GR L 2391; (April, 1906) (Digest)
G.R. No. L-2391
FACTS:
Plaintiff-appellee Anastasio Mateos filed a complaint for damages against defendant-appellant Felix Lopez, alleging breach of a contract for the sale of 1,000 head of cattle at ₱31.50 per head. Mateos claimed the contract required Lopez to refrain from selling cattle to others until Mateos had removed all 1,000 heads within six months from January 1, 1904, and that Mateos had made a partial payment of ₱200. Mateos alleged that Lopez violated the contract by selling 1,000 cattle to another entity, Jose Fernandez & Co., and refusing to allow Mateos to take possession. The trial court ruled in favor of Mateos, awarding damages and ordering the return of the ₱200.
Lopez denied the allegations, asserting that while initial negotiations occurred, the final agreement was contingent upon two conditions: (1) the contract being reduced to a public instrument (a formal written document) by February 1, 1904, and (2) Mateos delivering an advance payment of ₱5,000 upon the contract’s execution. Lopez contended that Mateos failed to fulfill these conditions, thereby breaching the contract first.
ISSUE:
Whether the defendant-appellant Felix Lopez is liable for damages for breach of contract, or whether the plaintiff-appellee Anastasio Mateos first failed to perform his reciprocal obligations under the agreement, thereby relieving Lopez of liability.
RULING:
The Supreme Court REVERSED the trial court’s decision and DISMISSED the complaint. The Court found the evidence sufficient to support Lopez’s defense. It held that the parties had indeed agreed on two essential conditions for the perfection of the contract: its execution in a public instrument and the payment of a ₱5,000 advance by Mateos. Since Mateos failed to comply with these conditions, he did not perform his own undertaking under the agreement. In reciprocal obligations, if one party fails to perform, the other has the right to rescind the contract (implied under Article 1124 of the Civil Code). Consequently, Lopez was not liable for damages. However, consistent with Lopez’s offer in his answer, the Court ordered him to return the ₱200 partial payment received from Mateos. No costs were awarded.