GAITE vs FONACIER | G.R. No.

L-11827

FACTS
Fonacier, owner of mining claims, constituted Gaite as his attorney-in-
fact. Gaite was authorized to enter into a contract with other persons
with respect to the mining claims.
Gaite then entered into a contract with Larap Iron Mines, a company
Gaite solely owned, to develop the mining claims. Later, Fonacier
abruptly decided to revoke Gaite’s authority as attorney-in-fact.
Afterwards, Gaite sold the developments his company made in the
mining claims areas and the ore already mined for a sum of money to
Fonacier. Fonacier secured the sale with a surety company. Part of the
money was paid upon sale while the other part was payable out of the
first loan of credit covering the first shipment of iron ore and the first
amount derived from the local sale of the iron ore.
After the surety expired, Gaite demanded payment of the remainder of
the purchase price but Fonacier refused arguing no sale of iron ore had
yet taken place.
ISSUE
WHETHER OR NOT THE SELLING OF THE IRON ORES IS A
SUSPENSIVE CONDITION FOR PAYING GAITE
HELD: NO.
The sale isn’t a suspensive condition but is only a suspensive period or
term. This interpretation is supported by:
1. The contract expresses no contingency in the buyer’s obligation to
pay. The contract
recognizes the existence of an obligation to pay and only the maturity is
deferred
2. Gaite never desired or assumed to run the risk of losing his right over
the ore without getting paid for it as shown by his insistence on a surety
3. Treating the condition as a suspensive condition would leave
payment at the debtor’s
discretion because the ore will be sold only when the debtor wants it
to be sold.
4. In onerous contracts the rules of interpretation favor the greater
reciprocity of interest and because sale is onerous this rule applies.
Greater reciprocity is obtained if the buyer’s
obligation to pay is deemed existing compared to such obligation non-
existing until the ore was sold.
Gonzales vs. Heirs of Thomas
314 SCRA 585 (1999)
FACTS:

On December 1, 1983, Paula Ao Cruz together with the plaintiffs heirs

of Thomas and Paula Cruz, entered into a Contract of Lease/Purchase
with the defendant, Felix L. Gonzales, a certain parcel of land. The
defendant Gonzales paid the annual rental on the half-portion of the
property covered by Transfer Certificate of Title No. 12111 in
accordance with the second provision of the Contract of Lease/Purchase
and thereafter took possession of the property, installing thereon the
defendant Jesus Sambrano as his caretaker. The defendant Gonzales did
not, however, exercise his option to purchase the property immediately
after the expiration of the one-year lease. He remained in possession of
the property without paying the purchase price provided for in the
Contract of Lease/Purchase and without paying any further rentals
thereon.

A letter was sent by one of the plaintiffs-heirs to the defendant Gonzales

informing him of the lessors decision to rescind the Contract of
Lease/Purchase due to a breach thereof committed by the defendant
which also served as a demand on the defendant to vacate the premises
within 10 days from receipt of said letter. However, the defendant
refused to vacate the property and continued possession thereof.

Alleging breach of the provisions of the Contract of Lease/Purchase, the

plaintiffs filed a complaint for recovery of possession of the property –
subject of the contract with damages, both moral and compensatory and
attorney’s fees and litigation expenses. The defendant Gonzales filed his
answer praying for a dismissal of the complaint filed against him and an
award of moral, exemplary and actual damages, as well as litigation
expenses.

The trial court rendered a decision in favor of the defendant. It held that
he failure of the plaintiffs to secure the Transfer Certificate of Title, as
provided for in the contract, does not entitle them to rescind the contract.
The plaintiff appealed to the Court of Appeals which reversed the
decision of the Trial Court. Hence, this petition.

ISSUE:

Whether or not the express stipulation of the contract which is to secure

the Transfer Certificate of Title a condition precedent before the
petitioner could exercise his option to buy the property.
RULING:

Yes, it is a condition precedent. If a stipulation in a contract admits of

several meanings, it shall be understood as bearing that import most
adequate to render it effectual. An obligation cannot be enforced unless
the plaintiff has fulfilled the condition upon which it is premised. Hence,
an obligation to purchase cannot be implemented unless and until the
sellers have shown their title to the specific portion of the property being
sold.
We hold that the ninth provision was intended to ensure that respondents
would have a valid title over the specific portion they were selling to
petitioner. Only after the title is assured may the obligation to buy the
land and to pay the sums stated in the Contract be enforced within the
period stipulated. Verily, the petitioners obligation to purchase has not
yet ripened and cannot be enforced until and unless respondents can
prove their title to the property subject of the Contract.

Therefore, respondents cannot rescind the contract, because they have

not caused the transfer of the TCT to their names, which is a condition
precedent to petitioners obligation. This Court has held that there can be
no rescission (or more properly, resolution) of an obligation as yet non-
existent, because the suspensive condition has not happened.
Romulo Coronel vs Court of Appeals , Conception Alcaraz

FACTS:
This case is about a sale of land in Roosevelt Avenue, Quezon City by
the vendor Romulo Coronel to the vendees Conception Alcaraz and her
daughter Ramona Patricia Alcaraz with the following conditions:
The Coronel’s will immediately transfer the certificate of title in their
name upon receipt of the downpayment which is ₱50,000.
Upon the transfer in their names of the subject property, the Coronel’s
will execute the deed of absolute sale in favor of Ramona and then
Ramona shall immediately pay the Coronel’s the whole balance of
₱1,190,000.
On January 15, 1985, Conception paid the downpayment of ₱50,000 and
then on February 6, 1985, the property was now registered under the
name of Coronel’s. By Feb. 18, 1985, the Coronel’s sold the property to
Catalina B. Mabanag for ₱1,580,000 after she made a ₱300,000
downpayment. This is the reason why the Coronel’s cancelled and
rescind the contract with the Alcaraz by depositing back the ₱50,000 to
Ramona’s bank account.
On Feb. 22, Conception filed a complaint for specific performance
against the Coronel’s. On April, the Coronel’s executed a deed of
absolute sale over the subject property to Catalina after which on June
Catalina was issued a new title over the subject property.
ISSUE:
Whether or not the “Receipt of Down payment” embodied a perfected
contract of sale or just a mere contract to sell?
HELD:
CONTRACT OF SALE- contracting parties obligates himself to transfer
the ownership and to deliver a determinate thing and the other to pay a
price certain in money or its equivalent.
CONTRACT TO SELL- the prospective seller explicitly reserves the
transfer of the title to the prospective buyer, meaning the seller does not
yet agree or consent to transfer the ownership of the property until the
happening of a contingent event like full payment of price.
SUPREME COURT RULING:
When the “Receipt of Down Payment” document was
prepared and signed by Romulo Coronel, the parties had agreed to a
conditional contract of sale the consummation of the contract is subject
only to the successful transfer of the certificate of Title.
According to Supreme Court, the receipt of down payment document
manifests a clear intent of the Coronel’s to transfer the title to the buyer,
but since the title is still in the name effect the transfer even though the
buyers are able and willing to immediately pay the purchase price. The
agreement as well could not have been a contract to sell because the
seller or the Coronel’s made no express reservation of ownership or the
title of the land.

On Feb. 6, 1985, the Contract of Sale between the Coronel’s and the
Alcaraz’ became obligatory.
Parks vs Province of Tarlac

FACTS In 1910, Concepcion Cirer and James Hill donated parcels of land
to the municipality of Tarlac on the condition that it be used absolutely
and exclusively for the erection of a central school and public parks, the
work to commence within six months. The president of the municipality
of Tarlac accepted and registered the donation. In 1921, Cirer and Hill
sold the same property to George L. Parks.Later on the, the
municipality of Tarlac transferred their rights in the property to the
Province of Tarlac.

Parks filed a complaint seeking the annulment of the donation and

asking that he be declared the absolute owner of the property. Parks
allege that the conditions of the donation were not complied with.

ISSUE Whether or not the donation was coupled with a condition

precedent? W/N the action to revoke has prescribed?

HELD

No. The condition to erect a school within six months is not a condition
precedent. The characteristic of a condition precedent is that the
acquisiito of the right is not effected while said condition is mot
complied with or is not deemed complied with. Meanwhile nothing is
acquired and there is only an expectancy of a right. Consequently,
when a condition is imposed, the compliance of which cannot be
effected except when the right is deemed acquired, such condition
cannot be a condition precedent. In the present case the condition that
a public school be erected and a public park be made of the donated
land could not be complied with except after giving effect to the
donation.

The action to revoke the donation has prescribed. The prescriptive

periods are: 5 years for the revocation by the subsequent birth of
children, 1 year if by reason of ingratitude. If no special period is
prescribed, 10 years, for an onerous donation following the law of
contracts and general rules on prescriptions. The donation was made in
1910, the cause of action accrued in 1911, while the action to revoke
was filed 1924, twenty three years later
Central Philippine University v. Court of Appeals G.R. No.: 112127

Ponente: Bellosillo Date: July 17, 1995

Petitioner: Central Philippine University (CPU)

Respondent: Court of Appeals, Remedios Franco, Francisco Lopez,

Cecilia Vda. De Lopez, Redan

Lopez and Remarene Lopez

FACTS:

1. Don Ramon Lopez, member of the Board of Trustees of CPU,

executed a deed of donation in favor of the latter of a parcel of land
with the following annotations:

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 shallbe 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. In 1989, private respondents, heirs of Don Ramon Lopez, filed an

action for annulment of the donation, reconveyance and damages
against CPU alleging that since 1939 (50 years!!!) CPU had not complied
with the conditions of the donation. Even alleged that petitioner
negotiated with NHA to exchange the donated property with another
land.

3. RTC Iloilo: Petitioner failed to comply with conditions of the donation

and declared it null and void. Directed to execute a deed of the re
conveyance of the property

4. CA: REVERSED and remanded the case to the court of origin for the
determination of the time within which the petitioner should comply.
ISSUE1: WON petitioner failed to comply the resolutely conditions
annotated at the back of petitioner’s certificate of title without a fixed
period when to comply with such conditions.-- YES

HELD/RATIO1:

The deed of donation executed in the present cases is an 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. 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.

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.

ISSUE2: WON there is a need to fix the period for compliance of the
condition.—NO.

General Rule: 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
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 obstacles for the court to decree recission.
QUIJADA VS. CA- Resolutory Condition in Donations

When a person donates land to another on a condition. The condition

imposed is not a condition precedent or a suspensive condition but a
resolutory one.

FACTS:

Petitioners are the children of the late Trinidad Quijada. Trinidad and
her siblings executed a deed of donation of a two-hectare lot in favor of
the Municipality of Talacogon (Agusan del Sur), exclusively for the
purpose of constructing the proposed provincial high school. However,
possession remained with Trinidad. She subsequently sold the two
hectares on two separate occasions to Regalado Mondejar, who sold it
to different persons. Eventually, the Municipality, failing to construct
the high school, reverted ownership to the donors. Petitioners filed an
action for quieting of title and recovery of possession and ownership.
RTC ruled in favor of petitioners, but CA reversed.

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.

FACTS:
A parcel of land was donated for the construction of a school. The
donation is subject to a resolutory condition. The school wasn’t
constructed. The land was subsequently sold to Montejar. The
donors sought to remove Montejar from the premises.
HELD:
It has been held that when a person donates land to another on
the condition that the latter would build upon the land a school,
the condition imposed is a resolutory one and not suspensive.
G.R. No. 87047 October 31, 1990

FRANCISCO LAO LIM vs. CA and BENITO VILLAVICENCIO DY

THE CASE:

CA having affirmed in toto on June 30, 1988 in CA-G.R. SP No.

13925, the decision of the RTC of Manila, Branch XLVI in Civil Case No.
87-42719, entitled "Francisco Lao Lim vs. Benito Villavicencio Dy,"
petitioner seeks the reversal of such affirmance in the instant petition.

FACTS:

The records show that Villavicencio entered into a contract of lease

with petitioner for a period of three (3) years, that is, from 1976 to
1979. After the stipulated term expired, Villavicencio refused to vacate
the premises, hence, petitioner filed an ejectment suit against the
former in the City Court of Manila, docketed therein as Civil Case No.
051063-CV.

The case was terminated by a judicially approved compromise

agreement of the parties providing in part:

“3. That the term of the lease shall be renewed every 3years
retroacting from October 1979 to October 1982; after which the
abovenamed rental shall be raised automatically by 20% every three
years for as long as defendant needed the premises and can meet and
pay the said increases, the defendant to give notice of his intent to
renew sixty (60) days before the expiration of the term;”

By reason of said compromise agreement the lease continued from

1979 to 1982, then from 1982 to 1985. On April 17, 1985, petitioner
advised Villavicencio that he would no longer renew the contract
effective October, 1985.

However, on August 5, 1985, Villavicencio informed petitioner in

writing of his intention to renew the contract of lease for another term,
commencing November, 1985 to October, 1988. In reply to said letter,
petitioner advised Villavicencio that he did not agree to a renewal of
the lease contract upon its expiration in October, 1985.
On January 15, 1986, because of Villavicencio's refusal to vacate the
premises, petitioner filed another ejectment suit, this time with the
Metropolitan Trial Court of Manila. In its decision of September 24,
1987, said court dismissed the complaint on the grounds that:

(1) the lease contract has not expired, being a continuous one the
period whereof depended upon the lessee's need for the premises
and his ability to pay the rents; and

(2) the compromise agreement entered into in the aforesaid Civil Case
No. 051063-CV constitutes res judicata to the case before it.

Petitioner appealed to the RTC of Manila which, in its decision of

January 28, 1988, affirmed the decision of the lower court.

CA affirmed RTC and held that:

(1) the stipulation in the compromise agreement which, in its

formulation, allows the lessee to stay on the premises as long as he
needs it and can pay rents is valid, being a resolutory condition and,
therefore, beyond the ambit of Article 1308 of the Civil Code; and

(2) that a compromise has the effect of res judicata.

ISSUE: Was the stipulation in the compromise agreement which allows

the lessee to stay on the premises as long as he needs it and can pay
rents is valid?

RULING: No. The decision of respondent CA is REVERSED and SET

ASIDE.

HELD: The disputed stipulation "for as long as the defendant needed

the premises and can meet and pay said increases" is a purely
potestative condition because it leaves the effectivity and enjoyment
of leasehold rights to the sole and exclusive will of the lessee.

It is likewise a suspensive condition because the renewal of the lease,

which gives rise to a new lease, depends upon said condition. It should
be noted that a renewal constitutes a new contract of lease although
with the same terms and conditions as those in the expired lease.
It should also not be overlooked that said condition is not resolutory in
nature because it is not a condition that terminates the lease contract.
The lease contract is for a definite period of three (3) years upon the
expiration of which the lease automatically terminates.

The invalidity of a condition in a lease contract similar to the one at bar

has been resolved in Encarnacion vs. Baldomar, et al. where we ruled
that in an action for ejectment, the defense interposed by the lessees
that the contract of lease authorized them to continue occupying the
premises as long as they paid the rents is untenable, because it would
leave to the lessees the sole power to determine whether the lease
should continue or not.

As stated therein, "(i)f this defense were to be allowed, so long as

defendants elected to continue the lease by 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 the aforesaid article of the
Civil Code.

The continuance, effectivity and fulfillment of a contract of lease

cannot be made to depend exclusively upon the free and uncontrolled
choice of the lessee between continuing the payment of the rentals or
not, completely depriving the owner of any say in the matter. Mutuality
does not obtain in such a contract of lease and no equality exists
between the lessor and the lessee since the life of the contract is
dictated solely by the lessee.

The interpretation made by respondent court cannot, therefore, be

upheld. The compromise agreement, read and interpreted in its
entirety, is actually to the effect that the last portion thereof, which
gives the Villavicencio sixty (60) days before the expiration of the term
the right to give notice of his intent to renew, is subject to the first
portion of said paragraph that "the term of the lease shall be renewed
every three (3) years," thereby requiring the mutual agreement of the
parties.
The use of the word "renew" and the designation of the period of three
(3) years clearly confirm that the contract of lease is limited to a specific
period and that it is not a continuing lease. The stipulation provides for
a renewal of the lease every three (3) years; there could not be a
renewal if said lease did not expire, otherwise there is nothing to
renew.

The contract of lease should be and is hereby construed as providing

for a definite period of three (3) years and that the automatic increase
of the rentals by twenty percent (20%) will take effect only if the parties
decide to renew the lease. A contrary interpretation will result in a
situation where the continuation and effectivity of the contract will
depend only upon the will of the lessee, in violation of Article 1308 of
the Civil Code and the aforesaid doctrine in Encarnacion.

Moreover, perpetual leases are not favored in law, nor are covenants
for continued renewals tending to create a perpetuity, and the rule of
construction is well settled that a covenant for renewal or for an
additional term should not be held to create a right to repeated grants
in perpetuity, unless by plain and unambiguous terms the parties have
expressed such intention.

A lease will not be construed to create a right to perpetual renewals

unless the language employed indicates dearly and unambiguously that
it was the intention and purpose of the parties to do so. A portion in a
lease giving the lessee and his assignee the right to perpetual renewals
is not favored by the courts, and a lease will be construed as not
making such a provision unless it does so clearly.

As we have further emphasized: It is also important to bear in mind that

in a reciprocal contract like a lease, the period of the lease must be
deemed to have been agreed upon for the benefit of both parties,
absent language showing that the term was deliberately set for the
benefit of the lessee or lessor alone. We are not aware of any
presumption in law that the term of a lease is designed for the benefit
of the lessee alone. . .

In addition, even assuming that the clause "for as long as the defendant
needed the premises and can meet and pay, said increases" gives
Villavicencio an option to renew the lease, the same will be construed
as providing for but one renewal or extension and, therefore, was
satisfied when the lease was renewed in 1982 for another three (3)
years.

A general covenant to renew is satisfied by one renewal and will not be

construed to confer the right to more than one renewal unless
provision is clearly and expressly made for further renewals. 16Leases
which may have been intended to be renewable in perpetuity will
nevertheless be construed as importing but one renewal if there is any
uncertainty in that regard.

The case of Buccat vs. Dispo et al., relied upon by respondent court, to
support its holding that respondent lessee can legally stay on the
premises for as long as he needs it and can pay the rents, is not in
point. In said case, the lease contract provides for an indefinite period
since it merely stipulates "(t)hat the lease contract shall remain in full
force and effect as long as the land will serve the purpose for which it is
intended as a school site of the National Business Institute, but the
rentals now stipulated shall be subject to review every after ten (10)
years by mutual agreement of the parties." This is in clear contrast to
the case at bar wherein, to repeat, the lease is fixed at a period of three
(3) years although subject to renewal upon agreement of the parties,
and the clause "for as long as defendant needs the premises and can
meet and pay the rents" is not an independent stipulation but is
controlled by said fixed term and the option for renewal upon
agreement of both parties.

Note: I did not include the 2nd issue anymore regarding res judicata. . .

WHEREFORE, the decision of respondent Court of Appeals is REVERSED

and SET ASIDE. Villavicencio is hereby ordered to immediately vacate
and return the possession of the leased premises subject of the present
action to petitioner and to pay the monthly rentals due thereon in
accordance with the compromise agreement until he shall have actually
vacated the same. This judgment is immediately executory.

SO ORDERED.
NATELCO VS. CA

G.R. No. 107112 February 24, 1994

FACTS:

1. NATELCO: telephone company rendering local and long distance

services in Naga.

1. Entered into contract with Camarines Sur II Electric

Cooperative (electrice power service):

i. “For the use in operation of its telephone service, electric light

posts of CASURECO II”.

ii. In return, free use of 10 telephone connections.

iii. Period: as long as NATELCO needs electric light posts, CASURECO

understands that contract will terminate when they are forced to stop,
abandon operation and remove lightposts.

2. CASURECO after 10 years: filed for reformation of contract with

damages, not conforming to guidelines of National Electrification
Administration (NEA)- reasonable compensation for use of posts.

i. Compensation is P10/posts but consumption of telephone cables

costs P2630.

ii. NATELCO used 319 posts without any contract at P10.00; refused
to pay.

iii. Poor servicing- damage not less than P100,000.

3. NATELCO

1. Compensation:

i. No cause of action for reformation of contract.

ii. Barred by prescription (10 years execution of contract)

iii. Barred by estoppel.

iv. Utilization could not have cause deterioration because already

used for 11 years.
v. Value of expenses been equal to use of telephone lines.

4. TRIAL COURT

1. ORDERED REFORMATION OF AGREEMENT:

i. NATELCO to pay for electric polls sum of P10/pole from January

1989.

1. Contract eventually became unfair due to increase in volume of

subscribers without increase of telephone connections which are free
of charge to CASURECO.

2. REFORMATION OF CONTACT: cannot make another contract but

abolish inequities.

3. Contract does not mention use of posts outside Naga City. Contract
should be reformed including provision that for the use posts outside
Naga.

5. CA: agreed to TRIAL COURT but for different reasons:

1. Article 1267 applicable

2. Contract POTESTATIVE CONDITION, THUS VOID.

ISSUE:

Is Article 1267 applicable? YES

Has the filing of reformation of contract prescribed? NO.

Is the period of contract, “as long as the party of the first part has need
for electrive light posts…” potestative? YES.

HELD:

1. ARTICLE 1267, EVEN THOUGH NEVER RAISED BEFORE, IS

APPLICABLE.

1. ARTICLE 1267: Art. 1267. When the service has become so

difficult as to be manifestly beyond the contemplation of
the parties, the obligor may also be released therefrom, in
whole or in part.
 2. PRESTATION: payment of money; a toll or duty; also, the
rendering of a service.

3. Contract was one-sided unfair, and disadvantageous to

plaintiff.

2. PRESCRIPTION HAS NOT YET LAPSED.

1. What is reformed is not the contract itself, but the

instrument embodying the contract. It follows that whether
the contract is disadvantageous or not is irrelevant to
reformation and therefore, cannot be an element in the
determination of the period for prescription of the action to
reform.

2. Article 1144: Action upon a written contract must be

brought within 10 years from the time the right of action
accrues.

i. “From the time the right of action accrues” not necessarily the date
of execution of the contract.

ii. As correctly ruled by respondent court, private respondent's right

of action arose "sometime during the latter part of 1982 or in 1983
when according to Atty. Luis General, Jr. . . ., he was asked by (private
respondent's) Board of Directors to study said contract as it already
appeared disadvantageous to (private respondent) in 1989.

iii. 10 years had not yet elapsed.

3. PERIOD OF CONTRACT IS POTESTATIVE, THUS INVALID.

a. Leaves the continued effectivity of the aforesaid agreement to the

latter's sole and exclusive will as long as plaintiff is in operation

b. Leaves leaves the effectivity and enjoyment of leasehold rights to

the sole and exclusive will of the lessee.