BERMUDEZ V MELENCIO-HERRERA

We do not agree. The doctrine in the case

cited by the trial court is inapplicable to the
instant case. In Joaquin vs. Aniceto, the Court
held:

The issue in this case is: May an employee's

primary civil liability for crime and his
employer's subsidiary liability therefor be
proved in a separate civil action even while
the criminal case against the employee is still
pending?

To begin with, obligations arise from law,

contract, quasi-contract, crime and quasi-
delict. According to appellant, her action is
one to enforce the civil liability arising from
crime. With respect to obligations arising
from crimes, Article 1161 of the New Civil
Code provides:

Civil obligations arising from criminal

offenses shall be governed by the penal laws,
subject to the provisions of article 21 77, and
of the pertinent provisions of Chapter 2,
Preliminary, Title, on Human Relations, and
of Title XVIII of this book, regulating
damages.

It is now settled that for an employer to be subsidiarily liable, the following requisites must be present: (1)
that an employee has committed a crime in the discharge of his duties; (2) that said employee is insolvent
and has not satisfied his civil liability; (3) that the employer is engaged in some kind of industry. (1 Padilla,
Criminal Law, Revised Penal Code 794 [1964])

Without the conviction of the employee, the employer cannot be subsidiarily liable.

In cases of negligence, the injured party or his heirs has the choice between an action to enforce the civil
liability arising from crime under Article 100 of the Revised Penal Code and an action for quasi- delict under
Article 2176-2194 of the Civil Code. If a party chooses the latter, he may hold the employer solidarity liable
for the negligent act of his employee, subject to the employer's defense of exercise of the diligence of a
good father of the family.

In the case at bar, the action filed b appellant was an action for damages based on quasi-delict. 1 The fact
that appellants reserved their right in the criminal case to file an independent civil action did not preclude
them from choosing to file a civil action for quasi-delict.

WHEREFORE, we grant the petition and annul and set aside the appealed orders of the trial court, dated
March 10, 1970 and May 7, 1970, and remand the case for further proceedings. No costs.
 GEMPESAW V. CA 218 SCRA 682

Telefast v. Castro

NAKPIL & SONS v. CA

To be exempt from liability due to an act of God, the engineer/architect/contractor must not have been
negligent in the construction of the building.

FACTS:
Private respondents Philippine Bar Association (PBA) a non-profit organization formed under the
corporation law decided to put up a building in Intramuros, Manila. Hired to plan the specifications of the
building were Juan Nakpil & Sons, while United Construction was hired to construct it. The proposal was
approved by the Board of Directors and signed by the President, Ramon Ozaeta. The building was
completed in 1966.

In 1968, there was an unusually strong earthquake which caused the building heavy damage, which led
the building to tilt forward, leading the tenants to vacate the premises. United Construction took remedial
measures to sustain the building.

PBA filed a suit for damages against United Construction, but United Construction subsequently filed a suit
against Nakpil and Sons, alleging defects in the plans and specifications.

Technical Issues in the case were referred to Mr. Hizon, as a court appointed Commissioner. PBA moved
for the demolition of the building, but was opposed. PBA eventually paid for the demolition after the
building suffered more damages in 1970 due to previous earthquakes. The Commissioner found that there
were deviations in the specifications and plans, as well as defects in the construction of the building.

ISSUE:
Whether or not an act of God (fortuitous event) exempts from liability parties who would otherwise be
due to negligence?
HELD:
Art. 1723 dictates that the engineer/architect and contractor are liable for damages should the building
collapse within 15 years from completion.
Art. 1174 of the NCC, however, states that no person shall be responsible for events, which could not be
foreseen. But to be exempt from liability due to an act of God, the ff must occur:
(2) The letter itself, addressed merely "TO ALL CONCERNED", would not strike one to be of serious
importance, sufficient enough to set alarm and cause people to take precautions for their safety's sake.
The notices were not delivered, or even addressed to responsible officials of the municipalities concerned
who could have disseminated the warning properly. They were delivered to ordinary employees and
policemen. As it happened, the said notices do not appear to have reached the people concerned, which
are the residents beside the Angat River. The plaintiffs in this case definitely did not receive any such
warning. Indeed, the methods by which the defendants allegedly sent the notice or warning was so
ineffectual that they cannot claim, as they do in their second assignment of error, that the sending of said
notice has absolved them from liability.

1) cause of breach must be independent of the will of the debtor
2) event must be unforeseeable or unavoidable
3) event must be such that it would render it impossible for the debtor to fulfill the obligation
4) debtor must be free from any participation or aggravation of the industry to the creditor.
In the case at bar, although the damage was ultimately caused by the earthquake which was an act of God,
the defects in the construction, as well as the deviations in the specifications and plans aggravated the
damage, and lessened the preventive measures that the building would otherwise have had.
(3) We cannot give credence to petitioners' third assignment of error that the damage caused by the
opening of the dam was in the nature of damnum absque injuria, which presupposes that although there
was physical damage, there was no legal injury in view of the fortuitous events. There is no question that
petitioners have the right, duty and obligation to operate, maintain and preserve the facilities of Angat
Dam, but their negligence cannot be countenanced, however noble their intention may be. The end does
not justify the means, particularly because they could have done otherwise than simultaneously opening
the spillways to such extent. Needless to say, petitioners are not entitled to counterclaim.

NPC v. CA
Facts:
At the height of the typhoon Kading, a flash flood covered the towns near the Angat Dam, causing deaths
and destructions to residents and their properties. Respondents blamed the tragedy to the reckless and
imprudent opening of the 3 floodgates by petitioner, without prior warning to the residents within the
vicinity of the dam. Petitioners denied the allegations and contended that they have kept the water at a
safe level, that the opening of floodgates was done gradually, that it exercises diligence in the selection of
its employees, and that written warnings were sent to the residents. It further contended that there was
no direct causal relationship between the damage and the alleged negligence on their part, that the
residents assumed the risk by living near the dam, and that what happened was a fortuitous event and are
of the nature of damnum absque injuria.

Issues:
(1) Whether the petitioner can be held liable even though the coming of the typhoon is a fortuitous event
(2) Whether a notice was sent to the residents
(3) Whether the damage suffered by respondents is one of damnum absque injuria

Held:
(1) The obligor cannot escape liability, if upon the happening of a fortuitous event or an act of God, a
corresponding fraud, negligence, delay or violation or contravention in any manner of the tenor of the
obligation as provided in Article 1170 of the Civil Code which results in loss or damage. Even if there was
no contractual relation between themselves and private respondents, they are still liable under the law on
quasi-delict. Article 2176 of the Civil Code explicitly provides "whoever by act or omission causes damage
to another there being fault or negligence is obliged to pay for the damage done." Act of God or force
majeure, by definition, are extraordinary events not foreseeable or avoidable, events that could not be
foreseen, or which, though foreseen, are inevitable. It is therefore not enough that the event should not
have been foreseen or anticipated, as is commonly believed, but it must be one impossible to foresee or
to avoid. The principle embodied in the act of God doctrine strictly requires that the act must be
occasioned solely by the violence of nature. Human intervention is to be excluded from creating or
entering into the cause of the mischief. When the effect is found to be in part the result of the participation
of man, whether due to his active intervention or neglect or failure to act, the whole occurrence is then
humanized and removed from the rules applicable to the acts of God. In the case at bar, although the
typhoon "Kading" was an act of God, petitioners cannot escape liability because their negligence was the
proximate cause of the loss and damage.
EASTERN SHIPPING LINES, INC., petitioner, vs. HON. COURT OF APPEALS AND MERCANTILE INSURANCE
COMPANY, INC., respondents.
VITUG, J.:
FACTS:
This is an action against defendants shipping company, arrastre operator and broker-forwarder for
damages sustained by a shipment while in defendants' custody, filed by the insurer-subrogee who paid
the consignee the value of such losses/damages.
the losses/damages were sustained while in the respective and/or successive custody and possession of
defendants carrier (Eastern), arrastre operator (Metro Port) and broker (Allied Brokerage).
As a consequence of the losses sustained, plaintiff was compelled to pay the consignee P19,032.95 under
the aforestated marine insurance policy, so that it became subrogated to all the rights of action of said
consignee against defendants.
DECISION OF LOWER COURTS: * trial court: ordered payment of damages, jointly and severally * CA:
affirmed trial court.
ISSUES AND RULING:
(a) whether or not a claim for damage sustained on a shipment of goods can be a solidary, or joint and
several, liability of the common carrier, the arrastre operator and the customs broker;
YES, it is solidary. Since it is the duty of the ARRASTRE to take good care of the goods that are in its custody
and to deliver them in good condition to the consignee, such responsibility also devolves upon the
CARRIER. Both the ARRASTRE and the CARRIER are therefore charged with the obligation to deliver the
goods in good condition to the consignee.
The common carrier's duty to observe the requisite diligence in the shipment of goods lasts from the time
the articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier
for transportation until delivered to, or until the lapse of a reasonable time for their acceptance by, the
person entitled to receive them (Arts. 1736-1738, Civil Code; Ganzon vs. Court of Appeals, 161 SCRA 646;
Kui Bai vs. Dollar Steamship Lines, 52 Phil. 863). When the goods shipped either are lost or arrive in
damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and
there need not be an express finding of negligence to hold it liable.
(b) whether the payment of legal interest on an award for loss or damage is to be computed from the time
the complaint is filed or from the date the decision appealed from is rendered; and
FOLLOW THESE VERY IMPORTANT RULES (GUIDANCE BY THE SUPREME COURT)
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts
is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages"
of the Civil Code govern in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory damages,
the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum.
No interest, however, shall be adjudged on unliquidated claims or damages except when or until the
demand can be established with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the
time the demand is made, the interest shall begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of
legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum
from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a
forbearance of credit.
(c) whether the applicable rate of interest, referred to above, is twelve percent (12%) or six percent (6%).
SIX PERCENT (6%) on the amount due computed from the decision, dated 03 February 1988, of the court
a quo (Court of Appeals) AND A TWELVE PERCENT (12%) interest, in lieu of SIX PERCENT (6%), shall be
imposed on such amount upon finality of the Supreme Court decision until the payment thereof.
RATIO: when the judgment awarding a sum of money becomes final and executory, the monetary award
shall earn interest at 12% per annum from the date of such finality until its satisfaction, regardless of
whether the case involves a loan or forbearance of money. The reason is that this interim period is deemed
to be by then equivalent to a forbearance of credit.
NOTES: the Central Bank Circular imposing the 12% interest per annum applies only to loans or
forbearance of money, goods or credits, as well as to judgments involving such loan or forbearance of
money, goods or credits, and that the 6% interest under the Civil Code governs when the transaction
involves the payment of indemnities in the concept of damage arising from the breach or a delay in the
performance of obligations in general. Observe, too, that in these cases, a common time frame in the
computation of the 6% interest per annum has been applied, i.e., from the time the complaint is filed until
the adjudged amount is fully paid.
ALVAREZ vs. IAC May 7, 1990
FACTS: Aniceto Yanes owned 2 parcels of land Lot 773-A and Lot 773-B.
Aniceto Yanes was survived by his children, Rufino, Felipe and Teodora. Herein private respondents,
Estelita, Iluminado and Jesus, are the children of Rufino who died in 1962 while the other private
respondents, Antonio and Rosario Yanes, are children of Felipe. Teodora was survived by her child, Jovita
(Jovito) Albib.
It is established that Rufino and his children left the province to settle in other places as a result of the
outbreak of World War II. According to Estelita, from the Japanese time up to peace time, they did not
visit the parcels of land in question but after liberation, when her brother went there to get their share
of the sugar produced therein, he was informed that Fortunato Santiago, Fuentebella (Puentevella) and
Alvarez were in possession of Lot 773.
After Fuentebellas death, Arsenia Vda. de Fuentebella sold said lots for P6,000.00 to Rosendo Alvarez. On
May 26, 1960, Teodora Yanes and the children of her brother Rufino filed a complaint against Fortunato
Santiago, Arsenia Vda. de Fuentebella, Alvarez and the Register of Deeds of Negros Occidental for the
return of the ownership and possession of Lots 773 and 823.

During the pendency of said case, Alvarez sold the Lots for P25,000.00 to Dr. Rodolfo Siason. CFI rendered
judgment ordering defendant Rosendo Alvarez to reconvey to plaintiffs the lots.

ISSUE: W/N the liability of Rosendo Alvarez arising from the sale of Lots Nos. 773-A and 773-B could be
legally passed or transmitted by operation of law to the petitioners without violation of law and due
process.

RULING: The doctrine obtaining in this jurisdiction is on the general transmissibility of the rights and
obligations of the deceased to his legitimate children and heirs.

The binding effect of contracts upon the heirs of the deceased party is not altered by the provision of our
Rules of Court that money debts of a deceased must be liquidated and paid from his estate before the
residue is distributed among said heirs (Rule 89). The reason is that whatever payment is thus made from
the estate is ultimately a payment by the heirs or distributees, since the amount of the paid claim in fact
diminishes or reduces the shares that the heirs would have been entitled to receive.

Under our law, therefore, the general rule is that a partys contractual rights and obligations are
transmissible to the successors. The rule is a consequence of the progressive depersonalization of
patrimonial rights and duties.

Roman concept of a relation from person to person, the obligation has evolved into a relation from
patrimony to patrimony, with the persons occupying only a representative position, barring those rare
cases where the obligation is strictly personal, in consideration of its performance by a specific person and
by no other. . . .

Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape the legal consequences of their
fathers transaction, which gave rise to the present claim for damages.

CENTRAL PHILIPPINE UNIVERSITY v. COURT OF APPEALS


Hermosa vs. Longara
Estate of Debtor (D) vs. Creditor (P)
Summary: A debtor promised to pay a loan on condition "as soon as he receive funds derived from the
sale of his property in Spain." The debtor died and the estate sold and receive the funds from the sale of
the said property. The creditor is demanding payment from the estate.
Rule of Law: A condition not dependent on the exclusive will of the debtor is a valid condition in an
obligation.
Facts: Epifanio Longara (P) filed a claim against the estate of Fernando Hermosa, Sr. (D) for money owed
to him by the deceased. He alleged that the advances were made "on condition that their payment should
be made by Fernando Hermosa, Sr. as soon as he receive funds derived from the sale of his property in
Spain." Upon Hermosa's (D) death, the property was sold and the money sent to the estate in the
Philippines.
Hermosa (D) contended on appeal that the obligation contracted by the intestate was subject to a
condition exclusively dependent upon the will of the debtor (a condicion potestativa) and therefore null
and void, in accordance with Article 1115 of the old Civil Code. The Court of Appeals held that the condition
was not entirely potestative. It further ruled that the payment of the advances did not become due until
the administratrix received the money from the buyer of the property.
Issues: Is the condition "as soon as he receives funds from the sale of his property in Spain" valid?
Ruling: Yes. The condition upon which the payment of the debt depended on, "as soon as he (intestate)
receive funds derived from the sale of his property in Spain," is a condition that does not depend
exclusively upon the will of the debtor, but also upon other circumstances beyond his power or control.
Upon review by the Court of Appeals, the condition implies that the intestate had already decided to sell
his house, or at least that he had made his creditors believe that he had done so, and that all that we
needed to make his obligation (to pay his indebtedness) demandable is that the sale be consummated and
the price thereof remitted to the islands. It is evident, therefore, that the condition of the obligation was
not purely protestativei.e., depending exclusively upon the will of the intestatebut a mixed one,
depending partly upon the will of intestate and partly upon chance. The obligation is clearly governed by
the second sentence of Article 1115 of the old Civil Code (8 Manresa, 126).
The condition is, besides, a suspensive condition, upon the happening of which the obligation to pay is
made dependent. And upon the happening of the condition, the debt became immediately due and
demandable. (Article 1114, old Civil Code; 8 Manresa, 119).
Taylor vs Uy Tieng piao G.R. No. L-16109 October 2, 1922
FACTS
Taylor contracted his services to Tan Liuan & Co as superintendent of an oil factory which the latter
contemplated establishing
The contract extended over 2 years and the salary was P600/month during the first year and
P700/month during the second with electric, light and water for domestic consumption or in lieu thereof,
P60/month
At this time, the machinery for contemplated factory had not been acquired, though ten expellers
had been ordered from the US
It was understood that should the machinery to be installed fail, for any reason, to arrive in Manila
within the period of 6 months, the contract may be cancelled by the party of the second part at its option,
such cancellation not to occur before the expiration of such 6 months
The machinery did not arrive in Manila within the 6 months; the reason does not appear, but a
preponderance of evidence show that the defendants seeing that oil business no longer promised large
returns, either cancelled the order for machinery from choice or were unable to supply the capital
necessary to finance the project.
Defendants communicated to Taylor that they had decided to rescind the contract.
Taylor instituted this action to recover damages in the amount of P13k, covering salary and perks
due and to become due
ISSUE
WON in a contract for the prestation of service, it is lawful for the parties to insert a provision giving the
employer the power to cancel the contract in contingency which may be dominated by himself
HELD
YES. One of the consequences of the stipulation was that the employers were left in a position where
they could dominate the contingency, and the result was about the same as if they had been given an
unqualified option to dispense with the services of Taylor at the end of 6 months. But this circumstance
does not make the stipulation illegal.
A condition at once facultative and resolutory may be valid even though the condition is made to
depend upon the will of the obligor.
If it were apparent, or could be demonstrated that the defendants were under positive obligation to
cause the machinery to arrive in Manila, they would of course be liable, in the absence of affirmative proof
showing that the non-arrival of the machinery was due to some cause not having its origin in their own act
or will.
The contract, however, expresses no such positive obligation, and its existence cannot be implied in
the face of the stipulation, defining the conditions under which the defendants can cancel the contract.
CFI no error in rejecting Taylors claim in so far as damages are sought for the period subsequent to
the expiration of 6 months, but in assessing the damages due for the six-month period, the trial judge
overlooked the item of P60 (commutation of house rent) This amount Taylor is entitled to recover in
addition to P300 awarded by CFI.
Smith Bell vs. Sotelo Matti (44 Phil. 874)
GR No. 16570, March 9, 1922
Romualdez, J.:
Facts:
Plaintiff corporation undertook to sell and deliver equipment for Mr. Sotelo but no definite dates were
fixed for the delivery. The periods were couched in ambiguous terms such as within 3 or 4 months, in
the month of September or as soon as possible, and approximate delivery with 90 days-This is not
guaranteed. When the goods arrived, Mr. Sotelo refused to receive them and to pay the prices. Mr. Sotelo
then sued for damages because of the delay suffered.
"The question as to what is a reasonable time for the delivery of the goods by the seller is to be determined
by the circumstances attending the particular transaction, such as the character of the goods, and the
purpose for which they are intended, the ability of the seller to produce the goods if they are to be
manufactured, the facilities available for transportation, and the distance the goods must be carried, and
the usual course of business in the particular trade." (35 Cyc., 181-184.)
The record shows, as we have stated, that the plaintiff did all within its power to have the machinery arrive
at Manila as soon as possible, and immediately upon its arrival it notified the purchaser of the fact and
offered to deliver it to him. Taking these circumstances into account, we hold that the said machinery was
brought to Manila by the plaintiff within a reasonable time.
Therefore, the plaintiff has not been guilty of any delay in the fulfillment of its obligation, and,
consequently, it could not have incurred any of the liabilities mentioned by the intervenor in its
counterclaim or set-off.
Roman Catholic Archbishop of Manila v. CA

Issue:
Whether Smith Bell incurred delay in the delivery of goods to Sotelo

Held:
No, it did not incur delay.

From the record it appears that these contracts were executed at the time of the world war when there
existed connection with the tanks and "Priority Certificate, subject to the United -States Government
requirements," with respect to the motors. At the time of the execution of the contracts, the parties were
not unmindful of the contingency of the United States Government not allowing the export of the goods,
nor of the fact that the other foreseen circumstances therein stated might prevent it.

Considering these contracts in the light of the civil law, we cannot but conclude that the term which the
parties attempted to fix is so uncertain that one cannot tell just whether, as a matter of fact, those articles
could be brought to Manila or not. If that is the case, as we think it is, the obligation must be regarded as
conditional.

When the delivery was subject to a condition the fulfillment of which depended not only upon the effort
of the herein plaintiff, but upon the will of third persons who could in no way be compelled to fulfill .the
condition. In cases like this, which are not expressly provided for, but impliedly covered, by the Civil Code,
the obligor will be deemed to have sufficiently performed his part of the obligation, if he has done all that
was in his power, even if the condition has not been fulfilled in reality.

In connection with this obligation to deliver, occurring in a contract of sale like those in question, the rule
in North America is that when the time of delivery is not fixed in the contract, time is regarded unessential.

When the contract provides for delivery 'as soon as possible' the seller is entitled to a reasonable time, in
view of all the circumstances, such as the necessities of manufacture, or of putting the goods in condition
for delivery. The term does not mean immediately or that the seller must stop all his other work and
devote himself to that particular order. But the seller must nevertheless act with all reasonable diligence
or without unreasonable delay. It has been held that a requirement that the shipment of goods should be
the 'earliest possible' must be construed as meaning that the goods should be sent as soon as the seller
could possibly send them, and that it signified rather more than that the goods should be sent within a
reasonable time.

Angeles v. 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.
 Even on the assumption that the court should have found out that no reasonable time or period at all had
been fixed, the COMPLAINT NOT HAVING SOUGHT THE COURT SHOULD SET A PERIOD, the court could not
proceed to do so unless the complaint is amended
No basis to support the conclusion that period should be set at two years after finality of judgment,
considering that the land was occupied by squatters. Parties must comply with legal processes in evicting
the squatters. Reasonable time: at the date all the squatters on affected areas are finally evicted.

Araneta vs. Phil. Sugar Estate Devt., Inc

20 SCRA 330/GR L-22558
Art. 1197

Scope
Art. 1197

Facts
Petitioner and Respondent entered into a contract of purchase and sale with mortgage whereas P sold a
big tract of land to R subject to following conditions: 1) that buyer will build on said land the Sto. Domingo
Church and Convent and 2) that seller will construct streets surrounding the land which shall be named
Sto. Domingo Avenue
R finished the construction of the church will P was unable to finish the construction of the streets because
a third party, occupying the middle part thereof, refuse to vacate the same
R filed a complaint seeking P to comply with the obligation and/or pay damages in case of failure/refusal
RTC and CA decided in favor of R and gave P 2 years to comply with its obligation

Held
Art. 1197 involves two step processes: 1) the Court must first determine that the obligation does not fix
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 1&2) and 2) the Court must proceed
to second step and decide what period was probably contemplated by parties.