MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY vs.

TUDTUD Case Digest

MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY v. BENJAMIN TUDTUD, et al.
571 SCRA 165 (2008), SECOND DIVISION (Carpio Morales, J.)
The former owner reacquires the property expropriated if the expropriation of the same was
subject to condition that when that purpose is ended or abandoned, it shall be returned to
the owner.
FACTS: The National Airports Corporation (NAC) filed a complaint for expropriation in order to
expand the Cebu Lahug Airport. It sought to acquire, by negotiated sale or expropriation, several lots
adjoining the then existing airport which included the parcels of land owned by the predecessors-ininterest of respondents Benjamin Tudtud et al. NAC assured the owners that they would reacquire
the land if it is no longer needed by the airport. The Court of First Instance of Cebu granted the
expropriation.
No structures related to the operation of the Cebu Lahug Airport were constructed on the land
expropriated. Respondent Lydia Adlawan (Lydia), acting as attorney-in-fact of the original owners,
sent a letter to the general manager of the petitioner Mactan Cebu International Airport Authority
(MCIAA), the new owner of the lot and demanded to repurchase the lot at the same price paid at the
time of the taking, without interest.
Lydia filed a complaint before the Regional Trial Court (RTC) of Cebu City for reconveyance and
damages against the MCIAA. The RTC of Cebu rendered judgment in favor of Tudtud et al. MCIAA
appealed to the Court of Appeals but it affirmed the RTC decision. MCIAA then filed a Motion for
Reconsideration but was denied.
ISSUE: Whether or not Tudtud et al. are entitled for the reconveyance of the land expropriated
HELD: Tudtud et al.s witness respondent Justiniano Borga declared that the original owners did not
oppose the expropriation of the lot upon the assurance of the NAC that they would reacquire it if it is
no longer needed by the airport. The rights and duties between the MCIAA and Tudtud et al are
governed by Article 1190 of the Civil Code which provides: When the conditions have for their
purpose the extinguishment of an obligation to give, the parties, upon the fulfillment of said
conditions, shall return to each other what they have received. In case of the loss, deterioration, or
improvement of the thing, the provisions which, with respect to the debtor, are laid down in the
preceding article [Article 1189] shall be applied to the party who is bound to return.
While the MCIAA is obliged to reconvey Lot No. 988 to Tudtud et al., they must return to the MCIAA
what they received as just compensation for the expropriation of Lot No. 988, plus legal interest to
be computed from default, which in this case runs from the time the MCIAA complies with its
obligation to the respondents. Tudtud et al., must likewise pay the MCIAA the necessary expenses it
may have incurred in sustaining Lot No. 988 and the monetary value of its services in managing it to
the extent that Tudtud et al., were benefited thereby. Following Article 1187 of the Civil Code, the
MCIAA may keep whatever income or fruits it may have obtained from Lot No. 988, and Tudtud et
al., need not account for the interests that the amounts they received as just compensation may
have earned in the meantime.

MACTAN CEBU INT VS LOZADA

FACTS: Subject of this case is a lot (Lot No. 88) located in Lahug, Cebu City. Its original owner
was Anastacio Deiparine when the same was subject to expropriation proceedings, initiated by
Republic, represented by the then Civil Aeronautics Administration (CAA), for the expansion and
improvement of the Lahug Airport. During the pendency of the expropriation proceedings,
respondent Bernardo L. Lozada, Sr. acquired Lot No. 88 from Deiparine. The trial court ruled for
the Republic and ordered the latter to pay Lozada the fair market value of the lot. However, the
projected improvement and expansion plan of the old Lahug Airport, however, was not pursued.
The plaintiff-respondents initiated a complaint for the recovery of possession and reconveyance
of ownership the subject lot. On the other hand, the petitioners asked for the immediate
dismissal of the complaint. They specifically denied that the Government had made assurances
to reconvey Lot No. 88 to respondents in the event that the property would no longer be needed
for airport operations. Petitioners instead asserted that the judgment of condemnation was
unconditional, and respondents were, therefore, not entitled to recover the expropriated property
notwithstanding non-use or abandonment thereof. The lower court ruled for herein plaintiffrespondents, which decision was affirmed by the Court of Appeals. In this petition, the
petitioners argued that the judgment in Civil Case No. R-1881 was absolute and unconditional,
giving title in fee simple to the Republic.
ISSUE: Whether or not a constructive trust was constituted in this case, and as such, the
respondents herein are entitled to the restitution of the expropriated property which was not
used for a public purpose.
HELD: YES. Art. 1454 of the Civil Code provides: If an absolute conveyance of property is
made in order to secure the performance of an obligation of the grantor toward the grantee, a
trust by virtue of law is established. If the fulfillment of the obligation is offered by the grantor
when it becomes due, he may demand the reconveyance of the property to him.
Constructive trusts are fictions of equity which are bound by no unyielding formula when they
are used by courts as devices to remedy any situation in which the holder of legal title may not
in good conscience retain the beneficial interest.
In constructive trusts, the arrangement is temporary and passive in which the trustees sole duty
is to transfer the title and possession over the property to the plaintiff-beneficiary. Of course, the
wronged party seeking the aid of a court of equity in establishing a constructive trust must
himself do equity. Accordingly, the court will exercise its discretion in deciding what acts are
required of the plaintiff-beneficiary as conditions precedent to obtaining such decree and has
the obligation to reimburse the trustee the consideration received from the latter just as the
plaintiff-beneficiary would if he proceeded on the theory of rescission. In the good judgment of
the court, the trustee may also be paid the necessary expenses he may have incurred in
sustaining the property, his fixed costs for improvements thereon, and the monetary value of his
services in managing the property to the extent that plaintiff-beneficiary will secure a benefit
from his acts.

The rights and obligations between the constructive trustee and the beneficiary, in this case,
respondent MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of the
Civil Code, When the conditions have for their purpose the extinguishment of an obligation to
give, the parties, upon the fulfillment of said conditions, shall return to each other what they
have received x x x In case of the loss, deterioration or improvement of the thing, the provisions
which, with respect to the debtor, are laid down in the preceding article shall be applied to the
party who is bound to return x x x.

CORONEL VS CA

FACTS:
Petitioners sold a parcel of land, which they inherited through succession by the death
of their father, to the private respondent. The Receipt of Downpayment was then executed by
the petitioners in favor of private respondent. Part of the said receipt is the statement that they
bind themselves to effect the transfer in their names from their deceased father the transfer
certificate of title immediately upon receipt of the downpayment abovestated. A month thereafter
the transaction, the title of the property was transferred under their name. Instead of delivering
the title to private respondent to consummate their transaction, the petitioners sold the property
to a third party. With this, petitioners unilaterally cancelled and rescinded the contract between
them and the private respondents on the ground of physical absence of the private respondent
since she was abroad.
Issues:
1. Whether or not the physical absence of the private respondent rendered her in default
insofar as her obligation to pay the full purchase price is concerned.
2. Whether the contract between petitioners and private respondent was that of a
conditional sale or a mere contract to sell
Held:
NO. Article 1169 provides that in reciprocal obligations, neither party incurs in delay if
the other does not comply or not ready to comply in a proper manner with what is incumbent
upon him. From the moment one of the parties fulfill his obligation, delay by the other begins.
In the case at bar, the obligation of the private respondent to pay the full amount
depends on the obligation of the petitioners to present the new transfer certificate of title and
execute the deed of absolute sale. The petitioners, however, failed to comply with their
agreement. Hence, private respondents obligation never became due and demandable and
therefore she cannot be deemed to have been in default.
(2) Sale, by its very nature, is a consensual contract because it is perfected by mere
consent. The essential elements of a contract of sale are the following: a) Consent or meeting of

the minds, that is, consent to transfer ownership in exchange for the price; b) Determinate
subject matter; and c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a Contract of Sale because
the first essential element is lacking. In a contract to sell, the prospective seller explicity
reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not
as yet agree or consent to transfer ownership of the property subject of the contract to sell until
the happening of an event, which for present purposes we shall take as the full payment of the
purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell the
subject property when the entire amount of the purchase price is delivered to him. In other
words the full payment of the purchase price partakes of a suspensive condition, the nonfulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by
the prospective seller without further remedies by the prospective buyer. A contract to sell may
thus be defined as a bilateral contract whereby the prospective seller, while expressly reserving
the ownership of the subject property despite delivery thereof to the prospective buyer, binds
himself to sell the said property exclusively to the prospective buyer upon fulfillment of the
condition agreed upon, that is, full payment of the purchase price.
A contract to sell may not even be considered as a conditional contract of sale where the seller
may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive
condition, because in a conditional contract of sale, the first element of consent is present,
although it is conditioned upon the happening of a contingent event which may or may not
occur. If the suspensive condition is not fulfilled, the perfection of the contract of sale is
completely abated. However, if the suspensive condition is fulfilled, the contract of sale is
thereby perfected, such that if there had already been previous delivery of the property subject
of the sale to the buyer, ownership thereto automatically transfers to the buyer by operation of
law without any further act having to be performed by the seller. In a contract to sell, upon the
fulfillment of the suspensive condition which is the full payment of the purchase price, ownership
will not automatically transfer to the buyer although the property may have been previously
delivered to him. The prospective seller still has to convey title to the prospective buyer by
entering into a contract of absolute sale.
It is essential to distinguish between a contract to sell and a conditional contract of sale specially
in cases where the subject property is sold by the owner not to the party the seller contracted
with, but to a third person, as in the case at bench. In a contract to sell, there being no previous
sale of the property, a third person buying such property despite the fulfillment of the suspensive
condition such as the full payment of the purchase price, for instance, cannot be deemed a
buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the
property. There is no double sale in such case. Title to the property will transfer to the buyer
after registration because there is no defect in the owner-seller's title per se, but the latter, of
course, may be used for damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the
sale becomes absolute and this will definitely affect the seller's title thereto. In fact, if there had
been previous delivery of the subject property, the seller's ownership or title to the property is
automatically transferred to the buyer such that, the seller will no longer have any title to transfer

to any third person. Such second buyer of the property who may have had actual or constructive
knowledge of such defect in the seller's title, or at least was charged with the obligation to
discover such defect, cannot be a registrant in good faith. Such second buyer cannot defeat the
first buyer's title. In case a title is issued to the second buyer, the first buyer may seek
reconveyance of the property subject of the sale.
The agreement could not have been a contract to sell because the sellers herein made no
express reservation of ownership or title to the subject parcel of land. Furthermore, the
circumstance which prevented the parties from entering into an absolute contract of sale
pertained to the sellers themselves (the certificate of title was not in their names) and not the full
payment of the purchase price. Under the established facts and circumstances of the case, the
Court may safely presume that, had the certificate of title been in the names of petitionerssellers at that time, there would have been no reason why an absolute contract of sale could not
have been executed and consummated right there and then.

What is clearly established by the plain language of the subject document is that when the said
"Receipt of Down Payment" was prepared and signed by petitioners Romeo A. Coronel, et al.,
the parties had agreed to a conditional contract of sale, consummation of which is subject only
to the successful transfer of the certificate of title from the name of petitioners' father,
Constancio P. Coronel, to their names.
The provision on double sale presumes title or ownership to pass to the first buyer, the
exceptions being: (a) when the second buyer, in good faith, registers the sale ahead of the first
buyer, and (b) should there be no inscription by either of the two buyers, when the second
buyer, in good faith, acquires possession of the property ahead of the first buyer. Unless, the
second buyer satisfies these requirements, title or ownership will not transfer to him to the
prejudice of the first buyer. In a case of double sale, what finds relevance and materiality is not
whether or not the second buyer was a buyer in good faith but whether or not said second buyer
registers such second sale in good faith, that is, without knowledge of any defect in the title of
the property sold. If a vendee in a double sale registers that sale after he has acquired
knowledge that there was a previous sale of the same property to a third party or that another
person claims said property in a pervious sale, the registration will constitute a registration in
bad faith and will not confer upon him any right.

PARKS VS PROV OF TARLAC

CENTRAL PHIL UNIVERSITY VS CA

July 17, 1995

DONATION
FACTS: (1) In 1939, the late Don Ramon Lopez, Sr., who was then a member of the Board of
Trustees of the Central Philippine College (now Central Philippine University [CPU]), executed a
deed of donation in favor of the latter of a parcel of land identified as Lot No. 3174-B-1 of the
subdivision plan Psd-1144, then a portion of Lot No. 3174-B, for which Transfer Certificate of
Title No. T-3910-A was issued in the name of the donee CPU with the following annotations
copied from the deed of donation
1. The land described shall be utilized by the CPU exclusively for the establishment and use of
a medical college with all its buildings as part of the curriculum;
2. The said college shall not sell, transfer or convey to any third party nor in any way encumber
said land;
3. The said land shall be called "RAMON LOPEZ CAMPUS", and the said college shall be under
obligation to erect a cornerstone bearing that name. Any net income from the land or any of its
parks shall be put in a fund to be known as the "RAMON LOPEZ CAMPUS FUND" to be used
for improvements of said campus and erection of a building thereon.
(2) On 31 May 1989, private respondents, who are the heirs of Don Ramon Lopez, Sr., filed an
action for annulment of donation, reconveyance and damages against CPU alleging that since
1939 up to the time the action was filed the latter had not complied with the conditions of the
donation.
RTC: On 31 May 1991, the trial court held that petitioner failed to comply with the conditions of
the donation and declared it null and void.
CA: 18 June 1993 ruled that the annotations at the back of petitioner's certificate of title were
resolutory conditions breach of which should terminate the rights of the donee thus making the
donation revocable.
APPLICABLE LAW/S:
Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or
loss of those already acquired, shall depend upon the happening of the event which constitutes
the condition. (1114)
Art. 1197. If the obligation does not fix a period, but from its nature and the circumstances it
can be inferred that a period was intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the debtor.
In every case, the courts shall determine such period as may under the circumstances have
been probably contemplated by the parties. Once fixed by the courts, the period cannot be
changed by them. (1128a)

 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. (1124)
HELD: (1) The donation was onerous. A clear perusal of the conditions set forth in the deed of
donation executed by Don Ramon Lopez, Sr., gives us no alternative but to conclude that his
donation was onerous, one executed for a valuable consideration which is considered the
equivalent of the donation itself, e.g., when a donation imposes a burden equivalent to the value
of the donation. The donation had to be valid before the fulfillment of the condition. 5 If there
was no fulfillment or compliance with the condition, such as what obtains in the instant case, the
donation may now be revoked and all rights which the donee may have acquired under it shall
be deemed lost and extinguished.
(2) The action has not prescribed. It has been held that its absolute acceptance and the
acknowledgment of its obligation provided in the deed of donation were sufficient to prevent the
statute of limitations from barring the action of private respondents upon the original contract
which was the deed of donation.
(3) Courts fixing a period is now moot and rescission is proper. Petitioner has slept on its
obligation for an unreasonable length of time. Hence, it is only just and equitable now to declare
the subject donation already ineffective and, for all purposes, revoked so that petitioner as
donee should now return the donated property to the heirs of the donor, private
respondents herein, by means of reconveyance.
ISSUE:
1) WON petitioner failed to comply the resolutely conditions annotated at the back of petitioners
certificate of title without a fixed period when to comply with such conditions? YES
2) WON there is a need to fix the period for compliance of the condition? NO
HELD:
1)
Under Art. 1181, on conditional obligations, the acquisition of rights as well the extinguishment
or loss of those already acquired shall depend upon the happening of the event which
constitutes the condition. Thus, when a person donates land to another on the condition that the
latter would build upon the land a school is such a resolutory one. The donation had to be valid
before the fulfillment of the condition. If there was no fulfillment with the condition such as what
obtains in the instant case, the donation may be revoked & all rights which the donee may have
acquired shall be deemed lost & extinguished.

More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of
the opportunity to comply with the condition even if it be burdensome, to make the donation in
its favor forever valid. But, unfortunately, it failed to do so. Hence, there is no more need to fix
the duration of a term of the obligation when such procedure would be a mere technicality and
formality and would serve no purpose than to delay or lead to an unnecessary and expensive
multiplication of suits.
Records are clear and facts are undisputed that since the execution of the deed of donation up
to the time of filing of the instant action, petitioner has failed to comply with its obligation as
donee. Petitioner has slept on its obligation for an unreasonable length of time. Hence, it is only
just and equitable now to declare the subject donation already ineffective and, for all purposes,
revoked so that petitioner as donee should now return the donated property to the heirs of the
donor, private respondents herein, by means of reconveyance.
2)
Under Art. 1197, when the obligation does not fix a period but from its nature & circumstance it
can be inferred that the period was intended, the court may fix the duration thereof because the
fulfillment of the obligation itself cannot be demanded until after the court has fixed the period
for compliance therewith & such period has arrived. However, this general rule cannot be
applied in this case considering the different set of circumstances existing more than a
reasonable period of 50yrs has already been allowed to petitioner to avail of the opportunity to
comply but unfortunately, it failed to do so. Hence, there is no need to fix a period when such
procedure would be a mere technicality & formality & would serve no purpose than to delay or
load to unnecessary and expensive multiplication of suits.
Under Art. 1191, when one of the obligors cannot comply with what is incumbent upon him, the
obligee may seek rescission before the court unless there is just cause authorizing the fixing of
a period. In the absence of any just cause for the court to determine the period of compliance
there is no more obstacle for the court to decree recission.

QUIJADA VS CA
Petitioners are the children of the late Trinidad who inherited from the same from Pedro a twohectare parcel of land subject of this case.The said land was the subject of a conditional deed of
donation executed by Trinidad, with hersisters and brother, in favor of the municipality based on
the condition that it shall be used as partof the campus of the proposed provincial high
school.However, Trinidad sold the half of the said land to respondent Mondejar. he then
verbally soldthe other half to him without a deed of sale, evidenced solely by receipts of
payment.The proposed provincial high school failed to materiali!e. "or this reason, the
angguniang#ayan of the municipality enacted a resolution reverting land donated bac$ to the
donors.Then, Mondejar sold portions of the land to other persons.The petitioners filed a
complaint alleging therein that their deceased mother never disposed ofthe property and that at

the time of the alleged sale the land still belongs to the municipality,hence, the supposed sale is
null and void.%espondents claimed otherwise and averred that petitioners& action is barred by
laches.The courta quo ordered judgment in favor of the petitioners. but this was reversed by
the c'our tof appeals )'(* when appealed on the ground that the sale made by Trinidad to
Mondejar was valid as the former retained an inchoate interest on the lots by virtue of the
automatic reversion clause in the deed of donation Hence, this petition.
ISSUE:
Whether the deed of donation had a suspensive condition or a resolutory condition
Whether the sale was valid
RULING:
When the donation was accepted, the ownership was transferred to the school, only subject to a
condition that a school must be constructed over the lot. Since ownership was transferred, and
failure to fulfill the condition reverts the ownership back to the donor, it is a resolutory condition.
(Not really a discussion in Property) When Trinidad sold the parcels of land to Mondejar, she
was not the owner of the land. Petitioners also did not sleep on their rights to recover the
possession and ownership over the property since they immediately filed the action when the
municipality passed the resolution, reverting the ownership of land to the donors. However, a
sale being a consensual contract, it can be perfected upon meeting of the minds, and
completing the three essential elements of a valid contract of sale. Even when Trinidad was not
the owner when the sale was perfected, tradition through delivery is only important upon the
consummation stage. Such transfer of ownership through actual or constructive delivery only
happened when the lands reverted back to petitioners. Art 1434 is applicable, stating that
seller's "title passes by operation if law to the buyer," and therefore making the sale valid. The
donated lots cannot be considered outside the commerce of man, since nowhere in the law
states that properties owned by municipality would be as such.

Heirs of Moreno vs. MACTAN

GR- 156273

October 15, 2003

FACTS:
1.
MORENO: successors of 2 parcels of land
1.
MACTAN wanted to acquire land:
i. Government assured landowners that they could repurchase their lands once Lahug
Airport was closed or its operations transferred to Mactan Airport
ii. Moreno refused offer.

iii. Civil Aeronautics Administration as the successor agency of the National Airport
Corporation filed a complaint with the Court of First Instance of Cebu, for the
expropriation of land.
iv. Trial court promulgated public use upon payment of just compensation.
v. MORENO were paid; no appeal.
vi. Certificates of title were issued.
2.
LAHUG AIRPORT CEASED OPERATIONS, lands not utilized.
1.
Moreno plead for repurchase of land.
i. Filed complaint for reconveyance and damages.
ii. Averred that they have been convinced not to oppose since they could repurchase.
iii. MCIAA did not object.
3.
ENCHUAN FILED FOR MOTION OF TRANSFER
1.
Acquired through deeds of assignment the rights of land.
2.
DPWH claimed it leased in good faith from MCIAA to Regional Equipment
Services and Region 7 Office.
4.

TRIAL COURT GRANTED RIGHT TO REPURCHASE but subject to the alleged

property rights of Richard E. Enchuan and the leasehold of DPWH.
5.
CA reversed: rights gained by MCIAA were indicative of ownership in fee simple
ISSUE:
Do they have right to repurchase? Or right to reversion?
HELD:
PETITION GRANTED. CA DECISION REVERSED AND SET ASIDE.
1. Return or repurchase of the condemned properties of petitioners could be readily
justified as the manifest legal effect or consequence of the trial courts underlying
presumption that Lahug Airport will continue to be in operation when it granted the
complaint for eminent domain and the airport discontinued its activities.
2. ARTICLE 1454: If an absolute conveyance of property is made in order to secure the
performance of an obligation of the grantor toward the grantee, a trust by virtue of law
is established. If the fulfillment of the obligation is offered by the grantor when it
becomes due, he may demand the reconveyance of the property to him.
a. In the case at bar, government obliged itself to use of land for the expansion of Lahug
Airport
i. Failure to keep its bargain: can be compelled to reconvey, otherwise, petitioners would be
denied the use of their properties upon a state of affairs that was not conceived nor
contemplated when the expropriation was authorized.
3. ARTICLE 1189: If the thing is improved by its nature, or by time, the improvement shall
inure to the benefit of the creditor.
a. CREDITOR: person who stands to receive something as a result of the process of
restitution.
i. Petitioners must pay MCIAA the necessary expenses in sustaining the properties and
services
ii. Government may keep whatever income or fruits it may have obtained from the parcels of
land.

iii. Petitioners need not account for the interests that the amounts they received as just
compensation may have earned in the meantime.

BOYSAW V INTERPHIL PROMOTIONS, INC. | 1987 | FERNAN, J.FACTS:

1.On May 1, 1961, Solomon Boysaw, and his thenManager Willie Ketchum, signed a contract to
fightGabriel Flash Elorde in boxing with InterphilPromotions, Inc. represented by Lope Sarreal,
Sr. forthe lightweight championship of the world;
2.The agreement was that the bout would be held at RizalMemorial Stadium in Manila on
September 30, 1961 ornot later than 30 days thereafter should apostponement be mutually
agreed upon; and thatBoysaw would not fight anyone without the consent of Interphil prior to the
date of the bout;
3. On June 19, 1961, Boysaw fought and defeated LouisAvila; Later, Boysaw had two manager
changes; FromWillie Ketchum to Amado Araneta, then from the latterto Alfredo Yulo, Jr.;4.On
September 5, 1961, Yulo informed Sarreal over hisacquisition of managerial rights over Boysaw
andindicating his and Boysaws readiness to comply with theMay 1 contract; on the same day,
Sarreal wrote to theGames Amusement Board (GAB) expressing concern of the switch of the
managers, which he wasnt formallynotified, and requesting Boysaw for clarifications;
5. GAB called for conferences of the parties leading to adecision to schedule the Elorde-Boysaw
to November 4,1961, which was approved by the USA National BoxingAssociation;6.However,
Yulo refused to accept the date change evenafter Sarreal offered it to be moved to October 28,
1961which was within the 30 day period allowablepostponement in the May 1 contract;7.Early in
October 1961, Yulo communicated withMamerto Besa, a local boxing operator; He
informedBesa that he would approve the November 4 bout if Besa was the promoter;
8. While the Elorde-Boysaw fight was eventually staged,the fight contemplated in the May 1
contract nevermaterialized; As a result, Boysaw and Yulo suedInterphil, Sarreal and Nieto Jr.
(GAB Chairman) fordamages by the refusal of InterPhil and Sarreal aidedand abetted by Nieto
to honour the May 1 contract;
9. The case dragged into 1963 when Boysaw left thecountry without informing the court and, as
alleged, hiscounsel; His counsel moved for postponements sincewhen the time came when
Boysaw was to take thewitness stand, he was still abroad; Boysaw eventuallyfailed to appear
and the plaintiffs case was deemedsubmitted on the evidence thus far presented
10.When the trial proceeded, when defendants counselwas about to present their case,
plaintiffs counsel tookno further part in the proceedings; after the trial courtrendered judgment,
plaintiffs moved for a new trial, themotion was denied, hence direct appeal to SC by reasonof
the amount involved;

Issues: May the offending party in a reciprocal obligation compel the other party for specific
performance?
Ruling: No. Evidence established that the contract was violated by Boysaw (P) when, without
the approval or consent of Interphil (D), he fought a boxing match in Las Vegas. Another
violation was the assignment and transfer of the managerial rights over Boysaw (P) without the
knowledge or consent of Interphil (D).
While the contract imposed no penalty for such violation, this does not grant any of the parties
the unbridled liberty to breach it with impunity. Our law on contracts recognizes the principle that
actionable injury inheres in every contractual breach.
Those who in the performance of their obligations are guilty of fraud, negligence or delay, and
those who in any manner contravene the terms thereof, are liable for damages.
Article 1170, Civil Code.
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.
Article 1191, Civil Code.
The contract in question gave rise to reciprocal obligations.
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, so that the performance of one
is conditioned upon the simultaneous fulfillment of the other.
Tolentino, Civil Code of the Philippines, Vol. IV, p. 175.
The power to rescind is given to the injured party.
Where the plaintiff is the party who did not perform the undertaking which he was bound by the
terms of the agreement to perform, he is not entitled to insist upon the performance of the
contract by the defendant, or recover damages by reason of his own breach.
Seva vs. Alfredo Berwin, 48 Phil. 581.
Under the law, when a contract is unlawfully novated by an applicable and unilateral substitution
of the obligor by another, the aggrieved creditor is not bound to deal with the substitute.
However, from the evidence, it is clear that the Interphil (D), instead of availing themselves of
the options given to them by law of rescission or refusal to recognize the substitute obligor,
really wanted to postpone the fight date owing to an injury that Elorde sustained in a recent
bout. That Interphil (D) had justification to renegotiate the original contract, particularly the fight
date is undeniable from the facts. Under the circumstances, Interphil's (D) desire to postpone
the fight date could neither be unlawful nor unreasonable.

UNIVERSITY OF THE PHILIPPINES VS. DE LOS

ANGELES

35 SCRA 102
FACTS:
On November 2, 1960, UP and ALUMCO entered into a logging agreement whereby the latter
was grantedexclusive authority to cut, collect and remove timber from the Land Grant for a
period starting from the date of agreement to December 31, 1965, extendible for a period of
5 years by mutual agreement.
On December 8, 1964, ALUMCO incurred an unpaid account of P219,362.94. Despite repeated
demands, ALUMCO still failed to pay, so UP sent a notice to rescind the logging agreement. On
the other hand, ALUMCO executed an instrument entitled
Acknowledgment of Debt and Proposed Manner of Payments. It was approved by the president
of UP, which stipulated the following:
3. In the event that the payments called for are not sufficient to liquidate the foregoing
indebtedness, the balance outstanding after the said payments
have been applied shall be paid by the debtor in full no later than June 30, 1965.
5. In the event that the debtor fails to comply with any of its promises, the Debtor agrees without
reservation that Creditor shall have the right to consider the Logging Agreement rescinded,
without the necessity of any judicial suit ALUMCO continued its logging operations, but
again incurred an unpaid account. On July 19,1965, UP informed ALUMCO that it had, as of
that date, considered rescinded and of no further legal effect the logging
agreement, and that UP had already taken steps to have another concessionaire take over the
logging operation. ALUMCO filed a petition to enjoin UP from conducting the bidding. The lower
court ruled in favor of ALUMCO, hence, this appeal.
ISSUE:
Can petitioner UP treat its contract with ALUMCO
rescinded, and may disregard the same before any judicial
pronouncement to that effect?
RULING:
Yes. In the first place, UP and ALUMCO had expressly stipulated that upon default by the
debtor, UP has the right and the power to consider the Logging Agreement of December 2, 1960
as rescinded without the necessity of any judicial suit. As to such special stipulation and in
connection with Article 1191 of the Civil Code, the Supreme Court, stated in Froilan vs. Pan
Oriental ShippingCo:
There is nothing in the law that prohibits the parties from entering into agreement that violation
of the terms of the contract would cause cancellation thereof, even without court intervention. In
other words, it is not always necessary for the injured party to resort to court for rescission of the
contract.
Angeles vs. Calasanz

Summary: A buyer of a property paid monthly installments for nine years, but was five months late on
the installment payment due. The seller rescinded the contract and applied the installments made as
rentals.
Rule of Law: The act of a party in treating a contract as canceled or resolved on account of infractions by
the other is always provisional, being ever subject to scrutiny and review by the proper court.
Facts: Ursula and Tomas Calasanz (D) sold a piece of land to Buenaventura Angeles (P) and Teofila Juani
covered by a contract to sell.
Angeles (P) paid a downpayment upon the execution of the contract and started paying the balance in
monthly installments. Angeles (P) paid monthly installments for nine years with only a few remaining
installments left to pay. Although Calasanz (D) accepted late payments before, Angeles (P) was now five
months late.
Calasanz (D) demanded payment of past due accounts, but did not receive any. Eventually, Calansanz (D)
canceled the said contract because Angeles (P) failed to pay the subsequent payments. Angeles (P) asked
for reconsideration, but was denied.
Angeles (P) filed a case to compel the Calasanz (D) to execute in their favor the final deed of sale alleging
that they have already fully paid the total price of the property. Calasanz (D) alleged in their answer that
Angeles (P) violated the contract to sell when they failed to pay a monthly installment.
A provision in the contract to sell gave Calasanz (D) the right to cancel the contract and consider the
amounts paid as rent for the property. However, the lower court ruled that the contract was not validly
canceled and ordered Calasanz (D) to execute a final Deed of Sale in favor of Angeles (P)
Issues: Was the contract to sell validly canceled?
Ruling: No. The rule that it is not always necessary for the injured party to resort to court for rescission
of the contract when the contract itself provides was qualified by this Court in University of the
Philippines v. De los Angeles, (35 SCRA 102) where we explained (paraphrased) that:
Of course, the act of a party in treating a contract as canceled or resolved on account of infractions by the
other must be made known to the other and is always provisional, being ever subject to scrutiny and
review by the proper court. If the other party denies that rescission is justified, it is free to bring the
matter to court. Then, should the court decide that the resolution of the contract was not warranted, the
responsible party will be sentenced to damages; in the contrary case, the resolution will be affirmed and
indemnity awarded to the party prejudiced.
In short, the party who deems the contract violated many consider it resolved or rescinded without
previous court action, but it proceeds at its own risk. For it is only the final judgment of the court that will
conclusively and finally settle whether the action taken was or was not correct in law.

The right to rescind the contract for non-performance of one of its stipulations, therefore, is not absolute.
In Universal Food Corporation vs. Court of Appeals (33 SCRA 1) the Court stated that:
The general rule is that rescission of a contract will not be permitted for a slight or casual breach, but only
for such substantial and fundamental breach as would defeat the very object of the parties in making the
agreement. (Song Fo & Co. vs. Hawaiian-Philippine Co., 47 Phil. 821) The question of whether a breach of
a contract is substantial depends upon the attendant circumstances. (Corpus vs. Alikpala, GR L-23707 &
L-23720, January 17, 1968)
The breach of the contract alleged by Calasanz (D) is so slight considering that Angeles (P) had already
paid monthly installments for almost nine years. In only a short time, the entire obligation would have
been paid. To sanction the rescission made by Calasanz (D) will work injustice to Angeles (P) and unjustly
enrich Calasanz (D).
Article 1234 of the Civil Code which provides that:If the obligation has been substantially performed in
good faith, the obligor may recover as though there had been a strict and complete fulfillment, less
damages suffered by the oblige also militates against the unilateral act of the Calasanz (P) in cancelling
the contract.

Ong v. CA
Facts:
Petitioner Jaime Ong, on the one hand, and respondent spouses Miguel K. Robles and
Alejandra Robles, on the other hand, executed an "Agreement of Purchase and Sale"
respecting two parcels of land situated at Barrio Puri, San Antonio, Quezon. On May 15, 1983,
petitioner Ong took possession of the subject parcels of land together with the piggery, building,
ricemill, residential house and other improvements thereon.
For failure of the vendee to pay the price as agreed upon, a complaint for rescission of contract
and recovery of properties with damages. Later, while the case was still pending with the trial
court, petitioner introduced major improvements on the subject properties. These prompted the
respondent spouses to ask for a writ of preliminary injunction. The trial court granted the
application and enjoined petitioner from introducing improvements on the properties except for
repairs. Eventually, the trial court ordered the rescission of the contract.
Issues:
(1) whether the contract entered into by the parties may be validly rescinded under Article 1191
of the New Civil Code
(2) whether the parties had novated their original contract as to the time and manner of payment
Held:

Article 1191 of the New Civil Code refers to rescission applicable to reciprocal obligations.
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.
A careful reading of the parties' "Agreement of Purchase and Sale" shows that it is in the nature
of a contract to sell, as distinguished from a contract of sale. In a contract of sale, the title to the
property passes to the vendee upon the delivery of the thing sold; while in a contract to sell,
ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full
payment of the purchase price. In a contract to sell, the payment of the purchase price is a
positive suspensive condition, the failure of which is not a breach, casual or serious, but a
situation that prevents the obligation of the vendor to convey title from acquiring an obligatory
force. The non-fulfillment of the condition of full payment rendered the contract to sell ineffective
and without force and effect. It must be stressed that the breach contemplated in Article 1191 of
the New Civil Code is the obligor's failure to comply with an obligation. Failure to pay, in this
instance, is not even a breach but merely an event which prevents the vendor's obligation to
convey title from acquiring binding force. Hence, the agreement of the parties in the case at
bench may be set aside, but not because of a breach on the part of petitioner for failure to
complete payment of the purchase price. Rather, his failure to do so brought about a situation
which prevented the obligation of respondent spouses to convey title from acquiring an
obligatory force.
Novation is never presumed, it must be proven as a fact either by express stipulation of the
parties or by implication derived from an irreconcilable incompatibility between the old and the
new obligation. In order for novation to take place, the concurrence of the following requisites is
indispensable: (1) there must be a previous valid obligation; (2) there must be an agreement of
the parties concerned to a new contract; (3) there must be the extinguishment of the old
contract; and (4) there must be the validity of the new contract. The aforesaid requisites are not
found in the case at bench. The subsequent acts of the parties hardly demonstrate their intent to
dissolve the old obligation as a consideration for the emergence of the new one.