Javier vs.

Court of Appeals FACTS: Private respondent is a holder of an ordinary timber license issued by the Bureau of Forestry covering 2,535 hectares. He executed a Deed of Assignment in favor of petitioners, to wit; Leonardo Tiro for and in consideration of P120,000 assign, transfer, and convey, absolutely and forever unto Jose Javier and Estrella Javier his shares of stocks in the Timberwealth Corporation; payment shall be in the following manner: 1) P20,000 upon signing of this contract; 2) The balance of P100,000 shall be paid every shipment of export logs actually produced from the forest concession of Timberwealth Corporation At the time the said deed of assignment was executed, private respondent had a pending application for an additional forest concession an area of 2,000 hectares southwest of and adjoining the area of the concession subject of the deed of assignment. Hence, they entered into another Agreement which states that Leonardo Tiro transfers his rights to Timberwealth Corporation over a forest concession which is now pending application and approval as additional area to his existing license area. And that, for and in consideration of the aforementioned transfer of rights to Timberwealth Corp., Javiers do hereby undertake to pay Tiro, as soon as said additional area is approved and transferred to Timberwealth the sum of P30,000 which shall form part of their paid up capital stock. However, petitioners failed to pay the balance due under the two deeds of assignment, Tiro then filed an action against Javiers based on the said contracts for the payment of P83,138.15 with interest 6% per annum until full payment plus attorneys fees. Consequently, Javiers filed their answer admitting the due execution of the contracts but interposing the special defense of nullity thereof since private respondent failed to comply with his contractual obligations and further that they failed to materialize. HELD: The true consideration of said deed was the transfer of the forest concession of private respondent to petitioners for P120,000.00. This finding is supported by the previous and simultaneous and subsequent acts of the parties which are properly cognizable indicia of their true intention. It thereby reveals the cause stated in the questioned deed of assignment is false. Where the parties of the contract have given it a practical construction by their conduct as by acts in partial performance, such construction may be considered by the court in construing the contract, determining its meaning and ascertaining the mutual intention of the parties at the time of contracting. The parties practical construction of their contract has been characterized as a clue or index to, or as evidence of their intention or meaning and as an important, significant, convincing, persuasive, or influential factor in determining the proper construction of the agreement. Thus, the deed of assignment of Feb 15, 1966 is a relatively simulated contract which states a false cause or consideration or one where the parties conceal their true agreement. A contract with a false consideration is not null and void per se. Under Article 1346 of the Civil Code, a relatively simulated contract, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement. Thus, petitioners (Javiers) are liable to Tiro for the sale and transfer in their favor of the Tiros forest concession. As to the alleged nullity of the second agreement, Javiers cannot be held liable. The efficacy of said deed of assignment is subject to the condition that the application of private respondent for an additional area for forest concession be approved by the Bureau of Forestry. Since private respondent did not obtain that approval, said deed produces no effect. When a condition is subject to a suspensive condition (obtaining the approval of the corporation), its birth or effectivity can take place only if and when the event which constitutes the condition happens or is fulfilled. IF the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. The said agreement is a bilateral contract which gave rise to reciprocal obligations, that is, the obligation of private respondent to transfer his rights in the forest concession over the additional area and, on the other hand, the obligation of petitioners to pay P30,000.00. The demandability of the obligation of one party depends upon the fulfillment of the obligation of the other. In this case, the failure of one party to comply with his obligation negates his right to demand performance from petitioners. Delivery and payment in a contract of sale are so interrelated and intertwined with each other that without delivery of the goods there is no corresponding obligation to pay. Under Article 1461 of the Civil Code, the efficacy of sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence.

ELEIZEGUI vs LAWN TENNIS CLUB FACTS: About: lease of a piece of land for a fixed consideration and to endure at the will of the lessee. By the contract of lease the lessee is expressly authorized to make improvements upon the land, by erecting buildings of both permanent and temporary character, by making fills, laying pipes, and making such other improvements as might be considered desirable for the comfort and amusement of the members. Lessors allegation: Article 1569 of the Civil Code may judicially dispossess the lessee upon the expiration of the conventional term or of the legal term Conventional term: the one agreed upon by the parties If there is a conventional term, the judge cannot apply the legal term fixed in subsidium to cover a case in which the parties have made no agreement with respect to the duration of the lease If there was an agreed duration, a conventional term, then the legal term the term fixed in article 1581 has no application; the contract is the supreme law of the contracting parties. In this case, the law interprets the presumptive intention of the parties, they having said nothing in the contract with respect to its duration. Legal term: fixed for leases by articles 1577 and 1581. ISSUE: Was there, or was there not, a conventional term, a duration, agreed upon in the contract in question? GRRRRRRRRRRRRRRRRRRRRRRR!!!!!!!!!!!

ENCARNACION vs. BALDOMAR FACTS: Vicente Encarnacion owner of the house numbered 589 Legarda St, Manila. Some six years ago leased said house to Jacinta Baldomar and her son, Lefrado Fernando, upon a month-to-month basis for the monthly rental of P35. After Manila was liberated in the last war, plaintiff Encarnacion notified defendants, the said mother and son, to vacate the house because plaintiff needed it for his offices as a result of the destruction of the building where said plaintiff had said offices before. Despite this demand, defendants insisted on continuing their occupancy. MTC entered judgment for restitution and payment of rental at rate of P35 a month from May until defendants completely vacate the premises. Court of First Instance in Manila defendants filed a motion to dismiss on the ground that the municipal court had no jurisdiction over the subject matter. Motion denied. Gravamen (grievance; formal complaint) of the defense by defendants, the contract which they had celebrated with plaintiff since the beginning authorized them to continue occupying the house indefinitely and while they should faithfully fulfill their obligation as respects the payment of the rentals, and that this agreement had been ratified when another ejectment case between the parties filed during the Japanese regime. HELD: The defense set up by defendant Lefrado Fernando would leave to the sole and exclusive will of one of the contracting parties the validity and fulfillment of the contract of lease, within the meaning of article 1308 of the Civil Code since the performance and fulfillment of the contract would then depend solely and exclusively upon their free and uncontrolled choice between continuing paying the rentals or not, completely depriving the owner of all say in the matter. If this defense were to be abowed so long as defendants elected to continuing the payment of the rentals the owner would never be able to discontinue it; conversely, although the owner should desire the lease to continue, the lessees could effectively thwart his purpose if they should prefer to terminate the contract by the simple expedient of stopping payment of the rentals. This of course, is prohibited by Article 1308 which states tha t the contracts must bind both contracting parties; its validity or compliance cannot be left to the will of one of them. The continuance and fulfillment of the contract of lease cannot be made to depend solely and exclusively upon the free and uncontrolled choice of the lessees between continuing paying the rentals or not, completely depriving the owner of all say in the matter.

DUCUSIN vs. COURT OF APPEALS FACTS: Petitioner Agapito Ducusin leased to private respondent, Virgilio Baliola, married to Lilia Baliola, a one-door apartment unit. One of their stipulations is the termination of the contract, to wit: The term of this contract shall be in a month to month basis on February 19, 1975 until terminated by the lessor on the ground that his children need the premises for their own use or residence or upon any ground provided for in accordance with law. The Baliola spouses occupied the apartment until Ducsin sent a Notice to Terminate Lease Contract to private respondents Baliolas

terminating the lease and giving them days within which to vacate the premises for the reason that his two children were getting married and will the apartment for their own use and residence. A second letter was sent by Ducsin making an inquiry on any action the latter had taken on the previous notice to terminate the lease contract. Respondents made no reply but wrote a letter to the Secretary of National Defense reporting that Ducusin was intent on evicting them from the leased premises. Ducusin filed an action for ejectment against the Baliola spouses in the City Court of Manila, alleging that having constructed the apartment complex for the use and residence of his children if and when they decide to marry and live independently and that the apartment having been allotted to his son, Agapito Ducusin, Jr., the said unit is not needed by Agapito Jr. who is now getting married and that he has decided to live independently. The complaint for eviction alleged that the lessees have violated the terms of the contract by subleasing the premises; that the lessees have not used the premises solely for residential purposes but have used the same as factory and/or they have neglected to undertake repairs of the apartment and the premises according to their agreement. The City Court of Manila decided in favor of the lessor Ducusin on the ground that the defendants contract with the plaintiff has already terminated with the notice of termination sent by the plaintiff to the defendants on the ground that he needs the premises for his own children; ordering the defendants and all persons claiming possession under them to vacate the premises and surrender possession to the plaintiffs. Lessees appealed to the Court of First Instance of Manila. The court affirmed the decision of the City Court of Manila. Lessees then went to the Court of Appeals.

ISSUE: whether or not an owner of a leased premises can unilaterally terminate the contract of lease under the terms and conditions stated therein; whether or not the happening of the resolutory condition re: the need of the immediate members of the family of the lessor of the leased premises has been established by a preponderance of evidence.

RULING: The parties to the contract of lease agreed that the obligations arising from the said contract shall be extinguished due to the following causes: 1) termination, 2) when the lessor elects to terminate, etc. The validity of the terms and conditions in a contract is governed by the ff Civil Code provisions: Article 1308. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them Article 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon the will of a third person, the obligation shall take effect in conformity with the provisions of this Code. The resolutory condition in the contract of lease re: the need of the lessors children of the leased premises is not a condition the happening of which is dependent solely upon the will of the lessor . The happening of the condition depends upon the will of a third person the lessors children. Whenever the latter require the use of the leased premises for their own needs, then the contract of lease shall be deemed terminated. The validity of the said condition as agreed upon by the parties stands. Period length of existence; duration; series of years, months or days in which something is completed Definite having distinct or certain limits; determinate in extent or character; limited; fixed Definite period refers to a portion of time certain or ascertainable as to its beginning, duration and termination

UY TONG vs SILVA RULING: Debts arose prior to bankruptcy cannot be set-off against the installments of rent falling due from the insolvent after bankruptcy. A debt of the bankrupt arising prior to the bankruptcy cannot be set off against installments of rent falling due after bankruptcy, although the installments are payable under a written lease in effect before the bankruptcy For COMPENSATION to take place, it is necessary that over neither of them (the two debts) there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.

Set off not allowed if it will give undue preference over other creditors of person declared bankrupt. Article 1279

BOSQUE vs YU CHIPCO FACTS: Yu Chipco, defendant, entered into a contract to construct a house and to complete the same within four (4) months after the contract was signed and delivered for Juan Bosque, plaintiff. The construction was actually commenced. However, Bosque made changed in and additions to the original plans of the house, which changes were agreed to by Chipco, and a new contract was made. Yet, Chipco was prevented from continuing his work because Bosque failed to secure a permit to make the additions. Thus, Chipco was delayed for several weeks. Expenses: Timber (Bosque) Php132.00; labor and additions (Chipco) Php500.00 Under the first agreement, Bosque was to make four (4) equal payments for the construction of the house, each payment to be made when the house was in a certain state of completion. The evidence sustains that it had passed the state of completion when the Bosque was to make the first payment upon the original contract. Bosque does not allege nor attempt to prove that he made any payments upon the second contract for the addition to the original building. Consequently, the house was totally destroyed by a baguio before its completion. LOWER COURTS RULING: Each of the parties failed to comply with their respective obligation; the plaintiff will not have his building and the defendant will not receive his contract price. The lower court refused to allow either one a judgment since it balances the failure of one of the parties to comply with his obligation with the failure of the other to comply with his part of the original contract. The defendant may recover of the plaintiff the sum of Php368.00, being the difference between Php200 and Php132. SCS RULING: Affirmed. Even though the court did not expressly pronounce that the parties were absolved from any further obligation, yet, by the very terms of the judgment the said parties must necessarily be absolved from any further action upon the said contract. It is clear that Bosque did not perform the undertaking which he was bound by the terms of his agreement to perform; consequently, he is not entitled to insist upon the performance of the contract by the defendant or to recover damages by reason of his own breach.

PEREZ vs. CA FACTS: Juan Perez, et.al., a usufructuary of a parcel of land called Papaya Fishpond. Luis Keh lessee of the Papaya Fishpond for 5yrs Condition: the first 5-yr period the annual rental would be Php150,000 and for the next 5yrs, Php175,000.00. The contract states that the lessee cannot sublease the fishpond nor assign his rights to anyone. Luis Crisostomo reached only the 5 grade; businessman engaged in the operation of fishponds. His friends persuaded him to take over the operation of Papaya Fishpond as they were (including Luis Keh) already losing money in its operation. Crisostomo acceded to the agreement. Hence, they executed a written agreement, called as pakiao buwis whereby Crisostomo would take possession of the fishpond of the amount Php128,000.00. Repairs and improvements Php486,562.65 In 1979, petitioners Tansinin and Juan Perez, in the company of men bearing armalites, went to the fishpond and presented Crisostomo a letter showing that Keh had surrendered possession of the fishpond to the usufructuaries. Crisostomo filed for injunction and damages; issuance of restraining order. Lower Court granted the restraining order.
th