Enriquez v Ramos
FACTS:
This is the second time that the party litigants have come to the SC on
basically same causes of action affecting the same deed of sale with real
estate mortgage covenanted between them.
Plaintiff-appellantRodorigo Enriquez averred that they sold to defendant-
apelleeSocorro Ramos 20 subdivision lots in Quezon City for the sum of
P235,056 which only P35,056 had been paid. The balance of P200,000 was
to be liquidated within two years from the date of execution of the deed of
sale, with interest at 6% for the first year and 12% thereafter until fully
paid. To secure the payment of the balance, the defendant-appellee
executed in the same document a deed of mortgage in favor of the vendors
on several parcels of land variously situated in Quezon City, Pampanga and
Bulacan.
In the deed of mortgage the stipulations are the following:
During the term and existence of the mortgage, the Mortgagor shall duly
pay and discharge, at her expense, and on their maturity, all lawful taxes or
assessments levied or assessed upon the mortgaged property;
Mortgagee may pay and discharge such taxes or assessments and insure
the security of the property, and any all sums so paid by the Mortgagee
shall be repayable on demand with interest at 6% per annum and be a lien
on the property mortgaged.
If mortgage cannot be registered, the whole obligation shall immediately
become due and demandable.
In the event that the Mortgagor should fail to pay the amount secured by
the mortgage or any part in accordance with the terms and conditions
stipulated, or fail to perform the conditions, the Mortgagee shall have the
right to foreclose the mortgage extrajudicially, and the Mortgagee be
appointed the attorney-in-fact of the Mortgagor, the full power to
substitute, to enter upon and take possession of the mortgaged property
without any court order or authority, to sell and dispose of the same to the
highest bidder at public auction after notice.
Plaintiff-appellant alleged that the defendant-appellee violated the terms
of their agreement
Inspite repeated demands, the defendant-appelle refused to pay the sum
of P200,000 within the stipulated period.
The mortgage of Bulacan property was never registered
The realty tax for 1959 on the lots mortgaged were not paid by the
defendant-appellee
SC upheld the findings and conclusions of the trial court which ruled that
the actual price of the lots sold to the defendant was only P185,056 instead
of P253,056, and that only if and when the roads shall have been
constructed pursuant to the ordinances of Quezon City may the period of
two years specified in the contract begin to run. This is pursuant to the
private deed entitled Explanation that the plaintiff certified the
consideration of P50,000, representing Socorro Ramos contribution to the
construction of the road in accordance with the provisions of the City
Ordinance of Quezon City.
Defendants contention:The non-payment of the 1959 realty tax and non-
registration, the Court held that it appear sufficiently explained in the brief
stating that her backpay certificates to the payment of the realty and
income taxes but as she had not yet received certificates the payment of
the taxes was delayed. The registration of the Bulacan property, on the
other hand, could not be undertaken because it was still then registered in
both her name and in the name of co-owner. The defendant promised that
she would pay the taxes in due time and undertake the needed segregation
and the annotation of the lien of the mortgage on the Bulacan property as
soon as the vendors proceeded with the construction of the roads on the
purchased lots.
In the case at bar, plaintiff charged before CFI that the defendant has not
yet paid the sum of P200,000 despite the facts that the roads on the
questioned lots were completed; that the mortgage on the Bulacan
property has not yet been registered; that the realty taxes corresponding
to the years 1959 to 1963 on the mortgaged lots had not been paid.
Defendant admits that she has not paid the realty taxes and has not
registered the mortgage on the Bulacan property, but argues that these
matters were minor ones and sufficiently explained, invoking the rule of res
judicata. She likewise does not dispute her non-payment of the sum of
P200,000; she contends, however, that the roads had not yet been
completed in accordance with the Ordinance of Quezon City. She contends
that it had not been completed because the Ordinance requires the putting
up of trees and water facilities. Neither said roads be considered in the
legal sense until their construction had not been accepted by the Capital
City Planning Commission.
SC finds the posture of the defendant-appellee to be untenable.
ISSUE:
WON Socorro Ramos fulfilled her obligations as stipulated in the deed of
mortgage
RULING:
The non-payment of the realty tax for a year and the non-registration of
the mortgaged property, within a reasonable time after the execution of a
contract may be considered minor matter, the failure to do so was
sufficiently explained, and that the mortgagor promised the SC that
positive remedial action would be taken. The Court opined that it cannot
however be taken as a license for the continued non-fulfillment by the
defendant-appellee of her contractual obligations. It was far from the
intention of the Court to allow or enable the litigants to utilize its decision
as an instrument where solemnly covenanted obligations could be avoided.
The continued violation by the defendant of the express terms of her
contract can no longer be countenanced. Not only has the defendant failed
to perform the mentioned obligations, but she has likewise failed to deliver
to the plaintiffs the sum of P50,000 which she promised to contribute to
the latter for the construction of the roads on her lots in accordance with
the ordinances of Quezon City. The deed of sale wit mortgage makes it the
expres duty of the defendant to pay the realty taxes on the mortgaged lots,
to register the mortgaged estates, and to contribute P50,000 for the
construction of roads on the purchased lots. By its express terms, if the
defendant failed to fulfill these conditions her entire obligation was to
become immediately due and demandable and the mortgage would have
the option to foreclose the mortgage. These terms of the contract have the
force of law between the parties thereto.
The completion of the roads in question, based on the evidence, must be
regarded as having been sufficiently established. (Number 2 of the ruling,
but is not that important)
On the non-completion in the technical, legal sense because the
completion has to be approved by an Administrative Agency was held by SC
as devoid of merit. There is nothing in the ordinance which makes the
acceptance by the said agency a condition precedent may be considered
constructed in accordance with the ordinance. (Number 3)
On planting trees and installation f water facilities, SC said that there is
nothing in Ordinance 2969 which would indicate that a street may be
considered completed only when trees are planted on both sides of the
street and water facilities are built on the subdivision. These are segregable
from the laying out and construction of roads and cannot be deemed
included within the scope of the latter. (Number 4)
As to the lack of previous notice of completion and demand for payment,
the filing of the case is sufficient notice to the defendant of the completion
of the roads in question and of the plaintiffs desire to be paid the purchase
price of the questioned lots. The effect of such demand retroacts to the
day of the constitution of the defendants obligation. Article 1187 provides
that The effects of a conditional obligation to give, once the condition has
been fulfilled, shall retroact to the day of the constitution of the
obligation The contracted obligation of the defendant under the fact of
the case at bar was to pay the balance of P200,00 within two years from
the date the roads in question is completed. (Number 5)
TAN v. CA
FACTS: Petitioner Tan and private respondents (Mariano Singson and
Visitacion Singson) entered into a Contract of Sale regarding the house and
lot owned by the latter, wherein, the property is subject to encumbrances
and liens. They have agreed on the price of Php.1,800,000.00 with the
petitioner to advance an earnest money of Php.200,000.00 to enable the
respondents to secure the cancellation of mortgage and lien annotated on
the title of the property. The remaining balance of the agreed price is to be
paid on June 21, 1984. As such, a check was handed to the respondents
from the petitioner and thereupon, they signed a receipt. In turrn,
respondents gave to the petitioner the Xerox copy of the title and other
papers as well as the inventory of the furnishings of the house that are
included in the sale.
The petitioner together with her daughter and another person asked the
respondents to reduce the price to Php.1,750,000.00 which was agreed by
the respondents and so, another receipt was signed by them entitled
Agreement. The respondents then received the advance payment of
Php.200,000.00. They then started paying the mortgage loan with the DBP
to clear up the title of the subject property. They paid the bank in the full
payment of the mortgage loan. The DBP then executed a cancellation of
mortgage which was registered with the Registry of Property of Baguio.
On June 25, 1984, the petitioner with an Atty. then went to Baguio to
inquire about the status of the property, in which the respondents told
them that the DBP was taking some time processing their payments and
preparing the deed of cancellation of the mortgage. With that, they agreed
on a two-week extension for the execution of the deed of sale.
There were two versions on this matter. Respondents said that it was the
petitioner who asked for the extension for she wasnt yet ready to pay for
the balance. On the other hand, petitioners contended that it was the
respondents who asked for the extension because the title of the property
wasnt yet cleared. The lower court ruled in favor of the petitioner because
the DBP had not yet indeed executed the deed of cancellation of mortgage
and no title has yet been issued for the driveway although already paid for.
Upon the execution of the DBP of the deed of cancellation of mortgage by
July 9, 1984, the respondents contacted the petitioner for the formal
execution of the deed of sale. Yet, the respondents received a telegram
from the petitioners Atty. to cancel the contract and demanded to return
the advance payment of Php.200,000.00. Respondents Atty. sent a counter
letter calling the petitioner to perform her part of the contract because the
title can now be transferred in her name upon the execution of the
contract of sale or else they will sue the petitioner. Yet, the petitioner
already then filed in court for the recovery of the sum of money with
damages (Rescission with damages). She contended that, she gave the
advance payment to the respondents upon the latters assurance that they
could transfer to her the house and lot free from liens and encumbrances
including the furnishings and adjacent lot used for driveway on June 25,
1984, but time already passed without the respondents had fulfilled their
obligation as she discovered that the mortgage on the property was not
released or cancelled and the driveway was still a public land and could be
validly transferred to her because the disposition thereof would require the
signature of the Secretary of Agriculture and National Resources.
RTC RULING. In favor of the petitioner and ordered for:
1) Rescission of the contract
2) Respondents to return to the petitioner the advance payment
she has given.
3) Pay an interest of 12% per annum on Php200,000.00 from the
date of the filing of the complaint until fully paid, etc.
Upon appeal by the respondents, the CA reversed the ruling of the RTC,
ordered to:
1) Respondents to execute and sign an absolute deed of sale
conveying the petitioner free from lien and encumbrance the
house and lot covered by the Registry of Deeds together with the
furnishings, appliances and the adjacent lot used as driveway.
2) To pay the respondents the remaining balance of
Php.1,550,000.00 plus interest.
Petitioner then filed an instant petition for Certiorari assailing the decision
of the CA and that the respondents had committed a substantial breach of
their obligation. Petitioners maintain that since respondents were not
prepared to convey the title to the subject property on the date agreed
upon in view of the various liens and encumbrances thereon, the former
are entitled to rescind the contract pursuant to Article 1191 of the Civil
Code which states:
Art. 1191. The power to rescind obligations is implied in reciprocal ones,
in case one of the obligors should not comply with what is incumbent
upon him.
The injured party may choose between the fulfillment and the rescission
of the obligation, with the payment of damages in either case. He may
also seek rescission, even after he has chosen fulfillment, if the latter
should become impossible.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons
who have acquired the thing, in accordance with articles 1385 and 1388
and the Mortgage Law.
ISSUE: WON, the petitioner is entitled to rescind the contract pursuant to
Article 1191 of the Civil Code?
RULING: No. The petition is void and unmeritorious. The power to rescind
obligations is implied in reciprocal ones in case one of the obligors should
not comply with what is incumbent upon him/her. Also, it is equally settled
that, in the absence of a stipulation in the contrary, this power must be
revoked judicially. It cannot be exercised solely on a partys own judgment
that the other has committed a breach of obligation. Clearly, there is
nothing in the contract that empowers the petitioner to rescind it without
resort to the courts, thus, petitioners action in unilaterally terminating the
contract is unjustified.
The alleged breach of the obligation by the respondents, which consists in
a mere delay for a few days in clearing the title to the property, cannot be
considered substantial enough to warrant rescission of the contract.
Review of the records indicates that the respondents had substantially
complied with their undertaking of clearing the title. Respondents, upon
receipt of the earnest money paid by petitioner, utilized the same to settle
its obligations with DBP, thus, enabling them to secure a cancellation of the
existing mortgage.
It is a settled principle of law that rescission will not be permitted for a
slight or casual breach of the contract but only for such breaches as are so
substantial and fundamental as to defeat the object of the parties in
making the agreement. A court, in determining whether rescission is
warranted, must exercise its discretion judiciously considering that the
question of whether a breach of a contract is substantial depends upon the
attendant circumstances.
In this case, it is true that as of June 25, 1984, the date set for the
execution of the final deed of sale, the mortgage lien in favor of DBP
annotated in the title has not yet been cancelled as it took DBP some time
in processing the papers relative thereto. However, just a few days after,
the cancellation of the DBP mortgage was entered by the Register of Deeds
and duly noted on the title. Time not being of the essence in the
agreement, a slight delay on the part of the respondents in the
performance of their obligation is not sufficient ground for the resolution
of the agreement more so when the delay was not totally attributable to
them.
VELARDE v COURT OF APPEALS
FACTS:
David Raymundo [herein private respondent] is the absolute and registered
owner of a parcel of land together with the house and other
improvements in Dasmarinas Makati. Defendant George Raymundo [herein
private respondent] is Davids father who negotiated with plaintiffs
Velardes [herein petitioners] for the sale of said property, which was,
however, under lease.
A deed of sale was executed by Raymundo as vendor and Verlardes as
vendee.
Prior to the sale, the parcel of land was mortgaged to BPI to secure the
payment of loan of 1.8M
Stipulation of the Deed of Sale:
1. Petitioners (Velardes) paid 800k and agreed to assume the
mortgage obligations on the property in favor of the BPI in the
name of the Vendor (Raymundo)
2. While the application for the assumption of the mortgaged
obligations in the property is not yet approved by the bank, the
mortgage obligation on the property are to be paid by the
vendee (Velardes) , in the name of the vendor (Raymundo)
3. In the event that the vendee violates any of the conditions, the
down payment of 800k and all the payments made to the bank
on the mortgage loan shall be forfeited in favor of David
Raymundo (respondent). Raymundo shall resume and complete
the ownership and possession of the property sold by Deed of
Sale with assumption of mortgage and the same shall be deemed
automatically cancelled and be of no force and effect, in the
same manner as if the same had never been executed or entered
into.
For and in consideration of the foregoing premises, and the assumption of
the mortgage obligations of 1.8M with the BPI, Velarde obligate herself to
strictly and faithfully comply with the following terms and conditions that
until such time as my assumption of the mortgage obligations on the
property purchased is approved by the mortgagee bank they shall continue
to pay the said loan in accordance with the terms and conditions of the
Deed of Real Estate Mortgage in the name of Mr. David A. Raymundo, the
original Mortgagor.
Pursuant to the deed, Velardes paid BPI monthly interest on the loan for
three months.
On December 15, 1986, Velardes where advised that the application for the
Assumption of Mortgage with BPI was not approved. This prompted
Velardes not to make any further payments.
Raymundo, through counsel, wrote to Velardes informing the latter that
the non-payment to mortgage constitute non performance of obligation.
Respondent sent Velardes a notarial notice of cancellation/rescission of the
intended sale of the subject property.
Velardes filed a complaint for specific performance to nullify the
cancellation, writ of possession and damages with RTC
RTC ruling:
The complaint was dismissed by judge Ynares-Santiago which later on
promoted as CA judge. Meanwhile, on a motion for reconsideration, Judge
Abad Santos granted petitioners Motion for Reconsideration and directed
the parties to proceed with the sale. He instructed petitioners to pay the
balance of P1.8 million to private respondents who, in turn, were ordered
to execute a deed of absolute sale and to surrender possession of the
disputed property to petitioners.
CA ruling:
Private respondents appealed to the CA. The court set aside the
decision of Judge Abad and reinstated Judge Ynares-Santiagos decision. It
was agreed that in case of violation of the mortgage obligation, the Deed of
Sale with Assumption of Mortgage would be deemed automatically
cancelled and of no further force and effect, as if the same had never been
executed or entered into.
In the case at bar, Raymundo sent Velarde a notarial notice dated
January 8, 1987 of cancellation/rescission of the contract due to the latters
failure to comply with their obligation. The rescission was justified in view
of Velardes failure to pay the price (balance). The agreement of the parties
involved a reciprocal obligation wherein the obligation of one is a
resolutory condition of the obligation of the other, the non-fulfillment of
which entitles the other party to rescind the contract (Songcuan vs. IAC,
191 SCRA 28).
Thus, the non-payment of the mortgage obligation by appellees
Velarde would create a right to demand payment or to rescind the
contract.
Hence this appeal,
ISSUES:
A. WON The Court of Appeals erred in holding that the non-
payment of the mortgage obligation resulted in a breach of
the contract.
B. WON The Court of Appeals erred in holding that the
rescission (resolution) of the contract by private
respondents was justified.
HELD:
A. Yes.
Petitionerdid not merely stop paying the mortgage obligations; they also
failed to pay the balance of the purchase price. As admitted by both
parties, their agreement mandated that petitioners should pay the
purchase price balance of P1.8 million to private respondents in case the
request to assume the mortgage would be disapproved. Thus, on
December 15, 1986, when petitioners received notice of the banks
disapproval of their application to assume respondents mortgage, they
should have paid the balance of the P1.8 million loan.
Instead of doing so, petitioners sent a letter to private respondents offering
to make such payment only upon the fulfillment of certain conditions not
originally agreed upon in the contract of sale. Such conditional offer to pay
cannot take the place of actual payment as would discharge the obligation
of a buyer under a contract of sale.
In a contract of sale, Private respondents had already performed their
obligation through the execution of the Deed of Sale, which effectively
transferred ownership of the property to petitioner through constructive
delivery. Deed of sale is equivalent to delivery.
Petitioners, on the other hand, did not perform their correlative obligation
of paying the contract price in the manner agreed upon. Worse, they
wanted private respondents to perform obligations beyond those
stipulated in the contract before fulfilling their own obligation to pay the
full purchase price.
B. Yes.
Art. 1191. -- The power to rescind obligations is implied in reciprocal ones,
in case one of the obligors should not comply with what is incumbent upon
him.
The injured party may choose between fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek
rescission even after he has chosen fulfillment, if the latter should become
impossible.
In the present case, private respondents validly exercised their right to
rescind the contract, because of the failure of petitioners to comply with
their obligation to pay the balance of the purchase price. Indubitably, the
latter violated the very essence of reciprocity in the contract of sale, a
violation that consequently gave rise to private respondents right to
rescind the same in accordance with law.
SIY v. CA
FACTS:
Spouses Valdez (private respondents) are owners of a house and a
parcel of land with an area of 155 sqm. Siy (petitioner) entered into a
contract with spouses Valdez regarding said property.
The first agreement was a Deed of Conditional Sale(Exhibit A),
where spouses Valdez sold the said property to Siy for P22,000. However,
the sale was subject to the condition that after the approval of the loan of
Siy with SSS and its payment to the respondents, the spouses shall
immediately execute the Deed of Absolute Sale in favor of Siy.
Siy applied for a loan with SSS through Home Financing Commission
(HFC). Since the property was mortgaged to GSIS, HFC asked both parties to
execute a Deed of Absolute Sale with Assumption of Mortgage, stating that
6,400 of the 22,000 has been paid, representing the amount petitioners
incurred for the improvements. The remaining 15,600 balance to be paid
upon approval of Siys loan.
Parties executed three more contracts:
1. First, Spouses agreed to sell property to Siy at 14,000, while
Siy must negotiates a loan with SSS to settle the amount 30 days from
March, 17, 1963.
2. Second, Virginia Valdez disagreed with prior contract, second
one was made, wherein, payment of the 14,000 should be on the 30th
day form the execution of the contract, and that failure to do so shall
make Siy liable for damages at P30.00/day of delay.
3. Last, spouses agreed to receive the partial amount of
P12,000 on the condition that the balance of P4,376 is completely
paid 45 days after date fixed by them, failure to do so will make Siy
liable for damages at P20.00/day if delay until balance shall have
been fully paid.
Siy failed to pay both 12,000 and 4376 on the fixed date. Thus,when
Siys loan was about to be released, he asked for execution of the deed of
absolute sale, which the spouses refused on the ground of Siys breach of
their last contract.
Siy filed for specific performance with writ of mandatory injunction to
compel the spouses to execute the necessary documents required by SSS.
RTC initially ruled in favor of Siy, citing Article 119 of NCC, in
reciprocal obligations in case one of the obligors should not comply with
what is incumbent upon him, the injured party may choose between
fulfillment or rescission of the obligation w/ payment of damages. In this
case, RTC believes that spouses can be compelled to fulfill the condition
agreed.
However, after a few motion for reconsiderations by spouses, RTC
realized its error and ruled in favor of spouses. The wordings in the last
agreement showed evidence that the amount previously agreed upon
(12,000) has not yet been paid, as well as the 4376 remaining balance.
Therefore, Siy has breached their last agreement and is liable for damages
due to delay (Article 1170). The spouses (injured party) choose to rescind
the agreement.
CA affirmed this second decision in toto.
A petition to the Supreme Court by petitioner had raised the
following issues:
ISSUES:
1. WON CA erred in ruling that the first decision of the RTC was final
even before the second decision, thus, RTC no longer has jurisdiction to
render the second decision.
2. WON CA erred in sustaining the trial court in ordering the
rescission of the agreement and payment of damages and attorneys fees
RULING:
1. No. The Court ruled that CA did not commit grave abuse of
discretion in upholding the trial courts jurisdiction when it rendered the
second decision. With respect to the second motion of the respondents,
which are merely supplementary pleadings which are only meant to supply
deficiencies in aid of the original pleadings, it should not be treated as
independent and separate form the original pleading.
2. No. The respondent prayed for the annulment of both the Deed of
Conditional Sale and Deed of Sale with Assumption of Mortgage which are
the very bases of the supplemental agreements. By failing to pay the
12,000 and the balance of 4376 as stipulated in the contract, the petitioner
has committed breach of contract, which sufficiently and justly entitled the
respondents to ask for the rescission of the contracts.
Therefore, the decision of CA has been modified by the SC,
deleting the award of damages from being excessive and ordered
petitioner to pay P50.00 as monthly rentals with interest at legal rate
from March 1963 until such time he vacates the property.
University of the Philippines vs. Walfrido De Los Angeles, et al
September 29, 1970
Facts:
On November 1960, UP and ALUMCO entered into a logging agreement
under which the latter (ALUMCO) was granted exclusive authority, for a
period starting from the date of the agreement to December 31, 1965,
extendible for a further period of 5 years by mutual agreement to cut,
collect and remove timber from the Land Grant (Land Grant was
segregated from public domain and given as an endowment of UP), in
consideration of payment to UP of royalties, forest fees, etc.
As of December 1964, it had incurred an unpaid account of Php 219,362.94
despite repeated demands, it had failed to pay.
After it had received notice that UP would rescind or terminate the logging
agreement, ALUMCO executed an instrument entitled Acknowledgement
of Debt and Proposed Manner of Payments. It was approved by the
President of UP and which stipulates that,
In the event that the Debtor fails to comply with any of its
promises or undertakings this document, the Debtor agrees
without reservation that the Creditor shall have the right and
the power to consider the Logging Agreement dated Dec. 2,
1960 as rescinded without the necessity of any judicial suit,
ALUMCO continued its logging operations, but again incurred an unpaid
account in the amount of Php 61,311.74 in an addition to the indebtedness
that if had previously acknowledged.
On July 19, 1965, Petitioner UP informed ALUMCO that logging agreement
had already considered as rescinded. UP filed a complaint against ALUMCO
of the CFI for the collection or payment of the herein before stated sums of
money and alleging the facts, together with other allegations; it prayed for
and obtained an order for preliminary attachment and injunction
restraining ALUMCO from continuing its logging operations in the Land
Grant.
Before the issuance of the aforesaid Preliminary Injunction, UP awarded to
Sta. Clara Lumber Company Inc. to take over the logging operations.
ALUMCO filed several motions but denied by the Court.
On February 1966, respondent judge issued an order enjoining UP from
awarding logging rights over the concession to any party. UP received the
order after it had already concluded its contract with Sta. Maria and said
company started logging operations.
Court declared Petitioner UP in contempt of court and directed Sta. Clara
to refrain from conduction operations.
Issue:WON Petitioner UP can treat its contract with ALUMCO rescinded,
and may disregard the same before any judicial pronouncement to that
effect.

Ruling:
Yes. The Supreme Court ruled that UP and ALUMCO had expressly
stipulated in the Acknowledgment of Debt and Proposed Manner of
Payments that upon the default of ALUMCO the creditor (UP) has the right
and the power to rescind the logging agreement without any judicial suit. It
is not always necessary for the injured party to resort to court for rescission
of the contract. The party who deems the contract violated may consider it
resolved or rescinded, and act accordingly without previous court action,
but it proceeds at its own risk. For it is only the final judgment of the
corresponding court that will conclusively and finally settle whether the
action taken was or was not correct in law.
In fact, even without express provision conferring the power of cancellation
upon one contracting party, it has repeatedly held that a resolution of
reciprocal or synallagmatic contracts may be made extrajudicially unless
successfully impugned in court.
which took effect on September 14, 1972. Moreover, it is a matter of public
policy to protect buyers of real estate on installment payments against
onerous and oppressive conditions.
As a consequence of the resolution by petitioners, rights to the lot should
be restored to private respondent or the same should be replaced by
another acceptable lot. However, considering that the property had
already been sold to a third person and there is no evidence on record that
other lots are still available, private respondent is entitled to the refund of
installments paid plus interest at the legal rate of 12% computed from the
date of the institution of the action. It would be most inequitable if
petitioners were to be allowed to retain private respondent's payments
and at the same time appropriate the proceeds of the second sale to
another.

The SC abstains from making any pronouncement regarding the order

finding the petitioner UP in contempt of court. It has been appealed to the
CA and case is pending therein.

PALAY INC. vs. CLAVE

FACTS:
Petitioner Palay Inc. executed in favour of respondent Nazario Dumpit, a
contract to sell a parcel of land of the Crestview Heights Subdivision. The
sale price was 23,300 with 9% interest per annum, payable with a down
payment of P4, 600 and monthly installments of 246.42 until fully paid.
Paragraph 6 of the contract provided for automatic extrajudicial rescission
upon default in payment of any monthly installment after the lapse of 90
days from the expiration of the grace period of one month, without need
of notice and with forfeiture of all installments paid.
Respondent paid the down payment and several installments until
December 5, 1967 for installments up to September 1967.
Almost six (6) years later, private respondent wrote petitioner offering to
update all his overdue accounts with interest, and seeking its written
consent to the assignment of his rights to a certain Lourdes Dizon.
Replying, petitioners informed respondent that his Contract to Sell had
long been rescinded pursuant to paragraph 6 of the contract, and that the
lot had already been resold.
Questioning the validity of the rescission of the contract, respondent filed a
letter complaint with the National Housing Authority (NHA) for
reconveyance with an alternative prayer for refund.
Petitioners maintain that it was justified in cancelling the contract to sell
without prior notice or demand upon respondent in view of paragraph 6 of
the contract.
NHA, found the rescission void in the absence of either judicial or notarial
demand. On appeal, the said decision was affirmed by the Office of the
President. Thus, the present petition.
ISSUE:
WON notice or demand may be dispensed with by stipulation in cancelling
a contract to sell.
HELD:
No. The act of a party in treating a contract as cancelled should be made
known to the other. Resolution of reciprocal contracts may be made extra
judicially unless successfully impugned in Court. If the debtor impugns the
declaration, it shall be subject to judicial determination.
In this case, private respondent has denied that rescission is justified and
has resorted to judicial action. It is now for the Court to determine whether
resolution of the contract by petitioners was warranted.
The Court holds that resolution by petitioners of the contract was
ineffective and inoperative against private respondent for lack of notice of
resolution. The indispensability of notice of cancellation to the buyer was
to be later underscored in Republic Act No. 6551 entitled "An Act to
Provide Protection to Buyers of Real Estate on Installment Payments."
Camus v. Price
FACTS:
Camus and price entered into a contract of lease wherein they clearly
stipulated that Price were to build a factory of strong materials and the
subject building are to be insured and that the insured shall become the
property of Camus immediately upon the termination of the contract of
lease. It was also stipulated that Camus agrees to cause the necessary
filling, at his own expense, within a year from the execution of the contract,
the vacant portion of the along the river with an area of 500sqm and to
erect the necessary concrete stone walls provided with barbed wires on
top.
Price filed a case in court for specific performance due to the lessors
failure to fill up the vacant portion and erect a concrete stone wall with
barbed wires. Camus also filed an action for unlawful detainer against Price
for allegedly failing to pay rentals. These cases were jointly tried and the
trial court rendered judgment that the lessee was to insure the factory
building and warehouse for P50,000 within in a month and the lessor was
to fill up the low portion of the leased premises.
Camus filed an appeal in the CA.
CA declared the contract extinguished but the parties were made to bear
this own losses (Article 1192). But since the lessee was still in possession of
the property, it was ordered to compensate the lessor in the sum of
P200.00 a month until it vacated the premises. Also, the contract having
been expired in March 16, 1960, the factory building have automatically
become the properties of the Lessor.
ISSUE/S:
WoN Price (lessor) first violated the contract.
Ruled:
The SC declared the Lessor Camus prima facie to be first to commit a
breach in agreement, but this is only in the matter of the Lessees default in
the payment of rentals. However, the Lessee failed to cover the said
buildings with insurance.
Even assuming that the Lessees obligation to insure the property arose
after the completion of the building, as the Lessor also defaulted in the
performance of his corresponding duty, it cannot be determined with
definiteness who of the parties committed the first infraction of the terms
of contract. The SC upheld the conclusion reached by the CA that the
parties were actually in pari delicto, and the contract deemed extinguished,
with the parties suffering their own losses.
The Lessee is still obligated to pay the P200.00 rental per month to the
Lessor and as a result of the termination of the contract, the lessor will
acquire the buildings constructed on the leased premises.
Gaite v Fonacier
FACTS:
DefendantFonacier was the ownerof iron lode mineral claims.
FonacierappointedGaite as his lawful attorney-in-fact to enter into a
contract with any individual or juridical person for the exploration and
development of the mining claims.
Gaite in turn executed a general assignment conveying the
development and exploitation of said mining claims into the Larap Iron
Mines, owned solely byhim. He began the development and exploitation of
the mining claims in question, and extracted what he estimated to be
approximately 24,000 metric tons of iron ore.
Fonacier decided to revoke the authority granted by him to Gaite,
and the latter assented subject to conditions. "Revocation of Power of
Attorney and Contract" was executed, whereinGaite transferred to
Fonacier, all his rights and interests on the mineral claims, the right to use
the business name "Larap Iron Mines", all the records relative to the mines,
and all his rights and interests over the "24,000 tons of iron ore, more or
less", in consideration of the sum of P75,000, P10,000 of which was paid
upon the signing of the agreement.
To secure the payment of P65,000, Fonacier delivered to Gaite a
surety bond Fonacier as principal and the Larap Mines and Smelting Co.
and its stockholders, as sureties.
Gaite testified that when this bond was presented to him by
Fonacier together with the "Revocation of Power of Attorney and
Contract", he refused to sign unless another bond was put up to secure the
payment of the P65,000. A second bond was executed with the Far Eastern
Surety and Insurance Co. as additional surety, but it provided that the
liability of the surety company would attach only when there had been an
actual sale of iron ore by the Larap Mines for an amount of not less then
P65,000, and that it would automatically expire on December 8, 1955.
The two executed and signed the "Revocation of Power of
Attorney and Contract", Fonacier entered into a "Contract of Mining
Operation" conveying unto the Larap Mines the right to develop, exploit,
and explore the mining claims in question, andthe complete title to the
24,000 tons of iron.
When the bond expired with respect to the Far Eastern Surety,
no sale of the approximately 24,000 tons of iron ore had been made, nor
had the P65,000been paid to Gaite on the theory that they had lost right to
make use of the period given them when their bond, automatically expired.
Gaite filed the present complaint against them in the CFI for the payment
of the P65,000balance of the price of the ore.
The defendants said that the obligation sued upon by Gaite was
subject to a condition that the amount of P65,000 would be payable out of
the first letter of credit covering the first shipment of iron ore and/or the
first amount derived from the local sale of the iron ore by the Larap Mines;
that up to the time of the filing of the complaint, no sale of the iron ore had
been made, hence the condition had not yet been fulfilled; and that
consequently, the obligation was not yet due and demandable. Fonacier
also contended that only 7,573 tons of the estimated 24,000 tons of iron
ore sold to him by Gaite was actually delivered, and counterclaimed for
more than P200,000 damages.
The lower court rendered judgment in favor of Gaite ordering
defendants to pay him.Defendants appealed to the Court.
ISSUES:
(1) WN the lower court erred in holding that the obligation of Fonacier to
pay Gaite the P65,000 (balance of the price of the iron ore in question)is
one with a period or term and not one with a suspensive condition; and
(2) WN there had been a short-delivery, as claimed by appellants, and that
they are entitled to the payment of damages.
RULING:
(1)Court finds the lower court to be legally correct in holding that the
shipment or local sale of the iron ore is not a condition precedent (or
suspensive) to the payment of the balance of P65,000, but was only a
suspensive period or term. What characterizes a conditional obligation is
the fact that its efficacy or obligatory force (as distinguished from its
demandability) is subordinated to the happening of a future and uncertain
event; so that if the suspensive condition does not take place, the parties
would stand as if the conditional obligation had never existed. That the
parties to the contract did not intend any such state of things to prevail is
supported by circumstances:
a) The words of the contract express no contingency in the buyer's
obligation to pay: "The balance of P65,000will be paid out of the first letter
of credit covering the first shipment of iron ores . . ." etc. There is no
uncertainty that the payment will have to be made sooner or later; what is
undetermined is merely the exact date at which it will be made. The
existence of the obligation to pay is recognized; only its maturity or
demandability is deferred.
b) A contract of sale is normally commutative and onerous: The fact that
Gaite insisted on a bond a to guarantee payment of the P65,000, not only
upon a bond by Fonacier, the Larap Mines and the company's stockholders,
but also on one by a surety company; and the fact that appellants did put
up such bonds indicates that they admitted the definite existence of their
obligation to pay the balance of P65,000.
The previous sale or shipment of the ore was not a suspensive
condition for the payment of the balance of the agreed price, but was
intended merely to fix the future date of the payment.
Another point of inquiry is whether Fonacier and his sureties are
entitled to take full advantage of the period granted them for making the
payment.Court agrees with the lower court that the appellant has forfeited
the right to compel Gaite to wait for the sale of the ore before receiving
payment of the balance of P65,000, because of their failure to renew the
bond of the Far Eastern Surety or replace it with an equivalent guarantee.
The expiration of the bonding company's undertaking substantially reduced
the security of the vendor's rights as creditor for the unpaid P65,000, a
security that Gaite considered essential and upon which he had insisted
when he executed the deed of sale of the ore to Fonacier.
The case squarely comes under paragraphs 2 and 3 of Article 1198 of the
Civil Code of the Philippines:
"ART. 1198. The debtor shall lose every right to make use of the period:
(1) . . .
(2) When he does not furnish to the creditor the guaranties or securities
which he has promised.
(3) When by his own acts he has impaired said guaranties or securities after
their establishment, and when through fortuitous event they disappear,
unless he immediately gives new ones equally satisfactory.
Appellants' failure to renew or extend the surety company's bond
upon its expiration plainly impaired the securities given to the creditor
(appelleeGaite), unless immediately renewed or replaced.Gaite acted
within his rights in demanding payment and instituting this action one year
from and after the contract was executed.
(2)The subject matter of the sale is, a determinate object, the mass, and
not the actual number of units or tons contained, so that all that was
required of the seller Gaite was to deliver in good faith to his buyer all of
the ore found in the mass, notwithstanding that the quantity delivered is
less than the amount estimated by them. Court affirmed.
Fernandez vs CA
Facts:
- Private respondent Miguel Tanjaco as lessor, and petitioner
Celso Fernandez as lessee entered into a ten year contract of
lease over a piece of land where petitioner would put up the then
proposed New Zamora Market. The parties agreed that the lease
would be renewable for another 10 years at the option of both
parties under such terms, conditions, and rental reasonable at
that time.
- Before the agreed term ended, respondent wrote to the
petitioner about his intention not to extend further or renew the
lease which petitioner replied that he opted to renew the
contract for another 10 years to recover all the expenses he
incurred in the construction of the market. In another letter,
respondent, through his lawyer, advised that respondent could
not accept petitioners unilateral action to renew the lease
because under the contract, any renewal or extension was only
possible at the option of BOTH parties.
- Petitioner commenced an action against respondent alleging that
petitioner was entitled to renew the lease contract and sought to
compel respondent to renew the lease agreement. The trial court
ruled in favor of the petitioner. Upon appeal by private
respondents, the CA reversed the trial courts decision.
Issue: Whether or not petitioner can compel private respondent to renew
contract for another 10 years with the condition of the contract that
stipulates that it is only renewable at the option of both parties.
Ruling:
- No. The SC held that it agrees to the CAs reading that the
intention to the parties to the lease agreement is clearly
discernible in the words of the agreement. The CA read the above
contract language as compromising, not using technical terms or
terms of legal art, but rather just plain and ordinary words.
- The contract clause may be seen to consist of two parts: first, the
contract is stipulated to be renewable for another ten years at
the option of both parties, second, the contract is specified to
be renewable under such terms, conditions, and rental
reasonable at that time. THE FIRST PART OF THE CLAUSE
STRESSES THAT THE OPTION OR FACULTY TO RENEW WAS GIVEN,
NOT TOT THE LESSEE ALONE NOR TO THE LESSOR BY HIMSELF,
BUT BOTH.
Abesamis vs. Woodcraft Works, LTD. board feet, was coming to Dolores, Samar, to load on
June 25, 1951. Appellee readied the necessary quantity
FACTS: of logs but the vessel did not arrive. As a result, 60,000
1.The plaintiff, doing business under the name "East Samar board feet of logs which had been rafted broke loose
Lumber Mills," was the owner of a timberconcession and sawmill and were lost.
located at Dolores, Samar. 8.3. Third breach, by the end of July 1951 appellee had
2. The defendant Woodcraft Works, Ltd., entered into an sufficient logs ready for shipment in accordance with
agreement with the plaintiff to purchase from thelatter 300,000 the contract. But appellant, in spite of the
board feet of Philippine round logs at P60.00 per thousand board representations made by the former, failed to send a
feet. vessel on the aforesaid date. Logs totalling 800,000
3. Due to bad weather conditions and the failure of the board feet were destroyed by marine borers, causing a
defendant to send the necessary vessels to Dolores,Samar, only loss of P62,000.00, for which appellant should be held
13,068 board feet of logs were delivered. liable.
4. The parties entered into a new contract. The previous one was ISSUE: Whether or not appellant Woodcraft Works, Ltd. failed to comply
cancelled, with the plaintiff waiving all hisclaims thereunder. with its obligations under the contract, or more specifically, whether or not
Certain advances which had been given by the defendant to the it was obligated to furnish the vessel to receive the shipment of logs from
plaintiff, in theaggregate amount of P9,000.00, were transferred appellee.
to and considered as advances on the new contract. HELD: YES
5. It was stipulated that the defendant Woodcraft would The following circumstances show that it was appellant who was obligated
purchase from the plaintiff 1,700,000 board feet of logs of to furnish the vessel to receive theshipment of logs from appellee: (1) the
thespecifications stated in the contract 1,300,000 board feet at provisions in the contract, particularly with respect to wharfage
P78.00 per thousand and the rest atP70.00. It was also agreed dues,demurrage and condition of the weather and of the ship's machinery,
that the shipment was to be "before the end of July, but will not would have been of little concern toappellant and would not have been
commenceearlier than April with the option to make partial imposed by it if appellee were the one to furnish the vessel; (2)in the
shipment depending on the availability of logs andvessels." twoshipments of logs in March and April of 1961, the vessels were
6. Of the quantity of logs agreed upon, only two shipments were furnished by appellant;(3) in several telegraphiccommunications between
made, one in March and the other in April,1951, amounting to the parties, it was invariably appellee who requested information as to the
333,832 board feet and 128,825 board feet, respectively, or a arrival of thevessels and it was appellant who gave the information
total of 462,657 boardfeet. accordingly; and(4) during the trial, it was appellant'switness who
7. The plaintiff filed in the Court of First Instance of Leyte an explained at length the failure of appellant to furnish the necessary
action for rescission of the contract of January22, 1951 and for vessels.Where the obligation is reciprocal and with a term,neither party
recovery of damages in the sum of P155,000.00 by reason of the could demand performance nor incur in delaybefore the expiration of the
defendant's failure tocomply with its obligations. term. In case of fortuitous event before the expiration of the term,each
8. RTC Ruling - ordering the defendant to pay to the plaintiff for party in suchreciprocal obligation bears his own loss.
actual damages suffered by the latter in the amount of The judgment appealed from is affirmed, with the modification that
P145,623.03, plus the amount of P50,000.00 representing the appellant Woodcraft Works, Ltd. is sentenced to pay appellee the
plaintiff's actual loss of credit in the operation of his business, aggregate sum of P69,685.26 by way of damages, plus P5,000 as attorney's
and, another sum of P5,000.00 as attorney's fees. The defendant fees, without costs in this instance.
is likewise ordered to pay the costs. Defendant questioned such
ruling but appellee argued the following:
8.1.First, appellee maintains that due to the failure of
appellant to send a vessel to Dolores, Samar, the storm
on May 5, 1951 swept away almost all the logs then
awaiting shipment, amounting to 410,000 board feet,
valued at P73,537.77. On this point it should be noted
that under the contract shipment was to be made
before the end of July 1951, but not to commence
earlier than April of the same year. The obligation
between the parties was a reciprocal one, appellant to
furnish the vessel and appellee to furnish the logs. It
was also an obligation with a term, which obviously was
intended for the benefit of both parties, the period
having been agreed upon in order to avoid the stormy
weather in Dolores, Samar, during the months of
January to March. The obligation being reciprocal and
with a period, neither party could demand performance
nor incur in delay before the expiration of the period.
Consequently, when the typhoon struck on May 5,
1951 there was yet no delay on the part of appellant,
and the corresponding loss must be shouldered by
appellee.
8.2. Second breach, it has been established that after
the storm of May 5, 1951 appellee continued its logging
operations. Appellant was advised of the quantity of
logs ready for shipment and was urged to send a vessel
to take delivery. It thereupon gave assurance that a
vessel, the "SS ALBAY," with a capacity of 450,000
Araneta vs The Philippine Sugar Estates Development Co.
1. J. M. Tuason & Co., Inc. is the owner of a big tract land situated in
Quezon City. Through Gregorio Araneta, Inc., it sold a portion
thereof for the sum of P430,514.00, to respondet.
The parties stipulated, among in the contract of purchase and
sale with mortgage, that the buyer will
Build on the said parcel land the Sto. Domingo Church and
Convent
while the seller for its part will
Construct streets on the NE and NW and SW sides of the land
herein sold so that the latter will be a block surrounded by
streets on all four sides; and the street on the NE side shall be
named "Sto. Domingo Avenue;"
2. The buyer finished the construction of Sto. Domingo Church and
Convent, but the seller, which began constructing the streets, is
unable to finish the construction of the street in the Northeast
side named (Sto. Domingo Avenue) because a certain third-party,
by the name of Manuel Abundo, who has been physically
occupying a middle part thereof, refused to vacate the same.
3. Hence, respondent filed its complaint against petitioner seeking
to compel the latter to comply with their obligation, as stipulated
in the above-mentioned deed of sale, and/or to pay damages in
the event they failed or refused to perform said obligation.
4. Petitioner avers that the that the action was premature since its
obligation to construct the streets in question was without a
definite period which needs to be fixed first by the court in a
proper suit for that purpose before a complaint for specific
performance will prosper.
5. The issues having been joined, the lower court proceeded with
the trial, and upon its termination, it dismissed plaintiff's
complaint upholding the defenses interposed by defendant.
6. Plaintiff moved to reconsider and modify the said decision,
praying that the court fix a period within which defendants will
comply with their obligation to construct the streets in question.
7. The trial court rendered a decision giving defendant Gregorio
Araneta, Inc., a period of 2 years from notice hereof, within
which to comply with its obligation under the contract
8. CA affirmed the decision of the lower court.
Issue:
Whether or not the RTC and CA committed an error in setting the date of 2
years for the defendant to comply with their obligation to construct the
subject streets
Held:
Yes. Article 1197 of the Civil Code involves a two-step process. The Court
must first determine that "the obligation does not fix a period" (or that the
period is made to depend upon the will of the debtor)," but from the
nature and the circumstances it can be inferred that a period was
intended" (Art. 1197, pars. 1 and 2). This preliminary point settled, the
Court must then proceed to the second step, and decide what period was
"probably contemplated by the parties" So that, ultimately, the Court
cannot fix a period merely because in its opinion it is or should be
reasonable, but must set the time that the parties are shown to have
intended. As the record stands, the trial Court appears to have pulled the
two-year period set in its decision out of thin air, since no circumstances
are mentioned to support it. Plainly, this is not warranted by the Civil Code.
In this connection, it is to be borne in mind that the contract shows that
the parties were fully aware that the land described therein was occupied
by squatters, because the fact is expressly mentioned therein. As the
parties must have known that they could not take the law into their own
hands, but must resort to legal processes in evicting the squatters, they
must have realized that the duration of the suits to be brought would not
be under their control nor could the same be determined in advance. The
conclusion is thus forced that the parties must have intended to defer the
performance of the obligations under the contract until the squatters were
duly evicted, as contended by the petitioner.
It follows that there is no justification in law for the setting the date of
performance at any other time than that of the eviction of the squatters
occupying the land in question. Thus, the time for the performance of the
obligations of petitioner is hereby fixed at the date that all the squatters on
affected areas are finally evicted therefrom.
RADIOWEALTH FINANCE COMPANY vs. DEL ROSARIO 335 SCRA 288
FACTS:
Spouses Vicente & Maria Del Rosario jointly & severally executed, signed
and delivered in favor of Radiowealth Finance Company a promissory note
for P138,948. Thereafter, respondents defaulted on the monthly
installments. Despite repeated demands, they failed to pay their obligation.
Petitioner filed a complaint for the collection of sum of money before the
RTC.
Trial court dismissed the complaint for the evidence presented were
merely hearsay.
CA reversed & remanded the case for further proceedings.
Petitioner claims that respondents are liable for the whole amount of their
debt and the interest thereon, after they defaulted on the monthly
installments. Respondents counter that the installments were not yet due
and demandable. They theorize that the action for immediate enforcement
of their obligation is premature because its fulfillment is dependent on the
sole will of the debtor. Hence, they consider that the proper court should
first fix a period for payment, pursuant to Articles 1180 and 1197 of the
Civil Code.
ISSUE:
WON the installments had already became due and demandable? YES
HELD:
The act of leaving blank space the due date of the first installment did not
necessary mean that the debtors were allowed to pay as & when they
could. If this was the intention of the parties, they should have so indicated
in the promissory note. However, it did not reflect any such intention.
While the specific date on which each installment would be due was left
blank, the note clearly provided that each installment should be payable
each month.
Furthermore, it also provided for an acceleration clause and a late payment
penalty, both of which showed the intention of the parties that the
installment should be paid at a definite date. Had they intended that the
debtors could pay as & when they could, there would have been no need
for these 2 clauses.
The installments had already became due & demandable is bolstered by
the fact that respondents started paying installments on the promissory
note. The obligation of the respondents had matured & they clearly
defaulted when their checks bounced. Per the acceleration clause, the
whole debt became due one month after the date of the note because the
check representing their first installment bounced.
ALLEN V. PROVINCE OF ALBAY 3. No. Evidence is not sufficient to warrant an affirmative holding
FACTS: that petitioner is entitled to recover these items or either of
The Director of Public Works, representing the respondent Province of them.
Albay, duly executed a formal contract with petitioner Allen for the
construction of a reinforced concrete bridge over the Argos River. The Judgment appealed from is reversed and will be entered in favor of
petitioner in his proposal stated that, All work contemplated by this petitioner.
contract to be completed on or before 4 months after contractor furnishes
sand and gravel. Paragraph 4 of the contract stated that the completion of
the bridge will be on or before Sept. 1, 1913. Paragraph 5 provided that the
necessary steel for the completion of the bridge will be furnished by the
respondent provinces. Respondent issued a resolution providing that
construction of the bridge be finished on or before Nov. 1, 1913. However,
no time for commencement of construction work was provided. Petitioner
requested an extension until Feb. 15, 1914 to complete the construction
due to quarantine on animals used to deliver construction materials, thus
incurring delay on the delivery of cement and steel. Respondent agreed but
for a price, issuing resolution no. 383 wherein the final payment to
petitioner will be deducted the sum of P1,301.45 to cover for inspection
charges and operation and maintenance of ferry from Nov. 1, 1913 to Feb.
15, 1914. Respondent province, in exercising its right under the contract,
furnished all the steel at the shipside in Legaspi and was received by
petitioner on July 26, August 4 and Sept. 1, 1913.

This is a petition to recover the amount P1,301.45 withheld by respondent,

P200 overcharges on steel not delivered, P2,000 for damages cause by
respondents delay, and P878 for extra work and material furnished on the
bridge at respondents request. Judgment was held in favor of respondent,
dismissing the complaint. An appeal was made, hence this petition.

ISSUE:
1. WON the contracting parties fixed Sept. 1 or Nov. 1 as the date of
completion agreed upon.
2. WON there was unreasonable delay to warrant the deduction of
P1,301.45 on petitioners final payment for the construction.
3. WON petitioner may recover the withheld amount and damages
from overcharges, delay and extra work and material furnished.

RULING:
1. Nov. 1, 1913. The respondent provinces did intend that the date
for completion of work should be on such date. It was manifested
on the statement and resolution of the provincial board to fix the
time on Nov. 1 and the fact that the provinces deducted
inspection expenses and expenses for the operation of the ferry
from Nov. 1. The Director of Public Works did not comply with
these instructions as to the date as he and the petitioner-
contractor agreed that the date be on Sept. 1. Although not the
intention of the provinces the Director and petitioner ratified
the contract by their own acts furnishing the steel and making
payments.
2. No. the respondent provinces waived the contract time, whether
Sept.1 or Nov. 1, by their failure to deliver the steel promptly, by
reason of having placed the strict quarantine on animals by the
Bureau of Agriculture, by which the carabaos and cattle were to
be used as means to deliver the cement and steel, and that the
waiver operated to eliminate the definite date from which to
assess the liquidated damages. Where the strict performance on
the part of the contractor is prevented or waived by the other
party, a claim by such party of fines and penalties for delay or
failure cannot be sustained. The same rule applies in cases
containing liquidated damage clauses. We cannot apportion
such delay between the contracting parties and hold the
contractor liable in liquidated damages for the number of days
delayed by him in completing the bridge. The provinces have
proven no actual damages after Feb. 15 and thus, had no right to
withhold the P1,301.45.