doctrine
The
mere grant to one party of the right to terminate the agreement because of the
nonpayment of an obligation established therein does not ipso facto give the
other party the same right to end the contract on the ground of allegedly
unsatisfactory service. Concededly, parties may validly stipulate the
unilateral rescission of a contract.
contested provision
5. MODE
OF PAYMENT: After 3 months of satisfactory performance, the parties may
negotiate for the extension of this contract and other matters that might be
advantageous to both parties.
"This Contract shall take effect on May
25, 1994 and shall be for a period of 1 Year from said date. Thereafter, it
shall be deemed renewed for the same period unless either party notifies the
other in writing not later than 1 month before the expiry of its intent not to
renew.
"14.
Either party may terminate this contract for legal cause by written notice
given to the other party not later than 30 days prior to the expiry date."
Facts
·
Peaches Security
was hired by Multinational Village Homeowners Association, Inc. to provide
security services from May 25, 1994 - 1995 on a monthly fee of P107,500
.
·
Aug 29, 1994,
President of Multinational terminated the contract “having found the guards’ services to be unsatisfactory, for repeated
violations of the Security Guards Code of Ethics and Conduct.”
·
Sep 13 - Peaches
commenced the present suit for injunction with PI + TRO which was granted.
·
Multinational: it
has the right to pre-terminate the contract under par 5 thereof stating:
5. MODE
OF PAYMENT: After 3 months of satisfactory
performance, the parties may negotiate for the extension of this contract and
other matters that might be advantageous to both parties.
·
RTC ruled in favor
of the CA.
Ruling of the CA
·
Par 5 did not
provide for a pre-termination option, but was "a mere superfluity with no
clear meaning."
·
Pre-termination
was not supported by evidence.
Issue: Whether
the pre-termination of the Contract was valid.
par 5
cannot be deemed to be a resolutory condition
·
The consequence of
unsatisfactory performance is not specified in the Contract of Guard Services.
There is no stipulation permitting petitioners to terminate the Contract upon
an unsatisfactory performance of the security guards.
·
Par 5 simple means
that the parties may extend the
Contract’s life upon mutual agreement. The provision was a mere
superfluity. The parties need not
provide that they may extend the Contract should they mutually agree, because
they may do so with or without this benign provision. Although par 5
mentions extensions, it is ominously and significantly silent on the matter of
pre-termination.
·
Parties may
validly provide for resolutory conditions and unilateral rescission in their
contract. However, par 5 is not a
resolutory condition, as it is not one that constitutes "a future and uncertain event, upon the
happening or fulfillment of which rights which are already acquired by virtue
of the obligation are extinguished or lost."
·
Petitioners cannot
be deemed to have the contractual right to pre-terminate the Contract
unilaterally. Such interpretation is a direct contravention of par 12, which
states that the term shall be 1 year.
instrument
construed so as to give effect to all provisions
·
Petitioners
contend that the court a quo did not comply with Sec 11 of Rule 130, because it
failed to give effect to par 5. They further invoke Sec 12 of the
same Rule, arguing that relative to the provision of the Contract on the
duration of its effectivity, which is one year, par 5 is a particular
provision. They conclude that since the two provisions are inconsistent, par 5 --
being the particular provision -- should prevail.
·
Rule 130.11 states
that "[i]n the construction of an
instrument where there are several provisions or particulars, such a
construction is, if possible, to be adopted as will give effect to all."
Contrary to petitioners’ contention, par 5 is not inconsistent with par 12.
More important, the former does not in any way deal with the termination of the
Contract. Neither does it provide for a right to rescind.
rescission
will not be permitted for a casual breach of a contract
·
The right to
rescind is implied in reciprocal obligations (NCC 1191). Rescission will not be
permitted for a slight or casual breach of a contract, but only for such
breaches as are so substantial and fundamental as to defeat the object of the
parties in entering into the agreement.
letter-complaints
presented in court were mere hearsay
·
MVHA failed to produce evidence of the alleged breach of obligation by Peaches. The Letter-Complaints presented in court were neither identified, nor
were their contents affirmed, by their authors.
·
Evidence is called
hearsay when its probative force
depends, in whole or in part, on the competency and credibility of some persons
other than the witness by whom it is sought to produce it. There are three
reasons for excluding hearsay evidence: (1) absence of cross examination; (2)
absence of demeanor evidence, and (3) absence of the oath."
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