Vda. De Mistica vs.

Naguiat
418 SCRA 73
Art. 1182. Potestative Condition

Issue/Scope
Potestative Condition under Art. 1182 in relation to Art. 1191 of Civil Code
Facts
Predecessor-in-interest of Petitioner and herein Defendants entered into a contract to sell in
which the latter prayed the initial payment and undertake to pay the remaining by installment within
10 years subject to 12% interest per annum
Petitioner filed a complaint for rescission alleging failure and refusal of Defendants to pay
the balance constitutes a violation of the contract which entitles her to rescind the same
Petitioner argues that period for performance of obligation cannot be extended to 10 years
because to do so would convert the obligation to purely potestative
Held
Under Art. 1191 of Civil Code, the right to rescind an obligation is predicated on
violation between parties brought about by breach of faith by one of them. Rescission,
however, is allowed only when the breach is substantial and fundamental to the
fulfillment of the obligation
In this case, no substantial breach in the Kasulatan, it was stipulated that payment could be
made even after 10 years from execution of contract, provided they will pay the 12% interest
Civil Code prohibits purely potestative, suspensive, conditional obligation that
depend on the whims of the debtor. Nowhere in the deed that payment of purchase price is
dependent whether respondents want to pay it or not, the fact that they already made partial
payment shows that parties intended to be bound by the Kasulatan

HEIRS OF RAMON C. GAITE, ET AL vs. THE PLAZA, INC. ET AL

G.R. No. 177685 January 26, 2011
FACTS:
The Plaza, Inc. (The Plaza) is a corporation engaged in the restaurant business. The
Plaza entered into a contract with Rhogen Builders represented by Ramon C. Gaite,
for the construction of a restaurant building located in Greenbelt, Makati on July 16,
1980. Gaite and FGU Insurance Coroparation (FGU) executed a surety bond in the
amount of P1,155,000 in favor of The Plaza to secure Rhogens compliance with its
obligation under the contract. The Plaza paid the surety bond less withholding taxes
as a downpayment to Gaite. The construction of the restaurant building is thereafter
commenced by Rhoegen.
Gaite received a letter on September 10, 1980 from the acting building official of
Makati ordering the former to cease and desist from continuing with the
construction for violation of the provisions of National Building Code. The Plazas
Project Manager, in his Construction memo stated that the actual jobsite
assessment showed that the finished works fall short of Rhogens claimed
percentage of accomplishment and Rhogen was entitled to only P32,684.16 and not
P260,649.91 as demanded by Rhogen. Further the said amount payable to Rhogen

be withheld due to stoppage of work by the Municipal Engineers Office of Makati

among others.
Gaite wrote to The Plaza on October 7, 1980 regarding his actions/observations on
the stoppage order issued. On the same day, Gaite notified The Plaza that he is
suspending all construction works until The Plaza and the Project Manager
cooperate to resolve the issue he had raised to address the problem. The Plaza
asserted that the corporation is not the one to initiate a solution to the situation,
especially after The Plaza already paid the agreed down payment of P1,155,000.00,
which compensation so far exceeds the work completed by Rhogen before the
municipal authorities stopped the construction for several violations. The Plaza
made it clear that the corporation has no obligation to help Rhogen get out of the
situation arising from non-performance of its own contractual undertakings, and
that The Plaza has its rights and remedies to protect its interest.
Gaite informed The Plaza on January 9, 1981 that he is terminating their contract
based on the Contractors Right to Stop Work or Terminate Contracts as provided for
in the General Conditions of the Contract. Gaite accused The Plaza of not
cooperating with Rhogen in solving the problem concerning the revocation of the
building permits, which he described as a minor problem. Additionally, Gaite
demanded the payment of P63,058.50 from The Plaza representing the work that
has already been completed by Rhogen
On January 13, 1981, The Plaza countered that it will hold Gaite and Rhogen fully
responsible for failure to comply with the terms of the contract and to deliver the
finished structure on the stipulated date. The Plaza also argued that the down
payment made was more than enough to cover Rhogens expenses.

The Plaza filed a complaint for breach of contract, sum of money and damages
against Gaite, Rhogen and FGU and for nullification of the project development
contract against Gaite and Rhogen. The trial court granted the claims of The Plaza
on withholding payment on the progress billing submitted by Rhogen based on the
evaluation of Tayzon and the non-lifting of the stoppage order among the other valid
grounds. Instead of readily rectifying the violations, Rhogen continued with the
construction works thereby causing more damage. Having failed to complete the
project within the stipulated period and comply with its obligations, Rhogen was
thus declared guilty of breaching the Construction Contract and is liable for
damages under Articles 1170 and 1167 of the Civil Code. The CA affirmed the trial
courts decision.

ISSUE:

WoN the contract between Rhogen and The Plaza provides for reciprocal obligation
which gives Rhogen valid legal grounds to terminate the contract pursuant to Art.
1191 of the Civil Code?

HELD:

Reciprocal obligations are those which arise from the same cause, and in which
each party is a debtor and a creditor of the other, such that the obligation of one is
dependent upon the obligation of the other. They are to be performed
simultaneously such that the performance of one is conditioned upon the
simultaneous fulfillment of the other. The Plaza predicated its action on Article
1191of the Civil Code, which provides for the remedy of rescission or more
properly resolution, a principal action based on breach of faith by the other party
who violates the reciprocity between them. The breach contemplated in the
provision is the obligors failure to comply with an existing obligation. Thus, the
power to rescind is given only to the injured party. The injured party is the party who
has faithfully fulfilled his obligation or is ready and willing to perform his obligation.

The construction contract between Rhogen and The Plaza provides for reciprocal
obligations whereby the latters obligation to pay the contract price or progress
billing is conditioned on the formers performance of its undertaking to complete the
works within the stipulated period and in accordance with approved plans and other
specifications by the owner. Pursuant to its contractual obligation, The Plaza
furnished materials and paid the agreed down payment. It also exercised the option
of furnishing and delivering construction materials at the jobsite pursuant to Article
III of the Construction Contract. However, just two months after commencement of
the project, construction works were ordered stopped by the local building official
and the building permit subsequently revoked on account of several violations of
the National Building Code and other regulations of the municipal authorities.

Non-observance of laws and regulations of the local authorities affecting the

construction project constitutes a substantial violation of the Construction Contract
which entitles The Plaza to terminate the same, without obligation to make further
payment to Rhogen until the work is finished or subject to refund of payment
exceeding the expenses of completing the works.

Upon the facts duly established, the CA therefore did not err in holding that Rhogen
committed a serious breach of its contract with The Plaza, which justified the latter in
terminating the contract. Petitioners are thus liable for damages for having breached
their contract with respondent The Plaza. Article 1170 of the Civil Code provides that
those who in the performance of their obligations are guilty of fraud, negligence or
delay and those who in any manner contravene the tenor thereof are liable for
damages.

Rhogen failed to finish even a substantial portion of the works due to the stoppage
order issued just two months from the start of construction. Despite the down
payment received from The Plaza, Rhogen, upon evaluation of the Project Manager,
was able to complete a meager percentage much lower than that claimed by it
under the first progress billing between July and September 1980. Moreover, after it
relinquished the project in January 1981, the site inspection appraisal jointly
conducted x x x x Rhogen was found to have executed the works not in accordance
with the approved plans or failed to seek prior approval of the Municipal Engineer.
Article 1167 of the Civil Code is explicit on this point that if a person obliged to do
something fails to do it, the same shall be executed at his cost.

The petition is DENIED. The Decision dated June 27, 2006 and the Resolution dated
April 20, 2007 of the Court of Appeals in CA-G.R. CV No. 58790 are AFFIRMED.

G.R. No. 133879, November 21, 2001

Panganiban, J.
Doctrine: Rent is a civil fruit that belongs to the owner of the property producing it by right of
accession.
Facts: Carmelo & Bauermann, Inc. (Camelo ) used to own a parcel of land with two 2-storey
buildings constructed thereon, located at Claro M. Recto Avenue, Manila, which it leased to Mayfair
Theater Inc. (Mayfair) for a period of 20 years. The Contract of Lease contained a provision
granting Mayfair a right of first refusal to purchase the subject properties. However, on July 30, 1978
within the 20-year-lease term the subject properties were sold by Carmelo to Equatorial Realty
Development, Inc. (Equatorial) for the total sum of P11,300,000, without first offering to Mayfair.

Mayfair filed a Complaint before the RTC of Manila for (a) the annulment of the Deed of Absolute
Sale between Carmelo and Equatorial, (b) specific performance, and (c) damages. The lower court
rendered a Decision in favor of Carmelo and Equatorial but the CA reversed such decision rescinding
the sale and ordered to allow Mayfair Theater, Inc. to buy the aforesaid lots for P11,300,000.00.
Mayfair bought the property. However, Equatorial filed an action for the collection of a sum of
money against Mayfair, claiming payment of rentals or reasonable compensation for Mayfairs use of
the subject premises after its lease contracts had expired. Equatorial alleged that representing itself
as the owner of the subject premises by reason of the Contract of Sale; it claimed rentals arising from
Mayfairs occupation thereof. The trial court dismissed the Complaint holding that the rescission of
the Deed of Absolute Sale did not confer on Equatorial any vested or residual proprietary rights.
Issue: Whether Equatorial is entitled to back rentals.
Held: No. In the case, there was no right of ownership transferred from Carmelo to Equatorial in
view of a patent failure to deliver the property to the buyer. By a contract of sale, one of the
contracting parties obligates himself to transfer ownership of and to deliver a determinate thing and
the other to pay therefor a price certain in money or its equivalent. Ownership of the thing sold is a
real right,[ which the buyer acquires only upon delivery of the thing to him in any of the ways
specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession
is transferred from the vendor to the vendee. This right is transferred, not by contract alone, but by
tradition or delivery. And there is said to be delivery if and when the thing sold is placed in the
control and possession of the vendee. From the peculiar facts of this case, it is clear that petitioner
never took actual control and possession of the property sold, in view of respondents timely
objection to the sale and the continued actual possession of the property. While the execution of a
public instrument of sale is recognized by law as equivalent to the delivery of the thing sold, such
constructive or symbolic delivery, being merely presumptive, is deemed negated by the failure of the
vendee to take actual possession of the land sold. In the case, Mayfairs opposition to the transfer of
the property by way of sale to Equatorial was a legally sufficient impediment that effectively
prevented the passing of the property into the latters hands. Rent is a civil fruit that belongs to the
owner of the property producing it by right of accession. Consequently and ordinarily, the rentals
that fell due from the time of the perfection of the sale to petitioner until its rescission by final
judgment should belong to the owner of the property during that period. Not having been the owner,
Equatorial cannot be entitled to the civil fruits of ownership like rentals of the thing sold.

CONSTANCIA G. TAMAYO v. ROSALIA ABAD SEORA

G.R. No. 176946

November 15, 2010

FACTS:

On September 28, 1995, at about 11:00 a.m., Antonieto M. Seora (Seora), was
riding a motorcycle, when a tricycle allegedly bumped his motorcycle from behind.
As a result, the motorcycle was pushed into the path of an Isuzu Elf Van (delivery
van). The delivery van ran over Seora, while his motorcycle was thrown a few
meters away. He was recovered underneath the delivery van and rushed to the
Medical Center of Paraaque, where he was pronounced dead on arrival.The tricycle
was driven by Leovino F. Amparo (Amparo), who testified that it was the delivery
van that bumped Seoras motorcycle.

The delivery van, on the other hand, was driven by Elmer O. Polloso (Polloso)
and registered in the name of Cirilo Tamayo (Cirilo). While trial was ongoing, Cirilo
was suffering from lung cancer and was bedridden. His wife, petitioner Constancia,
testified on his behalf. Constancia narrated that she and her husband were
managing a single proprietorship known as Tamayo and Sons Ice Dealer. She
testified that it was Cirilo who hired their drivers. She claimed that, as employer, her
husband exercised the due diligence of a good father of a family in the selection,
hiring, and supervision of his employees, including driver Polloso. Cirilo would tell
their drivers not to drive fast and not to be too strict with customers.

ISSUE:
Whether or not damages for loss of earning capacity should be awarded.

RULING:
The award of damages for loss of earning capacity is concerned with the
determination of losses or damages sustained by respondents, as dependents and
intestate heirs of the deceased. This consists not of the full amount of his earnings,
but of the support which they received or would have received from him had he not
died as a consequence of the negligent act. Thus, the amount recoverable is not the
loss of the victims entire earnings, but rather the loss of that portion of the
earnings which the beneficiary would have received.

Indemnity for loss of earning capacity is determined by computing the net earning
capacity of the victim.

The CA correctly modified the RTCs computation. The RTC had misapplied the
formula generally used by the courts to determine net earning capacity, which is, to
wit:

Net Earning Capacity = life expectancy x (gross annual income - reasonable and
necessary living expenses).

Life expectancy shall be computed by applying the formula (2/3 x [80 - age at
death]) adopted from the American Expectancy Table of Mortality or the Actuarial of
Combined Experience Table of Mortality. Hence, the RTC erred in modifying the
formula and using the retirement age of the members of the PNP instead of "80."

On the other hand, gross annual income requires the presentation of documentary
evidence for the purpose of proving the victims annual income. The victims heirs
presented in evidence Seoras pay slip from the PNP, showing him to have had a
gross monthly salary of P12,754.00. Meanwhile, the victims net income was
correctly pegged at 50% of his gross income in the absence of proof as regards the
victims living expenses.