BORROMEO VS.

FRANCO 5 PHIL 49 FACTS: On April 19, 1902, the Francos executed a contract to sell their property to Borromeo wherein the latter was given six months from the execution of the instrument to arrange and complete the documents and papers relating to the said property. On January 7, 1903, Borromeo filed a complaint praying that defendants be compelled to sell to him the property in question under the terms of the contract. He had already taken steps to complete the documents and papers relating to the property but he was unable to complete it. The Francos answered and asked that the complaint be dismissed for Borromeo failed to comply with the condition of completing the documents and papers related to the property. ISSUE: Can the petitioner demand fulfillment from the respondent? RULING: The Court held that the contract in question is a bilateral one containing mutual obligations and the fulfillment of which may be demanded. The failure of the petitioner to complete the documents and papers related to the property is not an essential part of the contract and cannot be an obstacle for the fulfillment thereof. The obligation to buy the property is correlative with the obligation to sell it. The obligation of Borromeo to perfect the papers of the

property is not correlative with the obligation to sell the property. These obligations do not arise from the same cause. They create no reciprocal rights between the contracting parties; so that the failure to comply with this stipulation does not give the defendants the right to cancel the obligation which they imposed upon themselves in accordance with Article 1191 of the Civil Code, since no real juridical bilaterality or reciprocity existed between the two obligations. One obligation is entirely independent of the other.

UNIVERSAL VS. CA 33 SCRA 1

FOOD CORPORATION

positions are permanent in nature. In line with the terms and conditions of the Bill of Assignment, Magdalo Francisco was appointed Chief Chemist with a salary of P300.00 a month. Magdalo Francisco kept the formula of the Mafran sauce secret to himself. Thereafter, however, due to the alleged scarcity and high prices of raw materials, on November 28, 1960, Secretary-Treasurer Ciriaco L. de Guzman of UFC issued a Memorandum duly approved by the President and General Manager Tirso T. Reyes that only Supervisor Ricardo Francisco should be retained in the factory and that the salary of plaintiff Magdalo V. Francisco, Sr., should be stopped for the time being until the corporation should resume its operation. On December 3, 1960, President and General Manager Tirso T. Reyes, issued a memorandum to Victoriano Francisco ordering him to report to the factory and produce "Mafran Sauce" at the rate of not less than 100 cases a day so as to cope with the orders of the corporation's various distributors and dealers, and with instructions to take only the necessary daily employees without employing permanent employees. Again, on December 6, 1961, another memorandum was issued by the same President and General Manager instructing the Assistant Chief Chemist Ricardo Francisco, to recall all daily employees who are connected in the production of Mafran Sauce and also some additional daily employees for the production of Porky Pops. On December 29, 1960, another memorandum was issued by the President and General Manager instructing Ricardo Francisco, as Chief Chemist, and Porfirio Zarraga, as Acting

FACTS: This is a petition for certiorari by the UFC against the CA decision of February 13, 1968 declaring the BILL OF ASSIGNMENT rescinded, ordering UFC to return to Magdalo Francisco 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, plaintiff Magdalo V. Francisco, Sr. discovered a formula for the manufacture of a food seasoning (sauce) derived from banana fruits popularly known as MAFRAN sauce. It was used commercially since 1942, and in the same year plaintiff registered his trademark in his name as owner and inventor with the Bureau of Patents. However, due to lack of sufficient capital to finance the expansion of the business, in 1960, said plaintiff secured the financial assistance of Tirso T. Reyes who, after a series of negotiations, formed with others defendant Universal Food Corporation eventually leading to the execution on May 11, 1960 of the aforequoted "Bill of Assignment" (Exhibit A or 1). On May 31, 1960, Magdalo Francisco entered into contract with UFC stipulating among other things that he be the Chief Chemist and Second VicePresident of UFC and shall have absolute control and supervision over the laboratory assistants and personnel and in the purchase and safekeeping of the chemicals used in the preparation of said Mafran sauce and that said

Superintendent, to produce Mafran Sauce and Porky Pops in full swing starting January 2, 1961 with further instructions to hire daily laborers in order to cope with the full blast operation. Magdalo V. Francisco, Sr. received his salary as Chief Chemist in the amount of P300.00 a month only until his services were terminated on November 30, 1960. On January 9 and 16, 1961, UFC, acting thru its President and General Manager, authorized Porfirio Zarraga and Paula de Bacula to look for a buyer of the corporation including its trademarks, formula and assets at a price of not less than P300,000.00. Due to these successive memoranda, without plaintiff Magdalo V. Francisco, Sr. being recalled back to work, he filed the present action on February 14, 1961. Then in a letter dated March 20, 1961, UFC requested said plaintiff to report for duty, but the latter declined the request because the present action was already filed in court. ISSUES: 1. Was the Bill of Assignment really one that involves transfer of the formula for Mafran sauce itself? 2. Was petitioners contention that Magdalo Francisco is not entitled to rescission valid? RULING: 1. No. Certain provisions of the bill would lead one to believe that the formula itself was transferred. To quote, the respondent patentee "assign, transfer and convey all its property rights and interest over said Mafran trademark and formula for MAFRAN SAUCE unto the Party of the Second

Part," and the last paragraph states that such "assignment, transfer and conveyance is absolute and irrevocable (and) in no case shall the PARTY OF THE First Part ask, demand or sue for the surrender of its rights and interest over said MAFRAN trademark and mafran formula." However, a perceptive analysis of the entire instrument and the language employed therein would lead one to the conclusion that what was actually ceded and transferred was only the use of the Mafran sauce formula. This was the precise intention of the parties. The SC had the following reasons to back up the above conclusion. First, royalty was paid by UFC to Magdalo Francisco. Second, the formula of said Mafran sauce was never disclosed to anybody else. Third, the Bill acknowledged the fact that upon dissolution of said Corporation, the patentee rights and interests of said trademark shall automatically revert back to Magdalo Francisco. Fourth, paragraph 3 of the Bill declared only the transfer of the use of the Mafran sauce and not the 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 right of the transfer of the use of the transfer of the formula itself. 2. No. Petitioners contention that Magdalo Franciscos petition for rescission should be denied because under Article 1383 of the Civil Code of the Philippines rescission cannot be

demanded except when the party suffering damage has no other legal means to obtain reparation, was of no merit because it is predicated on a failure to distinguish between a rescission for breach of contract under Article 1191 of the Civil Code and a rescission by reason of lesion or economic prejudice, under Article 1381, et seq. This was a case of reciprocal obligation. Article 1191 may be scanned without disclosing anywhere that the action for rescission thereunder was subordinated to anything other than the culpable breach of his obligations by the defendant. Hence, the reparation of damages for the breach was purely secondary. Simply put, unlike Art. 1383, Art. 1191 allows both the rescission and the payment for damages. Rescission is not given to the party as a last resort, hence, it is not subsidiary in nature. Ong vs. Bognalbal G.R. No. L-49190

reciprocal obligation and there is power to rescind it in case one doesnt comply with what is incumbent upon him. But this article should be judicially invoked. Novation is not presumed. There must be an express stipulation. Novation (a). change of object or principal conditions, (b). substituting person of debtor (c). subrogating 3rd person in the rights of creditor. Liability is on the first infractor, 1192. There has been no contract novation that required Bognalbal to finish the Kenzo flooring before the 4th billing shall be paid. 1186. Condition shall be deemed fulfilled when the obligor voluntarily prevents the fulfillment. To do: Pay 4th billing. (Reciprocal-di mo ginawa di ko rin gagawin-pero sabi nga ng court hindi pa rin yun justification, but only the first infractor shall be liable). ROMERO vs. COURT OF APPEALS G.R. No. 107207 November 23, 1995 Facts: Romero, a civil engineer, was engaged in the business of production, manufacture and exportation of perlite filter aids, permalite insulation and processed perlite ore. In 1988, he decided to put up a central warehouse in Metro Manila. Flores and his wife offered a parcel of land measuring 1,952 square meters. The lot was covered in a TCT in the name of private respondent Enriqueta Chua vda. de Ongsiong. Petitioner visited the property and, except for the presence of squatters in the area, he found the place suitable for a central warehouse. Flores called on petitioner with a proposal that should he advance the amount of P50,000.00 which could

Bognalbal was an architect hired by Ong who was a businesswoman to construct her boutique. Bognalbal agrees to furnish labor within 45 days and owner to pay every 2 weeks based on the accomplishment of work value. 4th billing came and Ong refused to pay but reason was not clear on the record. She wanted to change Vinyl tiles to Kenzo flooring. Ong claimed Bognalbal abandoned job. Issue: Whether or not Bognalbal be liable for abandoning job. Held: No. He is not liable but is not justified for doing so. 1191, it was a

be used in taking up an ejectment case against the squatters, private respondent would agree to sell the property for only P800/square meter. Romero agreed. Later, a Deed of Conditional Sale was executed between Flores and Ongsiong. Purchase price = P1,561,600.00; Downpayment = P50K; Balance = to be paid 45 days after the removal of all the squatters; upon full payment, Ongsiong shall execute deed of absolute sale in favour of Romero. Ongsiong sought to return the P50,000.00 she received from petitioner since, she said, she could not get rid of the squatters on the lot. She opted to rescind the sale in view of her failure to get rid of the squatters. Regional Trial Court of Makati rendered decision holding that private respondent had no right to rescind the contract since it was she who violated her obligation to eject the squatters from the subject property and that petitioner, being the injured party, was the party who could, under Article 1191 of the Civil Code, rescind the agreement. Issue: WON there was a perfected contract of sale? YES Held: A sale is at once perfected when a person (the seller) obligates himself, for a price certain, to deliver and to transfer ownership of a specified thing or right to another (the buyer) over which the latter agrees. (BILATERAL and RECIPROCAL CHARACTERISTIC OF SALE) In determining the real character of the contract, the title given to it by the parties is not as much significant as its substance. For example, a deed of sale, although denominated as a deed of conditional sale, may be treated as absolute in nature, if title to the property

sold is not reserved in the vendor or if the vendor is not granted the right to unilaterally rescind the contract predicated on the fulfillment or nonfulfillment, as the case may be, of the prescribed condition. From the moment the contract is perfected, 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. Under the agreement, private respondent is obligated to evict the squatters on the property. The ejectment of the squatters is a condition the operative act of which sets into motion the period of compliance by petitioner of his own obligation, i.e., to pay the balance of the purchase price. Private respondents failure to remove the squatters from the property within the stipulated period gives petitioner the right to either refuse to proceed with the agreement or waive that condition in consonance with Article 1545 of the Civil Code. This option clearly belongs to petitioner and not to private respondent. There was no potestative condition on the part of Ongsiong but a mixed condition dependent not on the will of the vendor alone but also of third persons like the squatters and government agencies and personnel concerned.

Pryce Corp v Pagcor Facts: Pagcor leases some hotel space from PPC in Cagayan for the purpose of establishing a Casino. The venture is fraught with problems from the start as near incessant protests and rallies by locals plagues the Casino. Pagcor is subsequently advised to stop operations by no less than the president of the RP. Pagcor stops paying the rent after stopping operations despite the fact that the lease contract had no yet expired. PPC sends several letters demanding the unpaid balance to no avail. Finally, PPC decides to exercise its contractual right to terminate the lease contract and to claim the forfeiture of the future rentals deposited with it by Pagcor. This right to forfeiture was stipulated in the contract as a penalty. May it be exercised? Held: Although the contract falls under one of those exceptions where both the actual damages and the penalty may be claimed by virtue of the provision which states that aside from the payment of the rentals corresponding to the remaining term of the lease, the lessee shall also be liable 'for any and all damages, actual or consequential, resulting from such default and termination of this contract. the right to claim the forfeiture of the future rentals may not be exercised by PPC, as such penalty would be unconscionable and iniquitous. The question of whether a penalty is reasonable or iniquitous is addressed to the sound discretion of the courts. To be considered in fixing the amount of penalty are factors such as -but not limited to -- the type, extent and purpose of the penalty; the nature of the obligation; the mode of the breach and its consequences; the supervening

realities; the standing and relationship of the parties; and the like. In this case, PAGCOR's breach was occasioned by events that, although not fortuitous in law, were in fact real and pressing. From the CA's factual findings, which are not contested by either party, we find that PAGCOR conducted a series of negotiations and consultations before entering into the Contract. It did so not only with the PPC, but also with local government officials, who assured it that the problems were surmountable. Likewise, PAGCOR took pains to contest the ordinances [34] before the courts, which consequently declared them unconstitutional. On top of these developments, the gaming corporation was advised by the Office of the President to stop the games in Cagayan de Oro City, prompting the former to cease operations prior to September 1993.Also worth mentioning is the CA's finding that PAGCOR's casino operations had to be suspended for days on end since their start in December 1992; and indefinitely from July 15, 1993, upon the advice of the Office of President, until the formal cessation of operations in September 1993. Needless to say, these interruptions and stoppages meant that PAGCOR suffered a tremendous loss of expected revenues, not to mention the fact that it had fully operated under the Contract only for a limited time. While petitioner's right to a stipulated penalty is affirmed, we consider the claim for future rentals to the tune ofP7,037,835.40 to be highly iniquitous. The amount should be equitably reduced. Article 1229.

BERG VS. MAGDALENA ESTATES 92 PHIL 110 FACTS: This is an action for partition of the property known as Crystal Arcade situated in the City of Manila. The complaint avers that plaintiff and defendant are co-owners of said property, the former being the owner of one-third interest and the latter of the remaining two-thirds. The division is asked because plaintiff and defendant are unable to agree upon the management of the property and upon the partition thereof. Defendant answered setting up a special defense and counterclaim. As a special defense, defendant claims that on September 22, 1943, it sold to plaintiff one-third of the property in litigation subject to the express condition that should either vendor or vendee decide to sell his undivided share, the party selling would grant to the other party first an irrevocable option to purchase the same at the sellers price. It avers that in January 1946, plaintiff fixed the sum of P200,000 as the price of said share and offered to sell it to defendant, which offer was accepted and for the payment of said price plaintiff gave defendant a period of time which, including the extensions granted would expire on May 31, 1947. Defendant claims that in spite of its acceptance of the offer, plaintiff refused to accept the payment of the price, and for this refusal defendant suffered

damages in the amount of P100,000. For these reasons, defendant asks for specific performance. ISSUE: Whether or not the obligation is one subject to a term. RULING: NO, rather, the obligation is rather subject to a condition. Under Article 1125 of the old Civil Code, obligations with a term, for the fulfillment of which a day certain has been fixed, shall be demandable only when the day arrives. A day certain is understood to be that which must necessarily arrive, even though it is not known when. In order that an obligation may be with a term, it is, therefore, necessary that it should arrive, sooner or later; otherwise, if its arrival is uncertain, the obligation is conditional. Viewing in this light the clause on which defendant relies for the enforcement of its right to buy the property, it would seem that it is not a term, but a condition. Considering the first alternative, that is, until defendant shall have obtained a loan from the National City Bank of New York, it is clear that the granting of such loan is not definite and cannot be held to come within the terms day certain. And if it is considered that the period given was until such time as defendant could raise money from other sources, then it is also to be indefinite and contingent, and so it is also a condition and not a term within the meaning of the law. In any event, it is apparent that the fulfillment of

the condition contained in this second alternative is made to depend upon defendants exclusive will, and viewed in this light, the plaintiffs obligation to sell did not arise, for, under article 1115 of the old Civil Code, when the fulfillment of the condition depends upon the exclusive will of the debtor the conditional obligation shall be void.