer in a draft
contract. VIVA through its Board of Directors, rejected such counter-offer. Even if it be
conceded arguendo that Del Rosario had accepted the counter-offer, the acceptance did not bind
VIVA, as there was no proof whatsoever that Del Rosario had the specific authority to do so.

The instant petition was GRANTED.

DELA CRUZ V. SISON

G.R. No. 163770 February 17, 2005

FACTS:

Epifania Dela Cruz alleged that in 1992, she discovered that her rice land in has been
transferred and registered in the name of her nephew, Eduardo C. Sison, without her knowledge
and consent, purportedly on the strength of a Deed of Sale she executed.
Epifania then filed a complaint praying to declare the deed of sale null and void.  She alleged
that Eduardo tricked her into signing the Deed of Sale, by inserting the deed among the
documents she signed pertaining to the transfer of her residential land, house and camarin, in
favor of Demetrio, her foster child and the brother of Eduardo.
Respondents, spouses Eduardo and Eufemia Sison denied that they employed fraud or trickery in
the execution of the Deed of Sale.  They claimed that they purchased the property from Epifania
for P20 000 and that the deed was duly notarized, complied with all requisites for its registration,
as evidenced by the Investigation Report by the Department of Agrarian Reform, Affidavit of
Seller/Transferor, Affidavit of Buyer/Transferee, Certification issued by the Provincial Agrarian
Reform Officer, Letter for the Secretary of Agrarian Reform, Certificate Authorizing Payment of
Capital Gains Tax, and the payment of the registration fees.  Some of these documents even bore
the signature of Epifania which only proves that she agreed to the transfer of the property.

ISSUE:

1.) Whether fraud attended the execution of a contract

2.) Whether the deed of absolute sale is valid.

RULING:

1.) A comparison of the deed of sale in favor of Demetrio and the deed of sale in favor Eduardo,
draws out the conclusion that there was no trickery employed.  One can readily see that the first
deed of sale is in all significant respects different from the second deed of sale.  A casual perusal,
even by someone as old as Epifania, would enable one to easily spot the differences.  Epifania
could not have failed to miss them. 
The Court is bound by the appellate court’s findings, unless they are contrary to those of the trial
court, in which case we may wade into the factual dispute to settle it with finality.

2.) After a careful perusal of the records, we sustain the Court of Appeals’ ruling that the Deed of
Absolute Sale dated November 24, 1989 is valid.
There being no evidence adduced to support her bare allegations, thus, Epifania failed to
satisfactorily establish her inability to read and understand the English language. 
Although Epifania was 79 years old at the time of the execution of the assailed contract, her age
did not impair her mental faculties as to prevent her from properly and intelligently protecting
her rights.  Even at 83 years, she exhibited mental astuteness when she testified in court.  It is,
therefore, inconceivable for her to sign the assailed documents without ascertaining their
contents, especially if, as she alleges, she did not direct Eduardo to prepare the same.

RIZALINO, substituted by his heirs, JOSEFINA, ROLANDO and FERNANDO,

ERNESTO, LEONORA, BIBIANO, JR., LIBRADO and ENRIQUETA, all surnamed
OESMER, Petitioners, vs. PARAISO DEVELOPMENT CORPORATION, Respondent.
G.R. No. 157493             February 5, 2007

FACTS:
Petitioner Ernesto to meet with a certain Sotero Lee, President of respondent Paraiso
Development Corporation, at Otani Hotel in Manila. The said meeting was for the purpose of
brokering the sale of petitioners’ properties to respondent corporation.
A Contract to Sell was drafted. A check in the amount of P100,000.00, payable to Ernesto, was
given as option money. Sometime thereafter, Rizalino, Leonora, Bibiano, Jr., and Librado also
signed the said Contract to Sell. However, two of the brothers, Adolfo and Jesus, did not sign the
document. However petitioners informed respondent corporation about their intention to rescind
the Contract to Sell and to return the amount of Php 100,000.00. respondent did not respond to
the aforesaid letter. Petitioners, therefore, filed a complaint for Declaration of Nullity or for
Annulment of Option Agreement or Contract to Sell with damages.
The RTC rendered its decision in favor to respondent. CA affirmed the decision of RTC with
modification.

ISSUE:

Whether ot not Contract to Sell is void considering that one of the heirs did not sign it as
to indicate its consent to be bound by its terms.

RULING:

It is well-settled that contracts are perfected by mere consent, upon the acceptance by the
offeree of the offer made by the offeror. From that moment, the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and law. To produce a
contract, the acceptance must not qualify the terms of the offer. However, the acceptance may be
express or implied. For a contract to arise, the acceptance must be made known to the offeror.
Accordingly, the acceptance can be withdrawn or revoked before it is made known to the offeror.
In the case at bar, the Contract to Sell was perfected when the petitioners consented to the sale to
the respondent of their shares in the subject parcels of land by affixing their signatures on the
said contract. Such signatures show their acceptance of what has been stipulated in the Contract
to Sell and such acceptance was made known to respondent corporation when the duplicate copy
of the Contract to Sell was returned to the latter bearing petitioners’ signatures

FRANCISCO VS HERRERA
GR No. 139982. November 21, 2002

FACTS:

Eligio Herrera, Sr., father of the respondent, was the owner of two parcels of land. At
two incidents on 1991, petitioner bought the two parcels of land for Php1,000,000.00 and
PhP750,000.00. Contending that the purchase price was inadequate, the children of Eligio, Sr.,
namely, Josefina Cavettany, Eligio Herrera, Jr., and respondent Pastor Herrera tried to negotiate
for an increase of the purchase price. When petitioner refused respondents then filed a complaint
for annulment of sale on the ground that at the time of sale, Eligio Sr., was already afflicted with
senile dementia, characterized by deteriorating mental and physical condition including loss of
memory. Both the RTC and CA decided in favor of respondent.

ISSUE:

Is the disputed contract void and therefore unenforceable?

RULING:

In the present case, it was established that the vendor Eligio, Sr., entered into an
agreement with petitioner, but that the former’s capacity to consent was vitiated by senile
dementia. Hence, the assailed contracts are not void or inexistent per se; rather, these are
contracts that are valid and binding unless annulled through a proper action filed in court
seasonably.
An annullable contract may be rendered perfectly valid by ratification which can be
express or implied. Implied ratification may take the form of accepting and retaining the benefit
of a contract. This is what happened in this case. Respondent negotiated for the increase of the
purchase price while receiving the installment payments.
One cannot negotiate for an increase in the price in one breath and in the same breath
contend that the contract of sale is void.

BIENVENIDO M. CASIÑO, JR. versus THE COURT OF APPEALS and

OCTAGON REALTY DEVELOPMENT CORPORATION
G.R. No. 133803 2005 September 16

FACTS:

In its complaint, respondent alleges that on December 22, 1989, it entered into a
contract with petitioner for the supply and installation by the latter of narra wood parquet (kiln
dried) to the Manila Luxury Condominium Project, of which respondent is the developer, for a
total price of P1,158,487.00; that the contract stipulated that full delivery by petitioner of labor
and materials was in May 1990; that in accordance with the terms of payment in the contract,
respondent paid to petitioner the amount P463,394.50, representing 40% of the total contract
price; that after delivering only 26,727.02 sq. ft. of wood parquet materials, petitioner
incurred in delay in the delivery of the remainder of 34,245.98 sq. ft.; that petitioner
misrepresented to respondent that he is qualified to do the work contracted when in truth and in
fact he was not and, furthermore, he lacked the necessary funds to execute the work as
he was totally dependent on the funds advanced to him by respondent; that due to petitioner’s
unlawful and malicious refusal to comply with its obligations, respondent incurred actual
damages in the amount of P912,452.39 representing estimated loss on the new price,
unliquidated damages and cost of money; that in order to minimize losses, the respondent
contracted the services of Hilvano Quality Parquet and Sanding Services to complete the
petitioner’s unfinished work, respondent thereby agreeing to pay the latter P1,198,609.30.

ISSUE:
Whether or not the rescission of the contract by the private respondent is valid.

RULING:

Under the contract, petitioner and respondent had respective obligations, i.e., the
former to supply and deliver the contracted volume of narra wood parquet materials and install
the same at respondent’s condominium project by May, 1990, and the latter, to pay for said
materials in accordance with the terms of payment set out under the parties’ agreement. But
while respondent was able to fulfill that which is incumbent upon it by making a downpayment
representing 40% of the agreed price upon the signing of the contract and even paid the first
billing of petitioner, the latter failed to comply with his contractual commitment. For, after
delivering only less than one-half of the contracted materials, petitioner failed, by the end of the
agreed period, to deliver and install the remainder despite demands for him to do so. Thus, it is
petitioner who breached the contract. The petitioner therefore, has failed to comply with his
prestations under his contract with respondent, the latter is vested by law with the right to rescind
the parties’ agreement, conformably with Article 1191 of the Civil Code.

However, the right to rescind a contract for non-performance of its stipulations is

not absolute. The general rule is that rescission of a contract will not be permitted for a slight or
casual breach, but only for such substantial and fundamental violations as would defeat the very
object of the parties in making the agreement. Contrary to petitioner’s asseveration, the breach he
committed cannot, by any measure, be considered as “slight or casual”. For petitioner’s failure to
make complete delivery and installation way beyond the time stipulated despite respondent’s
demands, is doubtless a substantial and fundamental breach, more so when viewed in the light of
the large amount of money respondent had to pay another contractor to complete petitioner’s
unfinished work.

Likewise, contrary to petitioner’s claim, it cannot be said that he had no inkling

whatsoever of respondent’s recourse to rescission. Petitioner cannot feign ignorance of
respondent’s intention to rescind, fully aware, as he was, of his non-compliance with what was
incumbent upon him, and not to mention the several letters respondent sent to him demanding
compliance with his obligation.

FERNANDO CARRASCOSO JR. v. COURT OF APPEALS

G.R. No. 123672 & G. R. No. 164489 December 14, 2005

FACTS:

On February 15, 1972, at a special meeting of El Dorado’s Board of Directors, a

Resolution was passed authorizing Feliciano Leviste, then President of El Dorado, to negotiate
the sale of the property and sign all documents and contracts bearing thereon. El Dorado, through
Feliciano Leviste, sold the property to Fernando O. Carrascoso, Jr. Under the Deed of Sale,
Carrascoso was to pay the full amount of the purchase price on March 23, 1975. On March 24,
1972, Carrascoso and his wife Marlene executed a Real Estate Mortgage] over the property in
favor of Home Savings Bank (HSB) to secure a loan in the amount of P1,000,000.00. Of this
amount, P290,000.00 was paid to Philippine National Bank to release the mortgage priorly
constituted on the property and P210,000.00 was paid to El Dorado pursuant to the terms and
conditions of the Deed of Sale.

On May 18, 1972, the real estate mortgage in favor of HSB was amended to
include an additional three year loan of P70,000.00 as requested by the spouses Carrascoso.
However, the 3-year period for Carrascoso to fully pay for the property on March 23, 1975
passed without him having complied therewith. In the meantime, on July 11, 1975, Carrascoso
and the Philippine Long Distance Telephone Company (PLDT), through its President Ramon
Cojuangco, executed an Agreement to Buy and Sell whereby the former agreed to sell 1,000
hectares of the property to the latter at a consideration of P3,000.00 per hectare or a total of
P3,000,000.00.
Lauro Leviste, a stockholder and member of the Board of Directors of El Dorado,
called the attention of the Board to Carrascoso’s failure to pay the balance of the purchase price
of the property amounting to P1,300,000.00. Lauro’s desire to rescind the sale was reiterated in
two other letters addressed to the Board. Jose P. Leviste, as President of El Dorado, later sent a
letter of February 21, 1977 to Carrascoso informing him that in view of his failure to pay the
balance of the purchase price of the property, El Dorado was seeking the rescission of the March
23, 1972 Deed of Sale of Real Property. For the failure of Carrascoso to give his reply, Lauro
and El Dorado finally filed a complaint for rescission of the Deed of Sale. They also sought the
cancellation of TCT No. T-6055 in the name of Carrascoso and the revival of TCT No. T-93 in
the name of El Dorado, free from any liens and encumbrances.

ISSUE:
Whether or not the rescission is valid.

RULING:
The right of rescission of a party to an obligation under Article 1191 is predicated on a
breach of faith by the other party who violates the reciprocity between them. A contract of sale is
a reciprocal obligation. The seller obligates itself to transfer the ownership of and deliver a
determinate thing, and the buyer obligates itself to pay therefor a price certain in money or its
equivalent. The non-payment of the price by the buyer is a resolutory condition which
extinguishes the transaction that for a time existed, and discharges the obligations created
thereunder. Such failure to pay the price in the manner prescribed by the contract of sale entitles
the unpaid seller to sue for collection or to rescind the contract.

In the case at bar, El Dorado already performed its obligation through the execution of
the March 23, 1972 Deed of Sale of Real Property which effectively transferred ownership of the
property to Carrascoso. The latter, on the other hand, failed to perform his correlative obligation
of paying in full the contract price in the manner and within the period agreed upon. The terms of
the Deed are clear and unequivocal: Carrascoso was to pay the balance of the purchase price of
the property amounting to P1,300,000.00 plus interest thereon at the rate of 10% per annum
within a period of three (3) years from the signing of the contract on March 23, 1972. When Jose
Leviste informed him that El Dorado was seeking rescission of the contract by letter of February
21, 1977, the period given to him within which to fully satisfy his obligation had long lapsed.

JESPAJO VS CA
GR No. 113626 September 27, 2002

FACTS:

On February 1, 1985, said corporation, represented by its President, Jesus L. Uy, entered
into separate contracts of lease with Tan Te Gutierrez and Co Tong. Pursuant to the contract, Tan
Te occupied room No. 217 of the subject building at a monthly rent of P847.00 while Co Teng
occupied the Penthouse at a monthly rent of P910.00. The terms of the contract among others are
the following:
“PERIOD OF LEASE- The lease period shall be effective as of February 1, 1985
and shall continue for an indefinite period provided the lessee is up-to-date in the payment of his
monthly rentals. The LESSEE may, at his option, terminate this contract any time by giving
sixty (60) days prior written notice of termination to the LESSOR.

However, violation of any of the terms and conditions of this contract shall be a
sufficient ground for termination thereof by the LESSOR.”

The private respondents religiously paid the monthly rental fees. On January 2, 1990, the
lessor corporation sent a written notice to the lessees informing them of the formers’ intention to
increase the monthly rentals on the occupied premises to P3,500.00 monthly effective February
1, 1990. The private respondents refused payment. An ejectment case was filed against them in
court.

ISSUE:

Is the stipulation a potestative period and hence void?

RULING:

The lease contract between petitioner and respondents is with a period subject to a
resolutory condition. The wording of the agreement is unequivocal. The condition imposed in
order that the contract shall remain effective is that the lessee is up-to-date in his monthly
payments. It is undisputed that the lessees Gutierrez and Co Tong religiously paid their rent at
the increasing rate of 20% annually. The agreement between the lessor and the lessees are
therefore still subsisting, with the original terms and conditions agreed upon, when the petitioner
unilaterally increased the rental payment to more than 20% or P3,500.00 a month.
 The petitioner is estopped from backing out of their representations in the contract with
respondent, that is, they may not renege on their own acts and representations, to the prejudice of
the respondents who relied on them.