GARCIA v.

LEGARDA
grace period already given, still unable to pay, puts the blame on other party
Mutuality of Contract
DOCTRINE:
Stipulations allowing a party to cancel or rescind do not militate against the mutuality of
contracts
- when the contract expressly provides that one of the contracting parties is authorized to
cancel the same contract, the agreement is just being fulfilled.
FACTS:
-

Petitioner Garcia is engaged in 3 contracts with respondent to purchase 3 parcels of

land (150 square meters each) payable through installment.
Respondent Rita Legarda Inc. cancelled the 3 contracts.
Petitioners instituted a civil case against the respondent to have the 3 contracts
declared as existing and subsisting
According to respondent, petitioners werent able to pay all of the installments under
the 3 contracts which is why respondent cancelled the contract.
Petitioners denied they were indebted to the 3 contracts which is why they wished to
have the 3 contracts declared as still subsisting.
Petitioners said that the respondents cancellation of the 3 contracts was in violation
of Art. 1308:
The contract must bind both contracting parties; its validity or compliance cannot be
left to the will of one of them.
Respondents contention: the reason for their cancelling of the 3 contracts was
because there was a stipulation in the contracts that gives the petitioner a certain 1
month grace period in case the petitioner wouldnt be able to pay the installments in
due time. If the petitioner is still unable to pay after the 1 month grace period, an
additional period of 90 days is given. If the petitioner is still unable to pay after the
lapse of the grace period and the additional 90 days, the respondent has the right to
declare the contract cancelled (said stipulation is found under Paragraph 6 of the
contract just in case Mison asks)

ISSUE:
Was the stipulation (Paragraph 6 of the contracts wherein the respondents contention relied
upon) violative of Art. 1308 of the NCC? NO
RATIO:
Art. 1308: The contract must bind both contracting parties; its validity or compliance
cannot be left to the will of one of them.

The above provisions ultimate purpose is to render void a contract containing a

condition which makes its fulfillment dependent exclusively upon the
uncontrolled will of one of the contracting parties.
The stipulation in question merely gives the vendor the right to declare the contract
cancelled.

It does not leave the validity or compliance of the contract entirely "to the
will of one of the contracting parties"
The stipulation or agreement simply says that in case of default in the payment of
installments by the vendee, he shall have (1) "a month of grace", and that (2) should
said month of grace expire without the vendee paying his arrears, he shall have
another "period of 90 days" to pay "all the amounts he should have paid", etc., then
the vendor "has the right to declare this contract cancelled and of no effect."
A contract expressly giving to one party the right to cancel, if a resolutory
condition therein agreed upon is not fulfilled, is still valid because when the
contract is cancelled, the agreement of the parties is actually being
fulfilled.
Jurisprudence also says that a contract with a resolutory condition (as in this case)
that expressly gives one party the right to cancel once said condition is not fulfilled is
still valid. The party upon exercising their right to cancel the contract was just
fulfilling its part of the contract therefore there was actually a fulfillment in the
agreement stipulated in their contract which the parties both consented to. (Taylor
vs. Ky Tieng Po)
In the case at bar, when respondent Rita Legarda Inc. cancelled the contract, it was
merely fulfilling its part of the agreement. It was the petitioners that did not do their
part of the bargain being unable to pay the installments on due time.
Moral of the case: Kung anong nasa kontrata, sundin. May grace period na nga
e...ayan, na hasslebeans pa sa pag file ng kaso.