Pryce Corp. v. PAGCOR 497 Phil 490 | 06 May 2005 | Panganiban, J. Princess Trisha Joy Z. Uy | Law 101-Obligations and Contracts | Grp3

Pryce entered a contract of lease with PAGCOR. Pryce wants to terminate the contract and wants to be paid the future rentals, which PAGCOR didnt want. Stipulations in their contract held PAGCOR liable.

Facts: ! Pryce made representations with the PAGCOR on possibly setting up a casino in Pryce Plaza Hotel. ! PAGCOR went to CDO to check out the place and conduct marketing research. ! 1992 - they entered a contract where Pryce is to lease its hotel lobby plus 1000 square meters of space

to PAGCOR for 3 years. ! 1990 - CDO released a resolution prohibiting the establishment and operation of a gambling casino in

the city. ! Hours before the opening of the casino, some people staged a rally in front of the hotel, suspending

the operations of the casino. ! 1993 - CDO released Ordinance No. 3353 prohibiting the operation of casinos in CDO. ! Pryce petitioned and prayed that the ordinance be declared unconstitutional. ! CA declared the ordinance unconstitutional. ! PAGCOR resumed the operations of the casino while the appeal was pending in the SC. ! The operations were suspended due to incessant demonstrations. ! PAGCOR discontinued the operations in September 1993 and was not amenable to paying for the

whole three years.

Issue/Ratio: WON Pryce is entitled to the payment of future rentals for the unexpired period of the contract. YES Obligations arising from the contracts have the force of law between the contracting parties. ! In the event of default or breach of any of such terms, conditions and/or covenants, xxx the

LESSOR shall have the right to terminate and cancel this contract xxx ! LESSEE shall be fully liable to the LESSOR for the rentals corresponding to the remaining term of

the lease as well as for any and all damages xxx ! The above stipulations are not contrary to law, and nothing is objectionable about it.

Rescission v. Termination Rescission is predicated on the breach of faith that violates the reciprocity between the parties. The

unmaking of a contract. May be effected by both parties by mutual agreement; or by one party declaring a rescission of contract without the consent of the other if a legally sufficient ground exists.

Termination entails the enforcement of the contracts terms prior to the declaration of its cancellation. End in time or existence.

Pryce did not intend to rescind ! In a rescission, mutual restitution is required, Pryce would re-acquire the hotel, and PAGCOR would

get back the rentals it paid. ! Here, Pryces actions do not call for a rescission, in fact, the petitioner is even asking for the

payment of accrued rentals.