29. Taylor v. Uy Tieng Piao and Tan Liuan (43 Phil.

873)

FACTS: Taylor contracted his services to Tan Liuan & Co as superintendent of an oil
factory which the latter contemplated establishing. The contract extended over 2 years
and the salary was 600/month during the first year and 700/month during the second
with electric, light and water for domestic consumption or in lieu thereof, 60/month. At
the time this agreement was made the machinery for the contemplated factory had not
been acquired, through ten expellers had been ordered from the US. “It was understood
and agreed that should the machinery to be installed fail, for any reason, to arrive in
Manila within the period of 6 months, the contract may be cancelled by the party of the
second part at its option, such cancellation not to occur before the expiration of such 6
months.” The machinery did not arrive in Manila within the 6 months, the reason does
not appear, but a preponderance of evidence show that the defendants seeing that oil
business no longer promised large returns, either cancelled the order for machinery
from choice or were unable to supply the capital necessary to finance the project.
Defendants communicated in writing to Taylor saying that they had decided to rescind
the contract. Taylor instituted this action to recover damages in the amount of 13k,
covering salary and perquisites due and to become due under the contract.

ISSUE: Whether in a contract for the prestation of service, it is lawful for the parties to
insert a provision giving the employer the power to cancel the contract in contingency
which may be denominated by him.

RULING: Yes. Undoubtedly one of the consequences of this stipulation was that the
employers were left in a position where they could dominate the contingency, and the
result was about the same as if they had been given an unqualified option to dispense
with the services of the plaintiff at the end of six months. But this circumstance does not
make the stipulation illegal. A condition at once facultative and resolutory may be valid
even though the condition is made to depend upon the will of the obligor. If it were
apparent, or could be demonstrated, that the defendants were under a positive
obligation to cause the machinery to arrive in Manila, they would of course be liable, in
the absence of affirmative proof showing that the nonarrival of the machinery was due
to some cause not having its origin in their own act or will. The contract, however,
expresses no such positive obligation, and its existence cannot be implied in the fact of
stipulation, defining the conditions under which the defendants can cancel the contract.

MAIN POINT: When the fulfilment of the condition depends upon the sole will of the
debtor, the conditional obligation is void (Art. 1182, Civil Code) if the condition is
SUSPENSIVE. If it is RESOLUTORY, the obligation is valid. Hence, it is all right for the
contract to expressly give to one party the right to CANCEL the same. This is because,
when the contract is thus cancelled, the agreement is really being FULFILLED.