CHUA vs.

VICTORIO
G.R. No. 157568 May 18, 2004
Facts:
Respondent Mutya Victorio is the owner of the property in Panganiban Street, Santiago, Isabela
where petitioners Chua and Yong Tian are lessees.
In 1990, Victorio effected an ejectment suit against the petitioners who were not fulfilling their
obligations as lessees, but a compromise agreement supervened this. In 1994, Victorio raised
the rentals and petitioners did not comply with such payments. She then again moved for an
ejectment suit. The RTC and CA ordered respondents to vacate the property. But this did not
happen because respondents agreed as to the new rentals and there again continued
occupation of the property.
In 1998, Victorio wanted to increase again the rentals. They again failed to pay such rents and
respondent filed again for ejectment suit.
Petitioners impugn such raises in rents, invoking the provisions of the compromise agreement
that the two parties executed sometime in 1991. They contend that there can be no increase of
more than 25% in a span of 4 years.
Issue:
1. WON the petitioners can invoke the provisions of the compromise agreement in order to hold
respondent stopped from making raises in leases NO
2. WON Victorio may rescind the contract of lease? YES
Held:
1.
The compromise agreement executed in 1991 is without moment as to petitioners claim.
Accordingly, in 1994, the juridical relation between the parties was severed when the CA
ordered ejectment of the petitioners. The lessors acceptance of the increased rentals in 1996
did not have the effect of reviving the earlier contract of lease. Upon the moment of
acquiescence by respondents to the increased amount, an entirely new contract of lease was

entered into, forging an entirely new juridical relation. Since payment of rent was made on a
monthly basis, and pursuant to Article 1687 of the Civil Code, the period of this lease contract
was monthly. Upon the expiration of every month, the lessor could increase the rents and
demand that the lessee vacate the premises upon non-compliance with increased terms.
2.
The right of rescission is statutorily recognized in reciprocal obligations, such as contracts of
lease. In addition to the general remedy of rescission granted under Article 1191 of the Civil
Code, there is an independent provision granting the remedy of rescission for breach of any of
the lessor or lessees statutory obligations. Under Article 1659 of the Civil Code, the aggrieved
party may, at his option, ask for (1) the rescission of the contract; (2) rescission and
indemnification for damages; or (3) only indemnification for damages, allowing the contract to
remain in force.
Payment of the rent is one of a lessees statutory obligations. The law grants the lessor the
option of extrajudicially terminating the contract of lease by simply serving a written notice
upon the lessee. This extrajudicial termination has the same effect as rescission. Rescission of
lease contracts under Article 1659 of the Civil Code does not require an independent action,
unlike resolution of reciprocal obligations under Article 1191 of said Code.

OLIVERIO LAPERAL& FILIPINAS GOLF & COUNTRY CLUB INC.petitioner vs.SOLID HOMES, INC. - respondentG.R. No. 130913. June 21, 2005
Facts:
Filipinas Golf Sales and Development Corporation, predecessor-in-interest of Filipinas Golf and Country Club,
Inc., represented by its then President, Oliverio Laperal, entered into a Development and
Management Agreement with respondent Solid Homes, Inc., a registered subdivision developer,
involving several parcels of land owned by Laperal and FGSDC. Under the terms and conditions of the
aforementioned Agreement and the Supplement, respondent undertook to convert at its own expense the land
subject of the agreement into a first-class residential subdivision, in consideration of which respondent will get
45% of the lot titles of the saleable area in the entire project. The aforementioned Agreement was cancelled by the
parties, and, in lieu thereof, two contracts identically denominated Revised Development and Management
Agreement were entered into by respondent with the two successors-in-interest of FGSDC. Unlike the original
agreement, both Revised Agreements omitted the obligation of petitioners Laperal and FGCCI to make available
to respondent Solid Homes, Inc. the owners duplicate copies of the titles covering the subject parcels of land. It
appears, however, that even as the Revised Agreements already provided for the non-surrender of the owners
duplicate copies of the titles, respondent persisted in its request for the delivery thereof .Then, petitioners served on

respondent notices of rescission of the Revised Agreements with a demand to vacate the subject properties and
yield possession thereof to them.
Issue:
Whether the termination of the Revised Agreement and Addendum, because of the contractual breach committed
by respondent solid homes, carried with it the effect provided under Article 1385 of the New Civil Code.
Held:
Mutual restitution is required in cases involving rescission under Article 1191. Since Article 1385 of the Civil
Code expressly and clearly states that rescission creates the obligation to return the things which were the object of
the contract, together with their fruits, and the price with its interest, the Court finds no justification to sustain
petitioners position that said Article 1385 does not apply to rescission under Article 1191.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. Applying the clear language of the law and the consistent jurisprudence on the matter,
therefore, the Court rules that rescission under Article 1191 in the present case, carries with it the corresponding
obligation of restitution.
Macasaet v. R. Transport CorporationFacts:
R. Transport and Macasaet entered into a Deed of Sale with Assumption of Mortgage
over 4 passenger buses whereby Macasaet undertook to pay the consideration of P12M
and assume the existing mortgage obligation on the said buses in favor of Phil. Hino
Sales Corp. Accordingly, R. Transport delivered to Macasaet 2 passenger buses.
Despite demands, however, Macasaet failed to pay the stipulated purchased price. This
prompted R. Transport to file acomplaint seeking the issuance of a writ of replevin,
praying for judgment declaring R. Transport as the lawfulowner and possessor of the
passenger buses and ordering Macasaet to remit the amount of P660, 000 representing
the income generated by the 2 buses. Prior to the execution of the contract, Special
Trip Contract was entered into by the parties wherein it stipulated that R. Transport
would lease the 4 subject of the deed of sale to Macasaet for the sum of P10, 000 a day
per bus. For his defense, petitioner alleged that he had paid respondent the full
consideration of P12M and had agreed to assume the mortgage obligation. He claimed
ownership over the 4 buses. He further contented thathe had already remitted P120,
000 to respondent as partial payment of the mortgage obligation. Petitioner admitted
that he had been earning at least P7, 000 per day on each bus. For his counterclaim, he
prayed for the return of the bus units seized and the immediate delivery of the other 2
units, as well as payment for damages.
Issue:
W/N respondent has the right to rescind or cancel the deed of sale in view of petitioners
failure to pay stipulated consideration.
Ruling:
The CA erred in stating that the deed of sale was not perfected, for it was. There was no
consummation though. However, the rescission or resolution of the deed of sale is in
order. Being a consensual contract, sale is perfected at themoment there is a meeting
of minds upon the thing which is the object of the contract and upon the price.From that

moment, the parties may reciprocally demand performance, subject to the provisions of
the law governing the form of contracts. A perfected contract of sale imposes reciprocal
obligations on the parties whereby the vendor obligates himself to transfer the
ownership of and to deliver a determinate thing to the buyer who, in turn, is obligated to
pay a price certain in money or its equivalent. Failure of either party to comply with his
obligation entitles the other to rescission as the power to rescind is implied in reciprocal
obligations. Applying these legal precepts to the case at bar, we hold that respondent
has the right to rescind or cancel the deed of sale in view of petitioners failure to
Pay stipulated consideration. Non-payment of the purchase price of property constitutes
a very good reason to rescind a sale for it violates the very essence of the contract of
sale. While itis preferable that respondent instead should have filed an action to resolve
or cancel the deed as the right to do so must be invoked judicially, this shortcoming was
cured when the complaint itself made out a case for rescission or resolution for failure of
petitioner to comply with his obligation to pay the full purchase price.
As previously noted, petitioner did not pay the full purchase price as stipulated in the
contract whereas respondent complied with its obligation when it delivered the 2 buses.
A necessary consequence of rescission is restitution with payment of damages under
Art. 1191. Also, corollary to the rescission of the contract of sale is the recovery of
possession of the object thereof. Thus, petitioners possession over the subject buses
became unlawful when upon demand for return, he wrongfully retained possession over
the same. As to damages, a party is entitled only up to suchcompensation for the
pecuniary loss that he has duly proven. Since the amount of damages was founded
merely on speculations, we return to the provisions of the Special Trip Contract wherein
the rental is fixed atP10,000 a day per bus. This duly executed contract was presented,
marked and formally offered in evidence. The fact that Macasaet voluntarily signed the
contract evinced his acquiescence to its terms, particularly the amount of rentals.
Congregation of the Religious of the Virgin Mary vs. OrolaG.R. No. 169790, April
30, 2008Nachura, J.
Facts:
On April 1999, petitioner, acting through Sr. Fe Enhenco, and respondents mets to talk
about the sale of the property of respondents adjacent to St. Marys Academy. Said
property is Lot 159-B-2 which is registered in the name of Manuel Laserna. Josepehine
Orola went to Manila on May, 1999 for the subject property and was entertained by Ma.
Clarita Balleque. A contract to sale was made between the parties where petitioners
are bound to pay the property for Php. 5,555,000.00 with 10% of the total consideration
payable upon the execution of the contract. This was signed by Sr. Enhenco as witness.
On June 7, 1999, Josephine and Antonio received the RCBC check bearing the amount
of P555, 550.00 as down payment by petitioner. An extrajudicial settlement was
executed for the estate of Trinidad Andrada Laserna adjudicating to themselves the
subject property. Transfer Certificates were now under their names. With an undated
Absolute Deed of Sale, respondents scheduled to meet with petitioner for the remaining
balance. Petitioner did not arrive. They instead refused to pay respondents due to
unreasonable grounds. This made respondents file a complaint before the RTC with

alternative causes of action or rescission. RTC granted respondents. On appeal, the

matter was resolved by the appellate court through Article 1378 of the New Civil Code.
Issue:
Whether or not Article 1191 should be applied instead of Article 1378 of the New Civil
Code.
Held:
Yes. Such case falls under Article 1191 because it applies to breach of reciprocal
obligations. Article1191 speaks of the remedy of rescission in reciprocal obligations. In
the present case, when RVM refused to pay the balance which breached the contract,
respondents have availed of the remedies granted by Article 1191. They are entitled to
damages regardless of the relief that would be granted by the Court. Hence, the court
should apply Article 1191 of the New Civil Code.
Stronghold Insurance v Republic Asahi
Facts:
Republic Asahi Glass contracts with JDS for the construction of roadways and drainage
systems in RAG's compound. JDS does so and files the required compliance bond with
Stronghold Insurance acting as surety. The contract is 5.3M the bond is 795k. JDS falls
woefully behind schedule, prompting RAG to rescind the contract and demand the
compliance bond. The owner of JDS dies and JDS disappears. SHI refuses to pay the
bond claiming that the death of JDS owner extinguishes the obligation.
Is SHI right?
Held:
As a general rule, the death of either the creditor or the debtor does not extinguish the
obligation.[8]Obligations are transmissible to the heirs, except when the transmission is prevented by
the law, the stipulations of the parties, or the nature of the obligation.[9]Only obligations that are
personal[10] or are identified with the persons themselves are extinguished by
death.[11] Furthermore, The liability of petitioner is contractual in nature, because it
executed a performance bond, As a surety, petitioner is solidarily liable with Santos in
accordance with the Civil Code.
SIMPLICIO PALANCA v.ULYSIUS GUIDES and LORENZO GUIDES
G.R. No. 146365 February 28, 2005
FACTS:
In August 1983, petitioner Palanca executed a contract to sell a parcel of land on installment with
Jopson for P11,250. Jopson paid petitioner P1,650 as downpayment, leaving a balance of P9600. In
December 1983, Jopson assigned ad transferred all her rights and interests over the property to
respondent Guides. Believing that she had fully paid the purchase prize, respondent found out when

she verified with the Register of Deeds that the property in question was still in the name of de Leon.
Petitioner stated that she refused to execute the document of sale in favor of the respondent since the
latter failed with the said obligation- that he was not paid the complete amount in the contract. RTC
ruled in favor of the plaintiff and against Palanca, ordering him to execute a Deed of Absolute Sale
and the issuance of TCT, reimburse plaintiff the amount paid n excess and for damages.
ISSUE:
Whether the petitioners claim of unpaid charges from the respondent proper
RULING:
Petitioner was deemed to have waived his right to present evidence and thus was unable to adduce
evidence of such inflation or fluctuation. Even if there were such, petitioner did not make a demand
on respondent for the satisfaction of the claim.
When petitioner accepted respondents installment payments despite the alleged charges, and
without any showing that he protested the irregularity of such payment, nor demanded the
payment of the alleged charges, respondents liability, if any for said charges is deemed fully
satisfied.
ALONZO VS SAN JUAN
GR No. 137549 February 11, 2005
FACTS:
A complaint for recovery of possession was filed by Aurelio P. Alonzo and Teresita A. Sison against
Jaime and Perlita San Juan docketed as Civil Case No. Q-96-29415 before the Regional Trial Court
(RTC) of Quezon City, Branch 77. In their Complaint, plaintiffs alleged that they are the registered
owners of a parcel of land. At around June of 1996, plaintiffs discovered that a portion on the left
side of the said parcel of land with an area of one hundred twenty-five (125) square meters, more or
less, was occupied by the defendants for more than a year, without their prior knowledge or consent.
A demand letter was sent to the defendants in August of 1996 requiring them to vacate the property
but they refused to comply; hence, the filing of the Complaint. During the pendency of the case, the
parties agreed to enter into a Compromise Agreement which the trial court approved in a Judgment.
Alleging that they failed to abide by the provisions of the Compromise Agreement by their failure to
pay the amounts due thereon, plaintiffs sent a letter demanding that the defendants vacate the
premises. Plaintiffs subsequently filed an Amended Motion for Execution. Acting on the motion, the
trial court issued its Order dated 11 August 1998 denying the motion.
ISSUE:
Is the RTC decision correct?
RULING:
In herein case, the respondents failed to discharge their burden of proving payment. Even assuming
that payments were made, it has not been shown to the full satisfaction of this Court whether the
payments were made specifically to satisfy respondents obligation under the Compromise
Agreement, nor were the circumstances under which the payments were made explained, taking into
consideration the conditions of the Compromise Agreement.
Respondents contract with the petitioners have the force of law between them. Respondents are
thus bound to fulfill what has been expressly stipulated therein. Items 11 and 12 of the Compromise
Agreement provided, in clear terms, that in case of failure to pay on the part of the respondents,
they shall vacate and surrender possession of the land that they are occupying and the petitioners
shall be entitled to obtain immediately from the trial court the corresponding writ of execution for
the ejectment of the respondents. This provision must be upheld, because the Agreement
supplanted the Complaint itself. When the parties entered into a Compromise Agreement, the
original action for recovery of possession was set aside and the action was changed to a monetary

obligation. Once approved judicially, the Compromise Agreement can not and must not be
disturbed except for vices of consent or forgery.

ALLANDALE SPORTLINE, INC AND MELBAROSE R. SASOTVS.THE GOOD

DEVELOPMENT CORPORATIONGR# 164521
FACTS:The Allandale Sportline,Inc (ASI) obtained a loan amounting to P204,000.00 from The
GoodDevelopment Corporation (GDI) after having executed a promissory note and provided an
additionalsecurity in the form of a deed of mortgage in favor of GDC. The terms and conditions of thepromissory
note signed by Melbarose S. Sasot and Allandale R. Sasot, the President and Vice-President of the company
respectively and the deed of mortgage are as follows:1.
The loan is to be paid daily in equal installments amounting to P 2,000.00 at an interestof 26 % per annum;2.
In case of default in payment the whole obligation shall be due and demandable andshall be subject to liquidate
penalty/collection charge at a rate of 2 % of the principalamount;3.
The failure of the Mortgagors to comply with the terms of the promissory note and themortgage contract, the
mortgagee shall automatically have the absolute right without aneed of demand to foreclose the mortgage
and proceed against all or any of themortgaged rights, interests and properties for the full satisfaction of the
mortgagorsentire obligation to the mortgagee;4.
The mortgagee shall also be liable for the payment of at
fees equivalent to 25%of the unpaid debt and all
expenses and incidental cost.On June 24, 1991, ASI failed to comply with their obligation and GDC demanded
that theunpaid account of 179,000. On October 31, 1991 ASI sent the respondent a posted check amountingto
171,000.00 which GDC eventually rejected since the check amount is insufficient for the loanbalance of
the principal loan. On October 15, 1997, petitioners tendered cash payment of 171,000.00 and on October 29,
1991 amounting to 174,986.96 and still the respondent still refusedto accept the payment due to insufficiency of
the amount. When no payment was made, GDC filed acomplaint for sum of Money with damages against
ASI.ISSUE:Whether or not ASI tender of payment and GDC refusal thereof discharged petitioners fromtheir
obligation.RULING:NO. The tender of payment do not result in the payment and extinguishment of
the loanobligation.Tender of payment must be followed by a valid consignation in order to produce the effectof
payment and extinguish the obligation. It is but a preparatory act to consignation. It is
themanifestation by the debtor of a desire to comply with or pay an obligation. If refused without justcause, the
tender of payment will discharge the debtor of the obligation to pay but only after a validconsignation of the sum
due shall have been made with the proper court. ASI did not allege or provethat their tender of payment was
rejected by respondents; they attempted or pursed consignation