You are on page 1of 2


L-42283 March 18, 198 5 FACTS: Ursula Torres Calasanz and Tomas Calasanz entered into a contract to sell a piec e of land with Buenaventura Angeles and Teofila Juani for the amount of P3,920.0 0 plus 7% interest per annum. Angeles & Juani made a down payment of P392.00 upo n the execution of the contract. They promised to pay the balance in monthly ins talments of P 41.20 until fully paid, the instalments being due and payable on t he 19th day of each month. Angeles & Juani paid the monthly instalments until Ju ly1966, when their aggregate payment already amounted toP4,533.38. On numerous o ccasions, the defendants (Calsanz) accepted and received delayed instalment paym ents from the plaintiffs (Angeles & Juani). ? In 1966, the defendants-appellants wrote the plaintiffs a letter requesting the remittance of past due accounts. Defendants cancelled the said contract because the plaintiffs failed to meet subsequent payments. The plaintiffs' letter with t heir plea for reconsideration of the said cancellation was denied by the defenda nts. The plaintiffs filed Civil Case to compel the defendants to execute in their fav or the final deed of sale alleging inter alia that after computing all subsequen t payments for the land in question, they found out that they have already paid the total amount of P4,533.38 including interests, realty taxes and incidental e xpenses for the registration and transfer of the land. The defendants alleged that the plaintiffs violated par. 6 of the contract to se ll when they failed to pay and/or offer to pay the monthly instalments correspon ding to the month of August1966 for more than 5 months, thereby constraining the defendants-appellants to cancel the said contract. ISSUE : WON the contract to sell has been validly cancelled by the defendants? HELD : NO. Article 1191 is explicit. In reciprocal obligations, either party the righ t to rescind the contract upon the failure of the other to perform the obligatio n assumed thereunder. Moreover, there is nothing in the law that prohibits the p arties from entering into an agreement that violation of the terms of the contra ct would cause its cancellation even without court intervention. Well settled is , however, the rule that a judicial action for the rescission of a contract is n ot necessary where the contract provides that it may be revoked and cancelled fo r violation of any of its terms and conditions. The rule is that it is not alway s necessary for the injured party to resort to court for rescission of the contr act when the contract itself provides that it may be rescinded for violation of its terms and conditions, was qualified by this Court in University of the Phili ppines v. De los Angeles: Of course, it must be understood that the act of a part y in treating a contract as cancelled or resolved on account of infractions by t he other contracting party must be made known to the other and is always provisi onal, being ever subject to scrutiny and review by the proper court. If the othe r party denies that rescission is justified, it is free to resort to judicial ac tion in its own behalf, and bring the matter to court. Then, should the court, a fter 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 re solution will be affirmed, and the consequent indemnity awarded to the party pre judiced. In other words, the party who deems the contract violated may consider it resolv ed or rescinded, and act accordingly, without previous court action, but it proc

eeds at its own risk. For it is only the final judgment of the corresponding cou rt that will conclusively and finally settle whether the action taken was or was not correct in law. The right to rescind the contract for non-performance of one of its stipulations , therefore, is not absolute. The general rule is that rescission of a contract will not be permitted for a sl ight or casual breach, but only for such substantial and fundamental breach as w ould defeat the very object of the parties in making the agreement. The breach of the contract adverted to by the defendants is so slight and casua l when we consider that apart from the initial down payment of P392.00 the plain tiffs had already paid the monthly instalments for a period of almost 9 years. I n other words, in only a short time, the entire obligation would have been paid. To sanction the rescission made by the defendants-appellants will work injustic e to the plaintiffs and would unjustly enrich the defendants. We agree with the plaintiffs that when the defendants, instead of availing of their alleged right to rescind, accepted and received delayed payments of instalments, though the pl aintiffs have been in arrears beyond the grace period mentioned in paragraph 6 o f the contract, the defendants waived and are now estopped from exercising their alleged right of rescission. Plaintiffs contend that the contract herein is a c ontract of adhesion. We agree. The contract to sell entered into by the parties has some characteristics of a contract of adhesion. The defendants drafted and p repared the contract. The plaintiffs, eager to acquire a lot upon which they cou ld build a home, affixed their signatures and assented to the terms and conditio ns of the contract. They had no opportunity to neither question nor change any o f the terms of the agreement. It was offered to them on a "take it or leave it" basis. While generally, stipulations in a contract come about after deliberate d rafting by the parties thereto, there are certain contracts almost all the provi sions of which have been drafted only by one party, usually a corporation. Such contracts are called contracts of adhesion, because the only participation of th e party is the signing of his signature or his "adhesion" thereto. Insurance con tracts, bills of lading, contracts of sale of lots on the instalment plan fall i nto this category. The contract to sell, being a contract of adhesion, must be c onstrued against the party causing it.