IRINGAN V CA

Facts:
 Alfonso Iringan (petitioner) and Antonio Palao (respondent) entered into a contract of
sale for a portion of land on March 22, 1985.
 The purchase price was to be paid in three installments.
 Iringan failed to pay the full amount of the second installment.
 Palao wrote a letter informing Iringan that he considered the contract rescinded.
 Iringan did not oppose the rescission but proposed for reimbursement of the amount he
had already paid or for Palao to sell him an equivalent portion of the land.
 Palao did not agree to either proposal.
 On July 1, 1991, Palao filed a complaint for Judicial Confirmation of Rescission and
Damages against Iringan to compel him to formalize the revocation and rescission of the
contract in a public document and to have a judicial confirmation of the rescission.
 Iringan opposed the rescission and argued that Palao's proper remedy was to collect the
balance of the purchase price.
 The trial court ruled in favor of Palao, affirming the rescission of the contract and
ordering Iringan to pay moral and exemplary damages and attorney's fees.
 The Court of Appeals affirmed the decision of the trial court but deleted the award of
attorney's fees.
Issue:
1. Whether the contract of sale was validly rescinded.
2. Whether the award of moral and exemplary damages is proper.
Ruling:
1. The contract of sale was not validly rescinded through the letter written by Palao.
2. The award of moral and exemplary damages is proper.
Ratio:
1. A judicial or notarial act is required by law for a valid rescission to take place.
 The letter written by Palao declaring his intention to rescind did not meet this
requirement.
 However, Palao had complied with the requirement of the law for a judicial decree of
rescission when he filed an action for Judicial Confirmation of Rescission and Damages.
 Therefore, the contract of sale between the parties can still be validly rescinded.
2. The award of moral and exemplary damages is proper.
 Iringan did not substantiate his claim that he was ready and willing to pay Palao.
 The Court believed that his claim was an afterthought intended to evade the consequence
of his breach.
 Therefore, the Court affirmed the award of moral and exemplary damages.
Conclusion:
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, which
affirmed the rescission of the contract of sale and awarded moral and exemplary damages to
Palao. The Court emphasized that a judicial or notarial act is necessary for a valid rescission to
take place, and the mere act of the vendor declaring the rescission is not sufficient.
NISSAN CAR V LICA
Parties Involved and Lease Contract Details
 Nissan Car Lease Philippines, Inc. (NCLPI) and Lica Management, Inc. (LMI) are the
parties involved in the dispute.
 The dispute revolves around a lease contract for a property in Makati City.
 The lease contract had a term of ten years.
NCLPI's Failure to Pay Rent and Accumulated Arrearages
 NCLPI became delinquent in paying the monthly rent and accumulated rental arrearages.
 NCLPI and LMI verbally agreed to convert the arrearages into a debt to be covered by a
promissory note and postdated checks.
 NCLPI delivered the postdated checks but failed to sign the promissory note and pay the
checks for several months.
Termination of Lease Contract by LMI
 LMI sent a letter to NCLPI terminating the lease contract due to non-payment of rentals
and demanded payment of the arrearages and vacation of the premises.
NCLPI's Agreement with Proton Pilipinas, Inc.
 Proton Pilipinas, Inc. (Proton) requested to use the premises temporarily as a display
center for Audi cars.
 NCLPI agreed to this request and entered into a Memorandum of Agreement with Proton.
 However, NCLPI was later informed by LMI that it had entered into a lease contract with
Proton for the same premises.
Trial Court's Ruling
 The trial court ruled in favor of LMI and Proton.
 The court found that NCLPI breached the lease contract by failing to pay rent and
subleasing the premises without LMI's consent.
 The court ordered NCLPI to pay the unpaid rentals, awarded damages to LMI and Proton,
and denied NCLPI's claim for damages.
Court of Appeals' Decision
 The Court of Appeals affirmed the trial court's decision with modifications.
 The amount of damages awarded was reduced, and the amount of unpaid rentals was
clarified.
NCLPI's Petition to the Supreme Court
 NCLPI filed a petition for review with the Supreme Court.
 The petition raised questions regarding the validity of the extrajudicial rescission of the
lease contract, the dismissal of NCLPI's claims, and the interest to be paid on a security
deposit.
Supreme Court's Decision
 The Supreme Court denied NCLPI's petition.
 The court upheld the extrajudicial rescission of the lease contract by LMI.
 The awards of damages and unpaid rentals were affirmed.
 The court also ordered the return of the security deposit with interest.

PEZA V PHILIHINO
Facts:
  The case involves a dispute between the Philippine Economic Zone Authority (PEZA)
and Pilhino Sales Corporation (Pilhino) over the delivery of fire trucks.
 PEZA published an invitation to bid for the acquisition of two fire truck units.
 Three companies participated in the bidding, and Pilhino was awarded the contract.
 The contract stipulated that Pilhino was to deliver the fire trucks within 45 days of
receiving a purchase order from PEZA, with a penalty of 1/10 of 1% of the total contract
price for each day of delay.
 Pilhino failed to deliver the trucks as agreed, prompting PEZA to file a complaint for
rescission of contract and damages.
Issue:
 Whether the contractually stipulated liquidated damages can still be awarded despite the
rescission of the contract.
Ruling:
 The Supreme Court ruled that the rescission of the contract does not negate the liability
for liquidated damages.
 The court explained that the options of rescission and specific performance under Article
1191 of the Civil Code come with the payment of damages in either case.
 The parties, by their own free will, agreed on the liquidated damages as the consequence
of a breach, and the court must uphold their agreement.
Ratio:
 The court emphasized the importance of upholding the parties' agreement and the need to
make non-compliance more burdensome than compliance.
 The court stated that the options of rescission and specific performance under Article
1191 of the Civil Code come with the payment of damages in either case.
 The court found that the contractually stipulated liquidated damages were agreed upon by
the parties and should be enforced.
 The court rejected Pilhino's attempt to rectify the situation by offering new specifications
for the fire trucks, as it came too late and was inconsequential.
 The court reinstated the Regional Trial Court's award of liquidated damages.
Conclusion:
 The Supreme Court upheld the contractual stipulation on liquidated damages and ordered
Pilhino to pay the original amount of damages.
 The court emphasized the importance of upholding the parties' agreement and the need to
make non-compliance more burdensome than compliance.

GOTESCO V SPS FAJARDO

Facts:
 Contract to sell between Gotesco Properties, Inc. (GPI) and spouses Eugenio and
Angelina Fajardo (Sps. Fajardo) for the purchase of a 100-square meter lot in Evergreen
Executive Village.
 Sps. Fajardo agreed to pay the purchase price within a 10-year period.
 GPI agreed to execute a final deed of sale upon full payment.
 GPI failed to execute the deed and deliver the title and possession of the lot despite full
payment by Sps. Fajardo.
 Sps. Fajardo filed a complaint for specific performance or rescission of the contract with
damages against GPI and its board of directors.
Issue:
 Whether GPI's failure to fulfill its obligations under the contract justifies the rescission of
the contract and the awarding of damages to Sps. Fajardo.
Ruling:
 The court ruled in favor of Sps. Fajardo and affirmed the rescission of the contract and
the awarding of damages.
 GPI's failure to execute the deed and deliver the title and possession of the lot constituted
a substantial breach of the contract.
 Sps. Fajardo had the right to rescind the contract under Article 1191 of the Civil Code.
 GPI was ordered to refund the purchase price to Sps. Fajardo at the prevailing market
value of the property.
 The court awarded moral and exemplary damages, attorney's fees, and costs of suit to
Sps. Fajardo.
 The individual petitioners were absolved from personal liability due to lack of evidence
of malice or bad faith.
Ratio:
 In a contract to sell, the seller's obligation to deliver the title is simultaneous and
reciprocal to the buyer's full payment of the purchase price.
 GPI's failure to fulfill its obligations despite full payment by Sps. Fajardo constituted a
substantial breach of the contract, justifying its rescission.
 The principle of mutual restitution required GPI to return the purchase price to Sps.
Fajardo.
 Damages and attorney's fees were awarded to compensate Sps. Fajardo for the anxiety
and inconvenience caused by GPI's non-compliance.
 The individual petitioners were absolved from personal liability due to lack of evidence
of malice or bad faith.

GONZALES VS THE HEIRS OF THOMAS AND PAULA CRUZ, GR No. 131784

September 16, 1999
FACTS:
On December 1, 1983, Paula Año Cruz together with the plaintiffs heirs of Thomas and
Paula Cruz entered into a contract of lease with the defendant, Felix L. Gonzales of a half portion
of a land containing an area of 12 hectares, more or less, and an accretion of 2 hectares, more or
less, situated in Rodriguez Town, Province of Rizal’ and covered by Transfer Certificate of Title
No. 12111. As stipulated therein:
Paragraph 9 - The LESSORS hereby commit themselves and shall undertake to
obtain a separate and distinct T.C.T. over the herein leased portion to the LESSEE within a
reasonable period of time which shall not in any case exceed four (4) years, after which a new
Contract shall be executed by the herein parties which shall be the same in all respects with this
Contract of Lease/Purchase insofar as the terms and conditions are concerned.
Under the contract, Gonzales paid the rental fees but did not choose to exercise the option
of paying the one million purchase price. A letter was issued by one of the heirs to rescind the
said contract following breach and ordered Gonzales to vacate the premises within ten days.
Gonzales did no vacate. A few days later Paula Cruz died. A case was launched in Court by the
heirs of Paula Cruz.
ISSUE:
 How must paragraph nine of the contract be interpreted in enforcing the contract of lease?
RULING:
If a stipulation in a contract admits of several meanings, it shall be understood as bearing
that import most adequate to render it effectual. An obligation cannot be enforced unless the
plaintiff has fulfilled the condition upon which it is premised. The ninth provision was intended
to ensure that respondents would have a valid title over the specific portion they were selling to
petitioner. Only after the title is assured may the obligation to buy the land and to pay the sums
stated in the Contract be enforced within the period stipulated. Verily, the petitioner’s obligation
to purchase has not yet ripened and cannot be enforced until and unless respondents can prove
their title to the property subject of the Contract. The ninth clause was the condition precedent of
the contract.
Respondents cannot rescind the contract, because they have not caused the transfer of the
TCT to their names, which is a condition precedent to petitioner’s obligation. This Court has
held that “there can be no rescission (or more properly, resolution) of an obligation as yet non-
existent, because the suspensive condition has not happened.”

UNIVERSAL FOODS CORP V CA

ACTS:
This is a petition for certiorari by the UFC against the CA decision of February 13, 1968
declaring the Bill of Assignment rescinded, ordering the petitioner to return to Magdalo
Francisco, Sr his Mafran sauce trademark and to pay his monthly salary of P300.00 from Dec. 1,
1960 until the return to him of said trademark and formula.
In 1938, Francisco, Sr. discovered a formula for the manufacture of a food seasoning derived
from banana fruits popularly known as “Mafran Sauce.” In May 1960, Francisco, Sr. entered into
a contract with UFC stipulation among others that he be the Chief Chemist with a salary of P300
a month. Francisco, Sr. kept the secret materials to himself. Tirso Reyes, President and General
Manager, requested him to permit 1 or 2 members of his family to observe the preparation of the
“Mafran Sauce” but was denied. However, Reyes forced Francisco, Sr. to accede to said request.
Thereafter, however, due to the alleged scarcity and high prices of raw materials, a
Memorandum duly approved by Reyes that only Supervisor Ricardo Francisco should be
retained in the factory and that the salary of Francisco Sr. should be stopped for the time being
until the corporation should resume its operation was issued. A memorandum was issued to
Victoriano Francisco ordering him to report to the factory and produce "Mafran Sauce” and
another one was issued to recall all daily employees who are connected in the production of
“Mafran Sauce.” Another memorandum was issued instructing the production of the “Mafran
Sauce” and Porky Pops in full swing starting January 1961. Due to these successive memoranda,
without Francisco Sr. being recalled back to work, the latter filed the present action.
ISSUE:
Whether or not petitioner’s contention that Magdalo Francisco is not entitled to rescission
valid?
HELD:
No. The petitioner’s contention that Magdalo’s petition for rescission should be denied
because under Art. 1383 of the Civil Code, rescission cannot be demanded except when the party
suffering damage has no other legal means to obtain reparation, was of no merit since it is
predicated on a failure to distinguish between a rescission for a breach of contract under Art.
1191 and a recission by reason of lesion or economic prejudice under Art. 1381. The case at bar
was a case of reciprocal obligation. The petitioner corporation violated the Bill of Assignment by
terminating the services Magdalo Francisco, Sr. without lawful and justifiable cause. Thus, apart
from the legal principle that the option to demand performance or ask for rescission of a contract
belongs to the injured party, the fact remains that the respondents-appellees had no alternative
but to file the present action for rescission and damages.

SOLANTE V COA
Facts:
 Jose Henry dela Cruz was terminated from employment by Baliwag Transit, Inc. for
driving his bus without authority and under the influence of liquor, resulting in severe
damage to property.
 The petitioner filed a petition seeking to reverse the decision of the Court of Appeals
(CA) which upheld his termination.
Issue:
 Whether the termination of Jose Henry dela Cruz by Baliwag Transit, Inc. is valid.
Ruling:
 The Supreme Court denied the petition and affirmed the decision of the Court of Appeals.
 The CA correctly ruled that the petitioner's act of driving his bus without authority and
under the influence of liquor, resulting in severe damage to property, constitutes serious
misconduct, which is a just cause for his dismissal.
Ratio:
 Misconduct is improper or wrongful conduct, the transgression of some established and
definite rule of action.
 The petitioner's act of driving without authority and under the influence of liquor clearly
violated the rules and regulations governing his employment.
 Misconduct to be considered serious must be willful in character and imply wrongful
intent, not mere error in judgment.
 The petitioner's actions were deemed serious misconduct, justifying his termination from
employment.
 The Court upheld the decision of the Court of Appeals, finding that the petitioner failed
to show any reversible error in the CA's ruling.

CENTRAL PHILIPPINES V CA
When a person donates land to another on the condition that a construction be made, the
condition is akin to a resolutory (not suspensive) one. The non-compliance to the condition
extinguishes the right to the donation, but it need not occur first in order for the donation to be
effected and validated.

FACTS:
In 1939, the late Don Ramon Lopez was a member of the board of trustees of Central Philippine
University when he executed a donation to the school, stating that the land must be for exclusive
use of a medical college. 50 years later, The heirs of Ramon Lopez filed an action to annul the
donation, stating the failure of the school to construct the medical college over the land. RTC
ruled in favor of respondents, which the CA affirmed.
ISSUE: Whether there is a resolutory condition

RULING:
The donation was an onerous one, where failure of the school to construct a medical college
would give the heirs the power to revoke the donation, reverting the property back to the heirs of
the donor. It is therefore a resolutory condition. Although, the period was not stated, and the
courts should have fixed a period, in this case, 50 years has lapsed since the donation was
executed, thus fixing a period would serve no purpose and the property must already be reverted
back.

Dissenting Opinion:
Davide considered the donation as "modal" where the obligations are unconditional, and the
fulfillment, performance, existence or extinguishment is not dependent on any future and
uncertain event. It is more accurate to say that the condition stated is not a resolutory condition,
rather a obligation itself, being an onerous donation. Since this is an onerous donation, it has to
comply with the rules on Oblicon, and therefore the courts should have fixed a period.