Professional Documents
Culture Documents
P 4,207,615.56
-- PLUS-DECISION
GARCIA, J.:
On a pure question of law involving the application of Republic Act (R.A.)
No. 5980, as amended by R.A. No. 8556 in relation to Articles 1484 and
1485 of the Civil Code, petitioner PCI Leasing and Finance, Inc. (PCI
LEASING, for short) has directly come to this Court via this petition for
review under Rule 45 of the Rules of Court to nullify and set aside the
Decision and Resolution dated December 28, 1998 and February 15,
2000, respectively, of the Regional Trial Court (RTC) of Quezon City,
Branch 227, in its Civil Case No. Q-98-34266, a suit for a sum of money
and/or personal property with prayer for a writ of replevin, thereat
instituted by the petitioner against the herein respondent, Giraffe-X
Creative Imaging, Inc. (GIRAFFE, for brevity).
The facts:
On December 4, 1996, petitioner PCI LEASING and respondent
GIRAFFE entered into a Lease Agreement,1whereby the former leased
out to the latter one (1) set of Silicon High Impact Graphics and
accessories worthP3,900,00.00 and one (1) unit of Oxberry Cinescan
6400-10 worth P6,500,000.00. In connection with this agreement, the
parties subsequently signed two (2) separate documents, each
denominated as Lease Schedule.2 Likewise forming parts of the basic
lease agreement were two (2) separate documents denominated
Disclosure Statements of Loan/Credit Transaction (Single Payment or
Installment Plan)3 that GIRAFFE also executed for each of the leased
equipment. These disclosure statements inter alia described GIRAFFE,
vis--vis the two aforementioned equipment, as the "borrower" who
acknowledged the "net proceeds of the loan," the "net amount to be
financed," the "financial charges," the "total installment payments" that it
must pay monthly for thirty-six (36) months, exclusive of the 36% per
annum "late payment charges." Thus, for the Silicon High Impact
Graphics, GIRAFFE agreed to pay P116,878.21 monthly, and for Oxberry
Cinescan, P181.362.00 monthly. Hence, the total amount GIRAFFE has
P 6,529,032.00
P 10,736,647.56
It is thus GIRAFFEs posture that the aforequoted Article 1484 of the Civil
Code applies to its contractual relation with PCI LEASING because the
lease agreement in question, as supplemented by the schedules
documents, is really a lease with option to buy under the companion
article, Article 1485. Consequently, so GIRAFFE argues, upon the
seizure of the leased equipment pursuant to the writ of replevin, which
seizure is equivalent to foreclosure, PCI LEASING has no further
recourse against it. In brief, GIRAFFE asserts in its Motion to Dismiss
that the civil complaint filed by PCI LEASING is proscribed by the
application to the case of Articles 1484 and 1485, supra, of the Civil
Code.
In its Opposition to the motion to dismiss, PCI LEASING maintains that its
contract with GIRAFFE is a straight lease without an option to buy.
Prescinding therefrom, PCI LEASING rejects the applicability to the suit
of Article 1484 in relation to Article 1485 of the Civil Code, claiming that,
under the terms and conditions of the basic agreement, the relationship
between the parties is one between an ordinary lessor and an ordinary
lessee.
In a decision7 dated December 28, 1998, the trial court granted
GIRAFFEs motion to dismiss mainly on the interplay of the following
premises: 1) the lease agreement package, as memorialized in the
contract documents, is akin to the contract contemplated in Article 1485
of the Civil Code, and 2) GIRAFFEs loss of possession of the leased
equipment consequent to the enforcement of the writ of replevin is "akin
to foreclosure, the condition precedent for application of Articles 1484
and 1485 [of the Civil Code]." Accordingly, the trial court dismissed Civil
Case No. Q-98-34266, disposing as follows:
WHEREFORE, premises considered, the defendant [GIRAFFE] having
relinquished any claim to the personal properties subject of replevin
which are now in the possession of the plaintiff [PCI LEASING], plaintiff is
DEEMED fully satisfied pursuant to the provisions of Articles 1484 and
1485 of the New Civil Code. By virtue of said provisions, plaintiff is
DEEMED estopped from further action against the defendant, the plaintiff
having recovered thru (replevin) the personal property sought to be
payable/leased on installments, defendants being under protection of
said RECTO LAW. In view thereof, this case is hereby DISMISSED.
With its motion for reconsideration having been denied by the trial court
in its resolution of February 15, 2000,8petitioner has directly come to this
Court via this petition for review raising the sole legal issue of whether or
not the underlying Lease Agreement, Lease Schedules and the
xxx
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"'Credit' shall mean any loan, any contract to sell, or sale or contract of
sale of property or service, under which part or all of the price is
payable subsequent to the making of such sale or contract; any rentalpurchase contract; .;"
and allowing the latter to obtain the immediate possession and use
thereof pending full payment of the financial accommodation that is
given.
In the case at bench, xxx. [T]he term of the contract [over a motor
vehicle] was for thirty six (36) months at a "monthly rental"
(P1,689.40), or for a total amount of P60,821.28. The contract also
contained [a] clause [requiring the Lessee to give a guaranty deposit in
the amount of P20,800.00] xxx
After the private respondent had paid the sum of P41,670.59, excluding
the guaranty deposit of P20,800.00, he stopped further payments. Putting
the two sums together, the financing company had in its hands the
amount of P62,470.59 as against the total agreed "rentals" of P60,821.28
or an excess of P1,649.31.
The respondent appellate court considered it only just and equitable for
the guaranty deposit made by the private respondent to be applied to his
arrearages and thereafter to hold the contract terminated. Adopting the
ratiocination of the court a quo, the appellate court said:
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Considering the factual findings of both the court a quo and the appellate
court, the only logical conclusion is that the private respondent did opt, as
he has claimed, to acquire the motor vehicle, justifying then the
application of the guarantee deposit to the balance still due and
obligating the petitioner to recognize it as an exercise of the option by the
private respondent. The result would thereby entitle said respondent to
the ownership and possession of the vehicle as the buyer thereof. We,
for profit. They serve a higher purpose, and R.A. No. 8556 has made that
abundantly clear.
We stress, however, that there is nothing in R.A. No. 8556 which defines
the rights and obligations, as between each other, of the financial lessor
and the lessee. In determining the respective responsibilities of the
parties to the agreement, courts, therefore, must train a keen eye on the
attendant facts and circumstances of the case in order to ascertain the
intention of the parties, in relation to the law and the written agreement.
Likewise, the public interest and policy involved should be considered. It
may not be amiss to state that, normally, financing contracts come in a
standard prepared form, unilaterally thought up and written by the
financing companies requiring only the personal circumstances and
signature of the borrower or lessee; the rates and other important
covenants in these agreements are still largely imposed unilaterally by
the financing companies. In other words, these agreements are usually
one-sided in favor of such companies. A perusal of the lease agreement
in question exposes the many remedies available to the petitioner, while
there are only the standard contractual prohibitions against the
respondent. This is characteristic of standard printed form contracts.
There is more. In the adverted February 24, 1998 demand letter17 sent to
the respondent, petitioner fashioned its claim in the alternative: payment
of the full amount of P8,248,657.47, representing the unpaid balance for
the entire 36-month lease period or the surrender of the financed asset
under pain of legal action. To quote the letter:
Demand is hereby made upon you to pay in full your outstanding balance
in the amount of P8,248,657.47 on or before March 04, 1998 OR to
surrender to us the one (1) set Silicon High Impact Graphics and one (1)
unit Oxberry Cinescan 6400-10
We trust you will give this matter your serious and preferential attention.
(Emphasis added).
Evidently, the letter did not make a demand for the payment of
the P8,248,657.47 AND the return of the equipment; only either one of
the two was required. The demand letter was prepared and signed by
Atty. Florecita R. Gonzales, presumably petitioners counsel. As such, the
use of "or" instead of "and" in the letter could hardly be treated as a
simple typographical error, bearing in mind the nature of the demand, the
amount involved, and the fact that it was made by a lawyer. Certainly
Atty. Gonzales would have known that a world of difference exists
between "and" and "or" in the manner that the word was employed in the
letter.
A rule in statutory construction is that the word "or" is a disjunctive term
signifying dissociation and independence of one thing from other things
enumerated unless the context requires a different interpretation.18
In its elementary sense, "or", as used in a statute, is a disjunctive article
indicating an alternative. It often connects a series of words or
propositions indicating a choice of either. When "or" is used, the various
members of the enumeration are to be taken separately.19
The word "or" is a disjunctive term signifying disassociation and
independence of one thing from each of the other things enumerated.20
The demand could only be that the respondent need not return the
equipment if it paid the P8,248,657.47 outstanding balance, ineluctably
suggesting that the respondent can keep possession of the equipment if
it exercises its option to acquire the same by paying the unpaid balance
of the purchase price. Stated otherwise, if the respondent was not
minded to exercise its option of acquiring the equipment by returning
them, then it need not pay the outstanding balance. This is the logical
import of the letter: that the transaction in this case is a lease in name
only. The so-called monthly rentals are in truth monthly amortizations of
the price of the leased office equipment.
On the whole, then, we rule, as did the trial court, that the PCI LEASINGGIRAFFE lease agreement is in reality a lease with an option to purchase
the equipment. This has been made manifest by the actions of the
petitioner itself, foremost of which is the declarations made in its demand
letter to the respondent. There could be no other explanation than that if
the respondent paid the balance, then it could keep the equipment for its
own; if not, then it should return them. This is clearly an option to
purchase given to the respondent. Being so, Article 1485 of the Civil
Code should apply.
The present case reflects a situation where the financing company can
withhold and conceal - up to the last moment - its intention to sell the
property subject of the finance lease, in order that the provisions of the
Recto Law may be circumvented. It may be, as petitioner pointed out,
that the basic "lease agreement" does not contain a "purchase option"
clause. The absence, however, does not necessarily argue against the
idea that what the parties are into is not a straight lease, but a lease with
option to purchase. This Court has, to be sure, long been aware of the
practice of vendors of personal property of denominating a contract of
sale on installment as one of lease to prevent the ownership of the object
of the sale from passing to the vendee until and unless the price is fully
paid. As this Court noted in Vda. de Jose v. Barrueco:21
Sellers desirous of making conditional sales of their goods, but who do
not wish openly to make a bargain in that form, for one reason or
another, have frequently resorted to the device of making contracts in the
form of leases either with options to the buyer to purchase for a small
consideration at the end of term, provided the so-called rent has been
duly paid, or with stipulations that if the rent throughout the term is paid,
title shall thereupon vest in the lessee. It is obvious that such transactions
are leases only in name. The so-called rent must necessarily be regarded
as payment of the price in installments since the due payment of the
agreed amount results, by the terms of the bargain, in the transfer of title
to the lessee.
In another old but still relevant case of U.S. Commercial v. Halili,22 a
lease agreement was declared to be in fact a sale of personal property by
installments. Said the Court:
. . . There can hardly be any question that the so-called contracts of lease
on which the present action is based were veritable leases of personal
property with option to purchase, and as such come within the purview of
the above article [Art. 1454-A of the old Civil Code on sale of personal
property by installment]. xxx
Being leases of personal property with option to purchase as
contemplated in the above article, the contracts in question are subject to
the provision that when the lessor in such case "has chosen to deprive
the lessee of the enjoyment of such personal property," "he shall have no
further action" against the lessee "for the recovery of any unpaid balance"
owing by the latter, "agreement to the contrary being null and void."
In choosing, through replevin, to deprive the respondent of possession of
the leased equipment, the petitioner waived its right to bring an action to
recover unpaid rentals on the said leased items. Paragraph (3), Article
1484 in relation to Article 1485 of the Civil Code, which we are hereunder
re-reproducing, cannot be any clearer.
an instant killing out of the transaction at the expense of its client, the
respondent. The Recto Law was precisely enacted to prevent this kind of
aberration. Moreover, due to considerations of equity, public policy and
justice, we cannot allow this to happen. Not only to the respondent, but
those similarly situated who may fall prey to a similar scheme.
1avvphil.zw+
xxx
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xxx
(3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more
installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to
the contrary shall be void.
FIRST DIVISION
VITUG, J.:p
From the decision of the Court of Appeals in CA-G.R. CV No.
30693 which affirmed that of the Regional Trial Court, NCJR,
Branch 39, Manila, in Civil Case No. 85-29954, confirming the
disputed possession of a motor vehicle in favor of private
respondent and ordering the payment to it by petitioners of
liquidated damages and attorney's fees, the instant appeal was
interposed.
The appellate court adopted the factual findings of the court a
quo, to wit:
The plaintiff's evidence shows among others that on
December 7, 1984, defendants Daniel L. Borbon and
Francisco Borbon signed a promissory note (Exh. A)
which states among others as follows:
PROMISSORY NOTE
Acct. No. 115008276
Makati, Metro Manila,
Philippines
December 7, 1984
"P122,856.00
"Maker:
"For value received (installment price of the chattel/s
purchased), I/We jointly and severally promised to pay
The parties here concede that the action for replevin has been
instituted for the foreclosure of the vehicle in question (now in the
possession of private respondent). The sole issue raised before
us in this appeal is focused on the legal propriety of the
affirmance by the appellate court of the awards made by the
court a quo of liquidated damages and attorney's fees to private
respondent. Petitioners hold that under Article 1484 of the Civil
Code, aforequoted, the vendor-mortgagee or its assignees loses
any right "to recover any unpaid balance of the price" and any
"agreement to the contrary (would be) void.
The argument is aptly made. In Macondray & Co. vs.
Eustaquio, 9 we have said that the phrase "any unpaid balance" can
only mean the deficiency judgment to which the mortgagee may be
entitled to when the proceeds from the auction sale are insufficient to
cover the "full amount of the secured obligations which . . . include
interest on the principal, attorney's fees, expenses of collection, and
the costs." In sum, we have observed that the legislative intent is not
to merely limit the proscription of any further action to the "unpaid
balance of the principal" but, as so later ruled in Luneta Motor Co. vs.
Salvador, 10 to all other claims that may be likewise be called in for in
the accompanying promissory note against the buyer-mortgagor or
his guarantor, including costs and attorney's fees.
SECOND DIVISION
G.R. No. 202358
The Facts
The CA recited the facts as follows:
On 28 December 1994, [Angeles] purchased a house (under Contract to
Sell No. 2272) and lot (under Contract to Sell No. 2271) from [GRI]
valued at Seven Hundred Fifty Thousand Pesos (Php 750,000.00) and
Four Hundred Fifty Thousand Pesos (Php 450,000.00), respectively, with
twenty-four percent (24%) interest per annum to be paid by installment
within a period of ten years.
The house and lot were delivered to [Angeles] in 1995. Nonetheless,
under the contracts to sell executed between the parties, [GRI] retained
ownership of the property until full payment of the purchase price.
(4) more postal money orders were sent by [Angeles] by registered mail
to [GRI].
For her continued failure to satisfy her obligations with [GRI] and her
refusal to vacate the house and lot, [GRI] filed a complaint for unlawful
detainer against [Angeles] on 11 November 2003.8
The MeTCs Ruling
The MeTC of Branch 79, Las Pias City ruled in favor of GRI. The MeTC
determined that the case was for an unlawful detainer, and thus assumed
jurisdiction. The MeTC further held that the facts show that GRI was able
to establish the validity of the rescission:
A careful scrutiny of the evidence presented by both parties regarding
payments made clearly show that [Angeles] defaulted in the payment of
the monthly installments due. Repeated notices and warnings were given
to her but she still and failed to update her account (Exhibits "E" to "E-1"
and "G" to "G-2", [GRIs] Position Paper). This is a clear violation of the
condition of their contracts. An ample grace period, i.e., 51 months, was
granted to her by [GRI] but she still failed to pay the whole amount due
as provided in paragraph 6 of the contracts and Section 3 of RA 6552.
[Angeles] has been in arrears beyond the grace period provided under
the contracts and law. The last payment received by [GRI], which
represents [Angeles] 35th installment, was made in July 2002. On the
other hand, the last payment, which represents her 48th installment,
[was] received [by GRI] in April 1999. Thus, [GRI], as seller, can
terminate or rescind the contract by giving her the notice of notarial
rescission of the contracts. The notarial rescission of the contracts was
executed on September 26, 2003 and served upon [Angeles].9
Although the MeTC agreed with Angeles that her total payment is already
more than the contracted amount, the MeTC found that Angeles did not
pay the monthly amortizations in accordance with the terms of the
contract. Interests and penalties accumulated and increased the amount
due. Furthermore, the MeTC found the monthly rentals imposed by GRI
reasonable and within the range of the prevailing rental rates in the
vicinity. Compensation between GRI and Angeles legally took effect in
accordance with Article 129010 of the Civil Code. The MeTC ruled that
GRI is entitled to P1,060,896.39 by way of reasonable rental fee
less P574,148.40 as of May 2005, thus leaving a balance of P486,747.99
plus the amount accruing until Angeles finally vacates the subject
premises.
201 of the Las Pias RTC dismissed Angeles Petition for Certiorari for
forum-shopping.13
GRI, on the other hand, filed a Motion for Execution Pending Appeal. A
Writ of Execution Pending Appeal was issued in favor of GRI on 25
August 2006, and the properties were turned over to GRI on 10 October
2006.14
The RTCs Ruling
Angeles appeal before Branch 197 of the Las Pias RTC initially
produced a result favorable to her. The RTC found that the case was one
for ejectment. As an ejectment court, the MeTCs jurisdiction is limited
only to the issue of possession and does not include the title or
ownership of the properties in question.
The RTC pointed out that Republic Act No. 6552 (R.A. 6552) provides
that the non-payment by the buyer of an installment prevents the
obligation of the seller to convey title from acquiring binding force.
Moreover, cancellation of the contract to sell may be done outside the
court when the buyer agrees to the cancellation. In the present case,
Angeles denied knowledge of GRIs notice of cancellation. Cancellation
of the contract must be done in accordance with Section 3 of R.A. 6552,
which requires a notarial act of rescission and refund to the buyer of the
cash surrender value of the payments on the properties. Thus, GRI
cannot insist on compliance with Section 3(b) of R.A. 6552 by applying
Angeles cash surrender value to the rentals of the properties after
Angeles failed to pay the installments due. Contrary to the MeTCs ruling,
there was no legal compensation between GRI and Angeles. The RTC
ruled:
There being no valid cancellation of the Contract to Sell, this Court finds
merit in the appeal filed by [Angeles] and REVERSES the decision of the
court a quo. This Court recognized [Angeles] right to continue occupying
the property subject of the Contract to Sell.
WHEREFORE, premises considered, the decision of the lower court is
hereby SET ASIDE and the ejectment case filed by [GRI] is hereby
DISMISSED.
SO ORDERED.15
rights of a buyer who has paid at least two years of installments but
defaults in the payment of succeeding installments. Section 3 reads:
5. Costs of suit.
SO ORDERED.17
The Court of Appeals Ruling
The CA dismissed GRIs complaint for unlawful detainer, and reversed
and set aside the RTCs decision. Although the CA ruled that Angeles
received the notice of notarial rescission, it ruled that the actual
cancellation of the contract between the parties did not take place
because GRI failed to refund to Angeles the cash surrender value. The
CA denied GRIs motion for reconsideration.
GRI filed the present petition for review before this Court on 10 August
2012.
The Issues
GRI assigned the following errors of the CA:
The court a quo committed reversible error when it declared that there
was no refund of the cash surrender value in favor of [Angeles] pursuant
to R.A. No. 6552; and
The court a quo erred in holding that the actual cancellation of the
contract between the parties did not take place.18
For paying more than two years of installments on the lot, Angeles was
entitled to receive cash surrender value of her payments on the lot
equivalent to fifty per cent of the total payments made. This right is
provided by Section 3(b) of R.A. 6552, as well as paragraph 6(b) of the
contract. Out of the contract price of P450,000, Angeles paid GRI a total
of P364,188.96 consisting of P135,000 as downpayment
and P229,188.96 as installments and penalties.27 The cash surrender
value of Angeles payments on the lot amounted to P182,094.48.28
For the same reasons, Angeles was also entitled to receive cash
surrender value of the payments on the house equivalent to fifty per cent
of the total payments made. Out of the contract price of P750,000,
Angeles paid GRI a total of P784,107.84 consisting of P165,000 as
downpayment and P619,107.84 as installments and penalties.29The cash
surrender value of Angeles payments on the house amounted
to P392,053.92.30
Actual Cancellation of the Contracts
There was no actual cancellation of the contracts because of GRIs
failure to actually refund the cash surrender value to Angeles.
Cancellation of the contracts for the house and lot was contained in a
notice of notarial rescission dated 11 September 2003.31 The registry
return receipts show that Angeles received this notice on 19 September
PERIOD COVERED
NO. OF
RENTALS
AMOUNT DUE
2003.32GRIs demand for rentals on the properties, where GRI offset
MONTHS
PER MONTH
Angeles accrued rentals by the refundable cash surrender value, was
contained in another letter dated 26 September 2003.33 The registry
7
11,000.00
77,000.
return receipts show that Angeles received this letter on 29 September June to December 1999
2003.34 GRI filed a complaint for unlawful detainer against Angeles on 11
January to December 2000
12
12,100.00
145,200.
November 2003, 61 days after the date of its notice of notarial rescission,
and 46 days after the date of its demand for rentals. For her part,
January to December 2001
12
13,310.00
159,720.
Angeles sent GRI postal money orders in the total amount ofP120,000.35
January to December 2002
12
14,641.00
175,692.02 [s
The MeTC ruled that it was proper for GRI to compensate the rentals due
January to August 2003
8
16,105.10
128,840.
from Angeles occupation of the property from the cash surrender value
due to Angeles from GRI. The MeTC stated that compensation legally
TOTAL AMOUNT DUE:
P 686,452.82 [sic
took effect in accordance with Article 1290 of the Civil Code, which reads:
"When all the requisites mentioned in Article 1279 are present,
We cannot subscribe to GRIs view that it merely followed our ruling in
compensation takes effect by operation of law and extinguishes both
Pilar Development Corporation v. Spouses Villar37 (Pilar) when it
debts to the concurrent amount, even though the creditors and debtors
deducted the cash surrender value from the rentals due. In Pilar, the
are not aware of the compensation." In turn, Article 1279 of the Civil
developer also failed to refund the cash surrender value to the defaulting
Code provides:
buyer when it cancelled the Contract to Sell through a Notice of
Cancellation. It was this Court, and not the developer, that deducted the
amount of the cash surrender value from the accrued rentals. Moreover,
the developer in Pilar did not unilaterally impose rentals. It was the MeTC
that decreed the amount of monthly rent. Neither did the developer
unilaterally reduce the accrued rentals by the refundable cash surrender
value. The cancellation of the contract took effect only by virtue of this
Courts judgment because of the developers failure to return the cash
surrender value.
This was how we ruled in Pilar:
According to R.A. 6552, the cash surrender value, which in this case is
equivalent to fifty percent (50%) of the total payment made by the
respondent spouses, should be returned to them by the petitioner upon
the cancellation of the contract to sell on August 31, 1998 for the
cancellation to take effect. Admittedly, no such return was ever made by
petitioner. Thus, the said cash surrender value is hereby ordered
deducted from the award owing to the petitioner based on the MeTC
judgment, and cancellation takes effect by virtue of this judgment.
Finally, as regards the award of P7,000.00/month as rental payment
decreed by the MeTC for the use of the property in question from the
time the respondent spouses obtained possession thereof up to the time
that its actual possession is surrendered or restored to the petitioner, the
Court finds the same just and equitable to prevent the respondent
spouses, who breached their contract to sell, from unjustly enriching
themselves at the expense of the petitioner which, for all legal intents and
purposes, never ceased to be the owner of the same property because of
the respondents non-fulfillment of the indispensable condition of full
payment of the purchase price, as embodied in the parties contract to
sell. However, as earlier explained, this sum is to be reduced by the cash
surrender value of the payments so far made by the spouses, and the
resulting net amount still owing as accrued rentals shall be subject to
legal interest from finality of this Decision up to the time of actual
payment thereof.38
Mandatory Twin Requirements:
Notarized Notice of Cancellation and
Refund of Cash Surrender Value
This Court has been consistent in ruling that a valid and effective
cancellation under R.A. 6552 must comply with the mandatory twin
SO ORDERED.
THIRD DIVISION
PANGANIBAN, J.:
The Antecedent Facts
Novation is never presumed; it must be sufficiently established that a
valid new agreement or obligation has extinguished or changed an
existing one. The registration of a later sale must be done in good faith to
entitle the registrant to priority in ownership over the vendee in an earlier
sale.
Statement of the Case
These doctrines are stressed by this Court as it resolves the instant
petition challenging the December 28, 1993 Decision 1 of Respondent
Court of Appeals 2 in CA-G.R. SP No. 33307, which reversed and set aside
the judgment of the Regional Trial Court of Cebu City, Branch 19, and
entered a new one dismissing the petitioners' complaint. The dispositive
portion of the RTC decision reads: 3
of the contract." 7 And even assuming arguendo that the second sale was
not perfected, the trial court ruled that the same still constituted a mere
modificatory novation which did not extinguish the first sale. Hence, the trial
court held that "the Velezes were not free to sell the properties to the Avenue
Group." 8 It also found that the Avenue Group purchased the property in bad
faith. 9
The Issues
Petitioners allege the following "errors" in the Decision of Respondent
Court:
I
Article 1600 of the Civil Code provides that "(s)ales are extinguished by
the same causes as all other obligations, . . . ." Article 1231 of the same
Code states that novation is one of the ways to wipe out an obligation.
Extinctive novation requires: (1) the existence of a previous valid
obligation; (2) the agreement of all the parties to the new contract; (3) the
extinguishment of the old obligation or contract; and (4) the validity of the
new one. 14 The foregoing clearly show that novation is effected only when a
new contract has extinguished an earlier contract between the same parties.
In this light, 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 old and new obligations or
contracts. 15 After a thorough review of the records, we find this element
lacking in the case at bar.
As aptly found by the Court of Appeals, the petitioners and the Velezes
did not reach an agreement on the new price of P1,400,000.00
demanded by the latter. In this case, the petitioners and the Velezes
clearly did not perfect a new contract because the essential requisite of
consent was absent, the parties having failed to agree on the terms of the
payment. True, petitioners made a qualified acceptance of this offer by
proposing that the payment of this higher sale price be made by
installment, with P1,000,000.00 as down payment and the balance of
P400,000.00 payable thirty days thereafter. Under Article 1319 of the
Civil Code, 16 such qualified acceptance constitutes a counter-offer and has
the ineludible effect of rejecting the Velezes' offer. 17 Indeed, petitioners'
counter-offer was not accepted by the Velezes. It is well-settled that "(a)n
offer must be clear and definite, while an acceptance must be unconditional
and unbounded, in order that their concurrence can give rise to a perfected
contract." 18 In line with this basic postulate of contract law, "a definite
agreement on the manner of payment of the price is an essential element in
the formation of a binding and enforceable contract of sale." 19 Since the
parties failed to enter into a new contract that could have extinguished their
previously perfected contract of sale, there can be no novation of the latter.
Consequently, the first sale of the property in controversy, by the Velezes to
petitioners for P1,050,000.00, remained valid and existing.
supplied)
After a thorough scrutiny of the records of the instant case, the Court
finds that bad faith tainted the Avenue Group's purchase on July 13, 1985
of the Velezes' real property subject of this case, and the subsequent
registration thereof on August 1, 1995. The Avenue Group had actual
knowledge of the Velezes' prior sale of the same property to the
petitioners, a fact antithetical to good faith. For a second buyer like the
Avenue Group to successfully invoke the second paragraph, Article 1544
of the Civil Code, it must possess good faith from the time of the sale in
its favor until the registration of the same. This requirement of good faith
the Avenue Group sorely failed to meet. That it had knowledge of the
prior sale, a fact undisputed by the Court of Appeals, is explained by the
trial court thus:
Having already ruled that petitioners' actual knowledge of the first sale
tainted their registration, we find no more reason to pass upon the issue
of whether the annotation of lis pendens automatically negated good faith
in such registration.
WHEREFORE, the petition is GRANTED. The assailed Decision of the
Court of Appeals is hereby SET ASIDE and the dispositive portion of the
trial court's decision dated October 19, 1990 is REVIVED with the
following MODIFICATION the consideration to be paid under par. 2 of
the disposition is P1,050,000.00 and not P1,400,000.00. No Costs.
SO ORDERED.
EN BANC
Derecho Civil, 7a Ed., p. 107). (Also Puig Pea, Der. Civ., T. IV (1), p.
113).'"
remove the scrap iron located in petitioners' premises between May 17,
1983 until May 30, 1983 or beyond the May 15, 1983 deadline for the
opening of the Letter of Credit. Hence, in the absence of any indication
that the time was of the essence, the eleven-day delay must be deemed
a casual breach which cannot justify a rescission.
DECISION
DAVIDE, JR., J p:
By this petition for review under Rule 45 of the Rules of Court, petitioners
urge this Court to set aside the decision of public respondent Court of
Appeals in C.A.-G.R. CV No. 08807, 1 promulgated on 16 March 1988,
which affirmed with modification, in respect to the moral damages, the
decision of the Regional Trial Court (RTC) of Iloilo in Civil Case No.
15128, an action for specific performance and damages, filed by the
herein private respondent against the petitioners. The dispositive portion
of the trial court's decision reads as follows:
"IN VIEW OF THE ABOVE FINDINGS, judgment is hereby rendered in
favor of plaintiff and against the defendants ordering the latter to pay
jointly and severally plaintiff, to wit:
1) The sum of Thirty-Four Thousand Five Hundred Eighty Three and
16/100 (P34,583.16), as actual damages;
2) The sum of One Hundred Thousand (P100,000.00) Pesos, as moral
damages;
3) The sum of Ten Thousand (P10,000.00) Pesos, as exemplary
damages;
4) The sum of TWENTY Five Thousand (P25,000.00) Pesos, as
attorney's fees; and
5) The sum of Five Thousand (P5,000.00) Pesos as actual litis
expenses." 2
The public respondent reduced the amount of moral damages to
P25,000.00.
2. Are the parties entitled to damages they respectively claim under the
pleadings?" 6
"1. In finding that there was delivery of the scrap iron subject of the sale;
2. In not finding that plaintiff had not complied with the conditions in the
contract of sale;
corporation's premises and to dig-up the scrap iron. The pieces of scrap
iron then (sic) placed at the disposal of the buyer. Delivery was therefore
complete. The identification and designation by the seller does not
complete delivery.
Thus, rescission in cases falling under Article 1191 of the Civil Code is
always subject to review by the courts and cannot be considered final.
Even if one were to grant that there was a breach of the contract by the
buyer, automatic rescission cannot take place because, as already (sic)
stated, delivery had already been made. And, in cases where there has
already been delivery, the intervention of the court is necessary to annul
the contract.
As the lower court aptly stated:
'Respecting these allegations of the contending parties, while it is true
that Article 1593 of the New Civil Code provides that with respect to
movable property, the rescission of the sale shall of right take place in the
interest of the vendor, if the vendee fails to tender the price at the time or
period fixed or agreed, however, automatic rescission is not allowed if the
object sold has been delivered to the buyer (Guevarra vs. Pascual, 13
Phil. 311; Escueta vs. Pando, 76 Phil 256), the action being one to
rescind judicially and where (sic) Article 1191, supra, thereby applies.
There being already an implied delivery of the items, subject matter of the
contract between the parties in this case, the defendant having
surrendered the premises where the scraps (sic) were found for plaintiff's
men to dig and gather, as in fact they had dug and gathered, this Court
finds the mere notice of resolution by the defendants untenable and not
conclusive on the rights of the plaintiff (Ocejo Perez vs. Int. Bank, 37 Phi.
631). Likewise, as early as in the case of Song Fo vs. Hawaiian
Philippine Company, it has been ruled that rescission cannot be
sanctioned for a slight or casual breach (47 Phil. 821).'
In the case of Angeles vs. Calasanz (135 (1935) SCRA 323), the
Supreme Court ruled:
'Article 1191 is explicit. In reciprocal obligations, either party has the right
to rescind the contract upon failure of the other to perform the obligation
assumed thereunder.
In the case at bar, the trial court ruled that rescission is improper because
the breach was very slight and the delay in opening the letter of credit
was only 11 days.
'Where time is not of the essence of the agreement, a slight delay by one
party in the performance of his obligation is not a sufficient ground for
rescission of the agreement. Equity and justice mandates (sic) that the
vendor be given additional (sic) period to complete payment of the
purchase price.' (Taguda vs. Vda. de Leon, 132 SCRA (1984), 722).'
There is no need to discuss the fourth and fifth assigned errors since
these are merely corollary to the first three assigned errors." 8
Their motion to reconsider the said decision having been denied by
public respondent in its Resolution of 4 May 1988, 9 petitioners filed this
petition reiterating the abovementioned assignment of errors.
There is merit in the instant petition.
Both the trial court and the public respondent erred in the appreciation of
the nature of the transaction between the petitioner corporation and the
private respondent. To this Court's mind, what obtains in the case at bar
is a mere contract to sell or promise to sell, and not a contract of sale.
The trial court assumed that the transaction is a contract of sale and,
influenced by its view that there was an "implied delivery" of the object of
the agreement, concluded that Article 1593 of the Civil Code was
inapplicable; citing Guevarra vs. Pascual 10 and Escueta vs. Pando, 11 it
ruled that rescission under Article 1191 of the Civil Code could only be
done judicially. The trial court further classified the breach committed by
the private respondent as slight or casual, foreclosing, thereby,
petitioners' right to rescind the agreement.
Article 1593 of the Civil Code provides:
the price of FIFTY CENTAVOS (P0.50) per kilo on the following terms
and conditions:
1. Weighing shall be done in the premises of the SELLER at Cawitan,
Sta. Catalina, Neg. Oriental.
2. To cover payment of the purchase price, BUYER will open, make or
indorse an irrevocable and unconditional letter of credit not later than
May 15, 1983 at the Consolidated Bank and Trust Company, Dumaguete
City, Branch, in favor of the SELLER in the sum of TWO HUNDRED AND
FIFTY THOUSAND PESOS (P250,000.00), Philippine Currency.
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.
3. The SELLER will furnish the BUYER free of charge at least three (3)
cargo trucks with drivers, to haul the weighed materials from Cawitan to
the TSMC wharf at Sta. Catalina for loading on BUYER's barge. All
expenses for labor, loading and unloading shall be for the account of the
BUYER.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period."
Sustaining the trial court on the issue of delivery, public respondent cites
Article 1497 of the Civil Code which provides:
"ARTICLE 1497. The thing sold shall be understood as delivered, when it
is placed in the control and possession of the vendee."
In the agreement in question, entitled PURCHASE AND SALE OF
SCRAP IRON, 12 the seller bound and promised itself to sell the scrap
iron upon the fulfillment by the private respondent of his obligation to
make or indorse an irrevocable and unconditional letter of credit in
payment of the purchase price. Its principal stipulation reads, to wit:
xxx xxx xxx
"Witnesseth:
That the SELLER agrees to sell, and the BUYER agrees to buy, an
undetermined quantity of scrap iron and junk which the SELLER will
identify and designate now at Cawitan, Sta. Catalina, Negros Oriental, at
" . . . The upshot of all these stipulations is that in seeking the ouster of
Maritime for failure to pay the price as agreed upon, Myers was not
rescinding (or more properly, resolving) the contract, but precisely
enforcing it according to its express terms. In its suit Myers was not
seeking restitution to it of the ownership of the thing sold (since it was
never disposed of), such restoration being the logical consequence of the
fulfillment of a resolutory condition, express or implied (article 1190);
neither was it seeking a declaration that its obligation to sell was
extinguished. What it sought was a judicial declaration that because the
suspensive condition (full and punctual payment) had not been fulfilled,
its obligation to sell to Maritime never arose or never became effective
and, therefore, it (Myers) was entitled to repossess the property object of
the contract, possession being a mere incident to its right of ownership. It
is elementary that, as stated by Castan,
'b) Si la condicion suspensiva llega a faltar, la obligacion se tiene por no
existente, y el acreedor pierde todo derecho, incluso el de utilizar las
medidas conservativas.' (3 Cast n, Derecho Civil, 7a Ed., p. 107). (Also
Puig Pea, Der. Civ., T. IV (1), p. 113)'."
In the instant case, not only did the private respondent fail to open, make
or indorse an irrevocable and unconditional letter of credit on or before 15
May 1983 despite his earlier representation in his 24 May 1983 telegram
that he had opened one on 12 May 1983, the letter of advice received by
the petitioner corporation on 26 May 1983 from the Bank of the Philippine
Islands Dumaguete City branch explicitly makes reference to the opening
on that date of a letter of credit in favor of petitioner Ang Tay c/o Visayan
Sawmill Co. Inc., drawn without recourse on ARMACO-MARSTEEL
ALLOY CORPORATION and set to expire on 24 July 1983, which is
indisputably not in accordance with the stipulation in the contract signed
by the parties on at least three (3) counts: (1) it was not opened, made or
indorsed by the private respondent, but by a corporation which is not a
party to the contract; (2) it was not opened with the bank agreed upon;
and (3) it is not irrevocable and unconditional, for it is without recourse, it
is set to expire on a specific date and it stipulates certain conditions with
respect to shipment. In all probability, private respondent may have sold
the subject scrap iron to ARMACO-MARSTEEL ALLOY CORPORATION,
or otherwise assigned to it the contract with the petitioners. Private
respondent's complaint fails to disclose the sudden entry into the picture
of this corporation.
Consequently, the obligation of the petitioner corporation to sell did not
arise; it therefore cannot be compelled by specific performance to comply
with its prestation. In short, Article 1191 of the Civil Code does not apply;
on the contrary, pursuant to Article 1597 of the Civil Code, the petitioner
corporation may totally rescind, as it did in this case, the contract. Said
Article provides:
"ARTICLE 1597. Where the goods have not been delivered to the buyer,
and the buyer has repudiated the contract of sale, or has manifested his
inability to perform his obligations, thereunder, or has committed a
breach thereof, the seller may totally rescind the contract of sale by
giving notice of his election so to do to the buyer."
The trial court ruled, however, and the public respondent was in
agreement, that there had been an implied delivery in this case of the
subject scrap iron because on 17 May 1983, private respondent's men
started digging up and gathering scrap iron within the petitioner's
premises. The entry of these men was upon the private respondent's
request. Paragraph 6 of the Complaint reads:
"6. That on May 17, 1983 Plaintiff with the consent of defendant Ang Tay
sent his men to the stockyard of Visayan Sawmill Co., Inc. at Cawitan,
Sta. Catalina, Negros Oriental to dig and gather the scrap iron and stock
the same for weighing." 14
This permission or consent can, by no stretch of the imagination, be
construed as delivery of the scrap iron in the sense that, as held by the
public respondent, citing Article 1497 of the Civil Code, petitioners placed
the private respondent in control and possession thereof. In the first
place, said Article 1497 falls under the Chapter 15 Obligations of the
Vendor, which is found in Title VI (Sales), Book IV of the Civil Code. As
such, therefore, the obligation imposed therein is premised on an existing
obligation to deliver the subject of the contract. In the instant case, in
view of the private respondent's failure to comply with the positive
suspensive condition earlier discussed, such an obligation had not yet
arisen. In the second place, it was a mere accommodation to expedite
the weighing and hauling of the iron in the event that the sale would
materialize. The private respondent was not thereby placed in
possession of and control over the scrap iron. Thirdly, We cannot even
assume the conversion of the initial contract or promise to sell into a
contract of sale by the petitioner corporation's alleged implied delivery of
the scrap iron because its action and conduct in the premises do not
support this conclusion. Indeed, petitioners demanded the fulfillment of
the suspensive condition and eventually cancelled the contract.
All told, Civil Case No. 15128 filed before the trial court was nothing more
than the private respondent's preemptive action to beat the petitioners to
the draw.
One last point. This Court notes the palpably excessive and
unconscionable moral and exemplary damages awarded by the trial court
to the private respondent despite a clear absence of any legal and factual
basis therefor. In contracts, such as in the instant case, moral damages
may be recovered if defendants acted fraudulently and in bad faith, 16
while exemplary damages may only be awarded if defendants acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner. 17 In the
instant case, the refusal of the petitioners to deliver the scrap iron was
founded on the non-fulfillment by the private respondent of a suspensive
condition. It cannot, therefore, be said that the herein petitioners had
acted fraudulently and in bad faith or in a wanton, reckless, oppressive or
malevolent manner. What this Court stated in Inhelder Corp. vs. Court of
Appeals 18 needs to be stressed anew:
"At this juncture, it may not be amiss to remind Trial Courts to guard
against the award of exhorbitant (sic) damages that are way out of
proportion to the environmental circumstances of a case and which, time
and again, this Court has reduced or eliminated. Judicial discretion
granted to the Courts in the assessment of damages must always be
exercised with balanced restraint and measured objectivity."
Separate Opinions
ROMERO, J., dissenting:
I vote to dismiss the petition.
Petitioner corporation, Visayan Sawmill Co., Inc., entered into a contract
on May 1, 1983 with private respondent RJH Trading Co. represented by
private respondent Ramon J. Hibionada. The contract, entitled
"PURCHASE AND SALE OF SCRAP IRON," stated:
This contract for the Purchase and Sale of Scrap Iron, made and
executed at Dumaguete City, Phil., this 1st day of May, 1983 by and
between:
VISAYAN SAWMILL CO., INC., . . . hereinafter called the SELLER, and
RAMON J. HIBIONADA, . . . hereinafter called the BUYER,
witnesseth:
That the SELLER agrees to sell, and the BUYER agrees to buy, an
undetermined quantity of scrap iron and junk which the SELLER will
identify and designate now at Cawitan, Sta. Catalina, Negros Oriental, at
the price of FIFTY CENTAVOS (P.50) per kilo on the following terms and
conditions:
1. Weighing shall be done in the premises of the SELLER at Cawitan,
Sta. Catalina, Negros Oriental.
2. To cover payment of the purchase price BUYER will open, make or
indorse an irrevocable and unconditional letter of credit not later than
May 15, 1983 at the Consolidated Bank and Trust Company, Dumaguete
City Branch, in favor of the SELLER in the sum of TWO HUNDRED AND
FIFTY THOUSAND PESOS (P250,000.00), Philippine currency.
SO ORDERED.
Narvasa, C .J ., Cruz, Feliciano, Padilla, Bidin and Bellosillo, JJ ., concur.
Gutierrez, Jr., J ., On terminal leave.
Melo and Quiason, JJ ., No part.
3. The SELLER will furnish the BUYER free of charge at least three (3)
cargo trucks with drivers, to haul the weighed materials from Cawitan to
the TSMC wharf at Sta. Catalina for loading on BUYER'S barge. All
expenses for labor, loading and unloading shall be for the account of the
BUYER.
meeting of minds upon the thing which is the object of the contract and
upon the price. From that moment, the parties may reciprocally demand
performance, subject to the provisions of the law governing the form of
contracts."
Thus, when the parties entered into the contract entitled "Purchase and
Sale of Scrap Iron" on May 1, 1983, the contract reached the stage of
perfection, there being a meeting of the' minds upon the object which is
the subject matter of the contract and the price which is the
consideration. Applying Article 1475 of the Civil Code, from that moment,
the parties may reciprocally demand performance of the obligations
incumbent upon them, i.e., delivery by the vendor and payment by the
vendee.
Petitioner, in its petition, admits that "[b]efore the opening of the letter of
credit, buyer Ramon Hibionada went to Mr. Ang Tay and informed him
that the letter of credit was forthcoming and if it was possible for him
(buyer) to start cutting and digging the scrap iron before the letter of
credit arrives and the former (seller) manifested no objection, and he
immediately sent 18 or 20 people to start the operation." 2
From the time the seller gave access to the buyer to enter his premises,
manifesting no objection thereto but even sending 18 or 20 people to
start the operation, he has placed the goods in the control and
possession of the vendee and delivery is effected. For according to
Article 1497, "The thing sold shall be understood as delivered when it is
placed in the control and possession of the vendee." 3
Such action or real delivery (traditio) is the act that transfers ownership.
Under Article 1496 of the Civil Code, "The ownership of the thing sold is
acquired by the vendee from the moment it is delivered to him in any of
the ways specified in Articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is transferred from the
vendor to the vendee."
That payment of the price in any form was not yet effected is immaterial
to the transfer of the right of ownership. In a contract of sale, the nonpayment of the price is a resolutory condition which extinguishes the
transaction that, for a time, existed and discharges the obligations
created thereunder. 4
On the other hand, "the parties may stipulate that ownership in the thing
shall not pass to the purchaser until he has fully paid the price." 5 In such
the sense of the happening of a future and uncertain event upon which
an obligation is made to depend. There must be a manifest
understanding that the agreement is in what may be referred to as
"suspended animation" pending compliance with provisions regarding
payment. The reservation of title to the object of the contract in the seller
is one such manifestation. Hence, it has been decided in the case of
Dignos v. Court of Appeals 15 that, absent a proviso in the contract that
the title to the property is reserved in the vendor until full payment of the
purchase price or a stipulation giving the vendor the right to unilaterally
rescind the contract the moment the vendee fails to pay within the fixed
period, the transaction is an absolute contract of sale and not a contract
to sell. 16
In the instant case, nowhere in the contract did it state that the petitioners
reserve title to the goods until private respondents have opened a letter
of credit. Nor is there any provision declaring the contract as without
effect until after the fulfillment of the condition regarding the opening of
the letter of credit.
Examining the contemporaneous and subsequent conduct of the parties,
which may be relevant in the determination of the nature and meaning of
the contract, 17 it is significant that in the telegram sent by petitioners to
Hibionada on May 23, 1983, it stated that "DUE [TO] YOUR FAILURE TO
COMPLY WITH CONDITIONS BEFORE DEADLINE OUR CONTRACT
FOR PURCHASE SCRAP IRON CANCELLED." And in some of the
pleadings in the course of this litigation, petitioners referred to the
transaction as a contract of sale. 18
In light of the provisions of the contract, contemporaneous and
subsequent acts of the parties and the other relevant circumstances
surrounding the case, it is evident that the stipulation for the buyer to
open a Letter of Credit in order to cover the payment of the purchase
price does not bear the marks of a suspensive condition. The agreement
between the parties was a contract of sale and the "terms and conditions"
embodied therein which are standard form, are clearly resolutory in
nature, the breach of which may give either party the option to bring an
action to rescind and/or seek damages. Contrary to the conclusions
arrived at in the ponencia, the transaction is not a contract to sell but a
contract of sale.
However, the determination of the nature of the contract does not settle
the controversy. A breach of the contract was committed and the rights
and liabilities of the parties must be established. The ponencia,
notwithstanding its conclusion that no contract of sale existed, proceeded
they had even received on May 26, 1983 the notice from the bank about
the opening of the Letter of Credit. How could they have made a
judgment on the materiality of the provisions of the Letter of Credit for
purposes of rescinding the contract even before setting eyes on said
document?
To be sure, in the contract, the private respondents were supposed to
open the Letter of Credit on May 15, 1983 but, it was not until May 26,
1983 or eleven (11) days later that they did so. Is the eleven-day delay a
substantial breach of the contract as could justify the rescission of the
contract?
In Song Fo and Co. v. Hawaiian-Philippine Co. 22 it was held that a delay
in payment for twenty (20) days was not a violation of an essential
condition of the contract which would warrant rescission for nonperformance. In the instant case, the contract is bereft of any suggestion
that time was of the essence. On the contrary, it is noted that petitioners
allowed private respondents' men to dig and remove the scrap iron
located in petitioners' premises between May 17, 1983 until May 30, 1983
or beyond the May 15, 1983 deadline for the opening of the Letter of
Credit. Hence, in the absence of any indication that the time was of the
essence, the eleven-day delay must be deemed a casual breach which
cannot justify a rescission.
Worthy of mention before concluding is Sycip v. National Coconut
Corporation, et al. 23 since, like this case, it involves a failure to open on
time the Letter of Credit required by the seller. In Sycip, after the buyer
offered to buy 2,000 tons of copra, the seller sent a telegram dated
December 19, 1946 to the buyer accepting the offer but on condition that
the latter opens a Letter of Credit within 48 hours. It was not until
December 26, 1946, however, that the Letter of Credit was opened. The
Court, speaking through Justice Bengzon, held that because of the delay
in the opening of the Letter of Credit; the seller was not obliged to deliver
the goods.
Two factors distinguish Sycip from the case at bar. First, while there has
already been a perfected contract of sale in the instant case, the parties
in Sycip were still undergoing the negotiation process. The seller's
qualified acceptance in Sycip served as a counter offer which prevented
the contract from being perfected. Only an absolute and unqualified
acceptance of a definite offer manifests the consent necessary to perfect
a contract. 24 Second, the Court found in Sycip that time was of the
essence for the seller who was anxious to sell to other buyers should the
offeror fail to open the Letter of Credit within the stipulated time. In
contrast, there are no indicia in this case that can lead one to conclude
that time was of the essence for petitioner as would make the eleven-day
delay a fundamental breach of the contract.
In sum, to my mind, both the trial court and the respondent Court of
Appeals committed no reversible error in their appreciation of the
agreement in question as a contract of sale and not a contract to sell, as
well as holding that the breach of the contract was not substantial and,
therefore, petitioners were not justified in law in rescinding the
agreement.
PREMISES CONSIDERED, the Petition must be DISMISSED and the
decision of the Court of Appeals AFFIRMED.