GAITE vs.

FONACIER

FACTS: Fonacier, owner of 11 iron lode mineral claims

(Dawahan Group) in Camarines Norte, constituted a
"Deed of Assignment”, and appointed Gaite as his true
and lawful attorney-in-fact to enter into a contract for its
exploration and development on a royalty basis. Gaite
executed a general assignment to the Larap Iron Mines
owned solely by him. However, Fonacier decided to revoke
the authority granted which he assented. Said revocation
included the transfer to Fonacier the rights and interests
over the "24,000 tons of iron ore, more or less" already
extracted for a certain consideration. A balance has to be
paid. To secure it, Fonacier delivered to Gaite a surety
bond. When it expired, no payment had been made by
Fonacier on the theory that they had lost right to make
use of the period when their bond expired. Gaite filed a
complaint in court for its payment. The lower court ruled
the obligation was one with a term and that the obligation
became due and demandable under Article 1198 of the
New Civil Code.

Hence, the defendants jointly filed an appeal.

ISSUES: WON the lower court erred in holding that the

obligation of Fonacier to pay Gaite is one with a period or
term and that the term has already expired.

1.WON the lower court erred in not holding that there

were lesser tons of iron ore in the stockpiles sold to
Fonacier.

HELD: On Issue No. 1 No. If the suspensive condition

does not take place, the parties would stand as if the
conditional obligation had never existed. The parties did
not intend such state. The words of the contract
expressed that obligation to pay and intended Gaite to be
paid.
The sale of the ore to Fonacier was a sale on credit, not an
aleatory contract. For their failure to renew the bond, the
appellant have forfeited the right to compel Gaite to wait
for the sale of the ore before receiving payment of the
balance.

Under paragraphs 2 and 3 of Article 1198 of the Civil Code

of the Philippines, the debtor shall lose every right to
make use of the period:
 When he does not furnish to the creditor the
guaranties or securities which he has promised.
 When by his own acts he has impaired said
guaranties or securities after their establishment, and
when through fortuitous event they disappear, unless he
immediately gives new ones equally satisfactory.

Gaite's acceptance of the surety company's bond with full

knowledge it would automatically expire within a year was
not a waiver of its renewal after the expiration date. The
balance became due and payable thereafter.

On Issue No. 2 No. This is a case of a sale of a specific

mass of fungible goods for a single price or a lump sum.
The quantity of "24,000 tons of iron ore, more or less,"
stated in the contract is a mere estimate by the parties. A
reasonable percentage of error should be allowed because
neither of the parties had actually measured of weighed
the mass.

In addition, no provision was made in their contract for the

measuring or weighing of the ore sold in order to complete
or perfect the sale, nor was the price agreed upon by the
parties based upon any such measurement. When Gaite
complied with his promise to deliver, the appellants, in
turn, are bound to pay the lump price.

GONZALES vs. HEIRS OF THOMAS AND PAULA CRUZ

G.R. No. 131784, September 16, 1999
Facts: Petitioner Gonzales entered into a Contract of
Lease/Purchase with the heirs of Thomas and Paula Cruz.
Based on the said contract, the petitioner was given an
option to purchase the leased property after the expiration
of the one-year lease. The option was subject to a
condition contained in par. 9 of the Contract which
provided that: “The LESSORS (heirs) x x x shall undertake
to obtain a separate and distinct TCT over the leased
portion to the LESSEE within a reasonable period of time
which shall not in any case exceed 4 years, x x x”. After
the expiration of the lease, petitioner Gonzales did not
exercise his option to purchase the property. He remained
in possession without paying the purchase price. Alleging
breach of the provisions of the Contract, the heirs filed a
complaint for the recovery of possession of the property.
For his part, the petitioner defended that there was no
breach since the heirs had not yet registered the leased
property in their names in accordance with par. 9 of the
Contract.

Issues: Whether or not the obligation was subject to a

condition

Held: YES.

 The clear intent of the 9th par. was for

respondents to obtain a separate and distinct TCT in
their names. This was necessary to enable them to
show their ownership of the stipulated portion of the
land and their concomitant right to dispose of it. It is a
well-settled principle in law that no one can give what
one does not have – nemo dat quod non habet.
 Accordingly, one can sell only what one owns or is
authorized to sell, and the buyer can acquire no more
than what the seller can transfer legally. Because the
9th clause required respondents to obtain a separate
and distinct TCT in their names and not in the name of
petitioner, it logically follows that such under taking
was a condition precedent to the latter’s obligation to
purchase and pay for the land.
  Put differently, petitioner’s obligation to purchase
the land is a conditional one and is governed by Article
1181 of the Civil Code. Condition has been defined as
“every future and uncertain event upon which an
obligation or provision is made to depend”. Without it,
the sale of the property under the Contract cannot be
perfected, and the petitioner cannot be obliged to
purchase the property. The obligatory force of a
conditional obligation is subordinated to the happening
of a future and uncertain event, so that if that event
does not take place, the parties would stand as if the
conditional obligation had never existed.

Coronel vs CA

FACTS: This case is about a sale of land in Roosevelt

Avenue, Quezon City by the vendor Romulo Coronel to
the vendees Conception Alcaraz and her daughter
Ramona Patricia Alcaraz with the following conditions:

 The Coronel’s will immediately transfer the

certificate of title in their name upon receipt of the
downpayment which is ₱50,000.
 Upon the transfer in their names of the subject
property, the Coronel’s will execute the deed of
absolute sale in favor of Ramona and then Ramona
shall immediately pay the Coronel’s the whole balance
of ₱1,190,000.

On January 15, 1985, Conception paid the

downpayment of ₱50,000 and then on February 6,
1985, the property was now registered under the name
of Coronel’s. By Feb. 18, 1985, the Coronel’s sold the
property to Catalina B. Mabanag for ₱1,580,000 after
she made a ₱300,000 downpayment. This is the reason
why the Coronel’s cancelled and rescind the contract
with the Alcaraz by depositing back the ₱50,000 to
Ramona’s bank account.
On Feb. 22, Conception filed a complaint for specific
performance against the Coronel’s. On April, the
Coronel’s executed a deed of absolute sale over the
subject property to Catalina after which on June
Catalina was issued a new title over the subject
property.

ISSUE: Whether or not the “Receipt of Down payment”

embodied a perfected contract of sale or just a mere
contract to sell?

HELD:

 CONTRACT OF SALE- contracting parties

obligates himself to transfer the ownership and to
deliver a determinate thing and the other to pay a price
certain in money or its equivalent.
 CONTRACT TO SELL- the prospective seller
explicitly reserves the transfer of the title to the
prospective buyer, meaning the seller does not yet
agree or consent to transfer the ownership of the
property until the happening of a contingent event like
full payment of price.

SUPREME COURT RULING: When the “Receipt of

Down Payment” document was prepared and signed by
Romulo Coronel, the parties had agreed to a conditional
contract of sale the consummation of the contract is
subject only to the successful transfer of the certificate
of Title.

According to Supreme Court, the receipt of down

payment document manifests a clear intent of the
Coronel’s to transfer the title to the buyer, but since the
title is still in the name effect the transfer even though
the buyers are able and willing to immediately pay the
purchase price. The agreement as well could not have
been a contract to sell because the seller or the
Coronel’s made no express reservation of ownership or
the title of the land.
On Feb. 6, 1985, the Contract of Sale between the
Coronel’s and the Alcaraz’ became obligatory.

3. PARKS vs. PROVINCE OF TARLAC [1926]

Plaintiff & Appellant: George L. Parks

Defendants & Appellees: Province of Tarlac,

Municipality of Tarlac, Concepcion Cirer & husband
James Hill

Facts:  Oct. 18, 1910: Cirer & Hill donated their land
(Land No. 2) perpetually to the Municipality of Tarlac
w/certain conditions stipulated in a public document.
Conditions were: 1) it will be used absolutely &
exclusively for the erection of a central school & public
park and 2) work will commence 6mos from the date of
the ratification of the document. Donation was
accepted by Mr. De Jesus, municipal president. Land
was registered in the name of the municipality.

 Jan. 15, 1921: Cirer & Hill sold the same parcel of
land to Parks.

 Aug. 24, 1923: municipality transferred ownership

of the land to the province of Tarlac.

 Parks filed this case claiming that he was the

lawful owner of the land. According to him, the
municipality failed to comply w/the conditions thus,
Cirer & Hill sold the land to him. He prayed for the
annulment of the transfer of ownership.

 Lower court dismissed Parks’ complaint.

Issues & Ratio:

1. WON Parks has a right of action. – NO.

 Although the donation might have been revoked,
such was not done when Cirer & Hill sold the land to
Parks.

 Revocation should either be consented to by the

donee (municipality) or be judicially decreed.

 When the spouses sold the land, they were no

longer the owners of said land.

2. WON the conditions in the donation were

conditions precedent (suspensive). – NO.

 Condition Precedent: acquisition of the right is not

effected while said condition is not complied with or is
not deemed complied with.

 A condition is not suspensive when compliance of

w/c cannot be effected except when the right is deemed
acquired.

 In this case, donation was already in effect since

the conditions could only be complied with after giving
effect to the donation. Otherwise, it would have been an
invasion of another’s property (donor). If the conditions
were suspensive, the donor would have continued to be
the owner so long as the condition imposed was not
complied with.

3. WON non-compliance w/condition subsequent

(resolutory) would be sufficient cause to revoke the
donation. – YES.

 However, period for bringing the action has

already prescribed:

a. revocation by subsequent birth of children: 5yrs.

(CC Art. 646)
b. revocation by reason of ingratitude: 1 yr.

c. Non-compliance of conditions of donation

(considered as onerous thus there’s no special period as
per CC Art. 647), law of contracts & general rules of
prescription govern: 10 yrs. (Code of Civ. Procedure,
Sec. 43)

 In this case, cause of action arose on April 19,

1911 (6mos after Oct. 18, 1910 or when the donation
was made as per the condition that work should begin
w/in 6mos after document’s ratified). Case was filed on
July 5, 1924 w/c is more than 10 years after the cause
accrued.

Holding: Lower court decision affirmed.

CENTRAL PHILIPPINE UNIVERSITY v. COURT OF

APPEALS

July 17, 1995 | Bellosillo, J. | Resolutory Condition or

Condition Subsequent PETITIONER: Central Philippine
University RESPONDENT: Court of Appeals and Heirs of
Don Ramon Lopez, Sr.

SUMMARY: Don Ramon Lopez executed a deed of

donation of a parcel of land in favor of CPU, on the
condition that the land shall be utilized by the CPU for
the establishment and use of a medical college. Fifty
years have passed and the condition still has not been
complied with. Because of this, the heirs of Don Ramon
want the donation annulled and the land reconveyed to
them for non-compliance with the condition. The Court
held that more than a reasonable period of 50 years has
already been allowed CPU to avail of the opportunity to
comply with the condition to make the donation in its
favor forever valid but it still failed to do so. CPU is
ordered to reconvey the land to the heirs of Lopez.
DOCTRINE: An onerous donation is one executed for a
valuable consideration which is considered the
equivalent of the donation itself. // When in an
obligation with a resolutory condition, more than a
reasonable period has been allowed to comply with the
condition and the donee still failed to do so, there is no
more need to fix the duration of the term.

FACTS: 1. In 1939, Don Ramon Lopez, Sr. who was then

a member of the Board of Trustees of the Central
Philippine College, executed a deed of donation in favor
of the latter of a parcel of land.

2. Conditions: - The land shall be utilized by the CPU for

the establishment and use of a medical college

- The college shall not sell, transfer or convey to any

third party nor in any way encumber said land

- The land shall be called Ramon Lopez Campus.

3. In 1989, the heirs of Don Ramon Lopez filed an action

for annulment of donation and reconveyance against
CPU, alleging that since 1939 up to the time the action
was filed, CPU had not complied with the conditions of
the donation. CPU had even negotiated with NHA to
exchange the donated property with another land
owned by Lopez.

4. Trial Court: CPU failed to comply with the conditions

of the donation, therefore it is null and void.

5. CA: reversed.- The annotations at the back of the

CPU’s certificate of tite were resolutory conditions
breach of which should terminate the rights of the
donee this making the donation revocable.

- The donor did not fix a period within which the

condition must be fulfilled. The case should be
remanded to court of origin for the determination of
period.

ISSUE: WON the donation should be revoked

 YES, the donation should be revoked for non-

compliance with the conditions imposed for the
donation to be forever valid.

RATIO: 1. The donation was onerous – one executed for

a valuable consideration which is considered the
equivalent of the donation itself.

2. When Don Ramon Lopez donated the parcel of land

to CPU but imposed an obligation upon the latter to
establish a medical college thereon, the donation must
be for an onerous consideration.

3. When a person donates land to another on the

condition that the latter would build upon the land a
school, the condition imposed was not a condition
precedent but a resolutory one.

4. GR: When the obligation does not fix a period but

from its nature and circumstances it can be inferred
that a period was intended, the courts may fix the
duration thereof.

5. However, in this case, the GR cannot be applied.

More than a reasonable period of 50 years has already
been allowed CPU to avail of the opportunity to comply
with the condition to make the donation in its favor
forever valid. Unfortunately, it failed to do so. Hence,
there is no more need to fix the duration of a term of
the obligation when such procedure would be a mere
technicality and formality.

6. Since the questioned deed of donation is basically a

gratuitous one, doubts referring to incidental
circumstances of a gratuitous contract should be
resolved in favor of the least transmission of rights and
interests.

RULING: Judgment of the CA MODIFIED. CPU is directed

to reconvey to heirs of Lopez the parcel of land.

DISSENTING OPINION, Davide:

The “conditions” in this case do not refer to uncertain

events on which the birth or extinguishment of a
juridical relation depends, but to obligations and
charges imposed by the donor on the donee. It is a
modal donation. The establishment of the medical
college as the condition of the donation is one such
prestation.

QUIJADA vs. COURT OF APPEALS

FACTS: Petitioners are the children of the late Trinidad

who inherited from the same from Pedro a two-hectare
parcel of land subject of this case.

The said land was the subject of a conditional deed of

donation executed by Trinidad, with her sisters and
brother, in favor of the municipality based on the
condition that it shall be used as part of the campus of
the proposed provincial high school.

However, Trinidad sold the half of the said land to

respondent Mondejar. She then verbally sold the other
half to him without a deed of sale, evidenced solely by
receipts of payment.

The proposed provincial high school failed to

materialize. For this reason, the Sangguniang Bayan of
the municipality enacted a resolution reverting land
donated back to the donors.

Then, Mondejar sold portions of the land to other

persons.

The petitioners filed a complaint alleging therein that

their deceased mother never disposed of the property
and that at the time of the alleged sale the land still
belongs to the municipality, hence, the supposed sale is
null and void.

Respondents claimed otherwise and averred that

petitioners’ action is barred by laches.

The court a quo ordered judgment in favor of the

petitioners. But this was reversed by the Court of
Appeals (CA) when appealed on the ground that the
sale made by Trinidad to Mondejar was valid as the
former retained an inchoate interest on the lots by
virtue of the automatic reversion clause in the deed of
donation. Hence, this petition.

ISSUES:1. WON the sale of the subject property is void

2.WON the petitioners' case is barred by laches.

HELD: The Court AFFIRMED the decision of the CA.

On Issue No. 1 No. Sale, being a consensual contract, is

perfected by mere consent, which is manifested the
moment there is a meeting of the minds as to the offer
and acceptance thereof on 3 elements: subject matter,
price and terms of payment of the price.

Ownership by the seller on the thing sold at the time of

the perfection of the contract of sale is not an element
for its perfection. What the law requires is that the
seller has the right to transfer ownership at the time the
thing sold is delivered. Perfection per se does not
transfer ownership which occurs upon the actual or
constructive delivery of the thing sold. A perfected
contract of sale cannot be challenged on the ground of
non-ownership on the part of the seller at the time of its
perfection.

Nowhere in Article 1409 (4) which provide that the

properties of a municipality, whether it be those for
public use or its patrimonial property are outside the
commerce of men. Hence, the sale is still valid.

On Issue No. 2 No. Petitioners' action is not yet barred

thereby. Laches presupposes failure or neglect for an
unreasonable and unexplained length of time, to do
that which, by exercising due diligence, could or should
have been done earlier. Their cause of action to quiet
title commenced only when the property reverted to the
donor and/or his successors-in-interest.

The time of sale made by Trinidad cannot be the

reckoning point as to when petitioners' cause of action
arose. They had no interest over the property at that
time except under the deed of donation. Moreover,
petitioners had previously filed an ejectment suit
against private respondents only that it did not prosper
on a technicality.

Case Digest Title: Osmena vs Rama, 14 Phil. 99

GR No. 4437 September 9, 1909

Facts of the case: On November 15, 1890, Don

Victoriano Osmena loaned P200 to Dona Cenona Rama
with an interest of half a cuartillo (quarter) per month
on each peso with the promise that if Dona Rama does
not comply, she will sell all the sugar she has
harvested, and pledge as security all her present and
future properties, and as special security, her house in
which she lives in in Pagina. On October 27, 1891, Don
Victoriano Osmena loaned P70 to Dona Cenona Rama,
P50 of which she has loaned to Don Evaristo Penares
which they will pay in sugar. There was no date supplied
in the case. Don Victoriano Osmena died between the
execution and delivery of the contracts and they are
passed down to one of his heirs, Agustina Rafols. The
plaintiff commenced the present action in the Court of
First Instance of the Province of Cebu and demanded for
payment wherein the failure to pay will have a
judgment. The defendant filed a general denial.

Issue of the case: Dona Cenona Rama failed to comply

with her promise to pay Don Victoriano Osmena P200
with additional P20 (P50 paid by Don Evaristo Penales)
with interest

Ruling of the Supreme Court: Dona Victoriano Osmena

won the case by the decision of the supreme court.

Rationale: The only witness produced during the trial

was the plaintiff himself. On the other hand, the
defendant did not offer any proof in the lower court. The
lower court rendered a judgment in favor of the plaintiff
and against the defendant for the sum of P200. Dona
Osmena had no responsibility for the payment of the
P50 since there was another person responsible for the
said amount of money.

HERMOSA v. LONGARA (October 27, 1953) G.R. No.

L-5267 Ponente: Labrador, J. Action: appeal by way of
certiorari against a CA decision Keywords (Topic):
conditional obligations, mixed conditions

SHORT STORY: Longara is a creditor of the late Fernando

Hermosa, Sr. and is trying to enforce his claims against
the estate of the latter. CA approved his claims. The
heirs of FHS are arguing that the claims were based on
an obligation subject to a potestative condition,
therefore the obligation is void. Court held that the
condition is not a potestative one, but a mixed one, and
therefore the obligation was still valid, i.e., Longara’s
claims are still enforceable.
FACTS:• This is an appeal by way of certiorari
against a CA decision approving certain claims
presented by Epifanio Longara against the intestate
estate of Fernando Hermosa, Sr.

o Php 2341.41 – credit advances to intestate (1932-

44)

o Php 12,924.12 – credit advances to his son

Francisco Hermosa

o Php 3772 – credit advances to grandson Fernando

Hermosa, Jr. (1945-47, after death of intestate on
December,1944)

•Claimant presented evidence that the intestate had

asked for the advances for himself and for his family on
condition that payment should be made by Fernando
Hermosa, Sr. as soon as he receive funds derived from
the sale of his property in Spain (in other words,
payable as soon as FHS’s property in Spain was sold
and he received money from the sale).

•Appellant contended that the obligation contracted by

intestate was subject to a potestative condition (solely
dependent upon the will of the debtor) and therefore
null and void, per Art.1115 of the old CC.

ISSUES:1.) WON the condition in question is a

potestative condition. 2.) WON the 3rd group of claims
(credits furnished to intestate’s grandson, AFTER death
of intestate should be allowed.

RULES:•Art. 1182 (formerly Art. 1115). When the

fulfillment of the condition depends upon the sole will of
the debtor, the conditional obligation shall be void. If it
depends upon chance or upon the will of a third person,
the obligation shall take effect in conformity with the
provisions of this Code.
In relation to the dissent: If the obligation is a pre-
existing one and therefore does not depend for its
existence upon the fulfillment of the debtor of the
potestative condition, only the condition is void leaving
unaffected the obligation itself. Hence, the condition is
imposed not on the birth of the obligation but on its
fulfillment. (De Leon)

ANALYSIS: 1.) NO. It is a mixed condition. Condition does

not depend exclusively upon will of the debtor, but also
upon other circumstances beyond his power or control.
It implies that the intestate had already decided to sell
his house, or at least that he made his creditors believe
that he had done so, and that all that was left to make
his obligation (to pay debt) demandable is the
consummation of the sale and the remittance of the
price. The will to sell on the debtor’s part was therefore
either present in fact, or legally presumed to exist,
although the price and other conditions thereof were
still within his discretion.

Therefore, the obligation is not purely a potestative one,

but a mixed one, depending partly upon the will of the
debtor (i.e., the intestate), and partly upon chance, i.e.,
the presence of the buyer of the property.

2.) NO. The obligation to furnish support is a personal

one and is extinguished upon the death of the principal.
Therefore the decision approving the third set of claims
should be reversed.

CONCLUSION/DISPOSITIVE:DecisionAFFIRMED IN PART
and REVERSED IN PART. Claims of P2341 and P12.9K
approved, claim of P3.7K reversed.

Taylor vs. Uy Tieng Piao | G.R. No. L-16109 |

October 2, 1922 | Ponente: Street, J. Nature of
Case: Potestative condition Petitioners(s): M.D. Taylor
(plaintiff-appellant) Respondent(s): Uy Tieng Piao and
Tan Liuan (doing business under the firm name Tan
Liuan & Company) *Uy Tieng Piao (defendant-appellant)

SUMMARY: Plaintiff contracted his sevices to Tan Liuan

and Co., as superintendent of an oil factory to which the
latter will establish. Among the stipulations in the
contract is the clause wherein defendant can cancel the
contract with plaintiff if the machinery to be installed in
the said factory fails, for any reason, to arrive in Manila
within a period of 6 months. Defendant availed of this
option to cancel since said machinery did not in fact
arrive. Plaintiff now comes to the court stating that
stipualtion is illegal as contemplated in Articles 1256
and 1119 of the Civil Code. Court decided in favor of
the defendant stating that a condition which is
facultative and resolutory at the same time is valid
even though the condition is made to depend upon the
will of the obligor.

FACTS•appeal from the CFI of the city of Manila wherein

court awarded plaintiff P300 as damages for breach of
contract

-plaintiff appeals on the gound that the amount of

damages awarded is inadequate

-defendant appeals on the ground that he is not liable

at all

•December 12, 1918 — plaintiff was contracted as

superintendent of an oil factory for Tan Liuan and Co.

-period of the contract will be 2 years from the date

mentioned

-salary of P600/month for the first year and P700/month

on the second year
-with electric light and water for domestic consumption,
and a residence to live in or in lieu thereof P60/month

•During the time of their agreement, the machinery to

be used for the factory had not yet been acquired,
although 10 expellers had already been ordered from
US

-among the stipulations inserted in the contract was a

provision to the following effect:

It is understood and agreed that should the machinery

to be installed in the said factory fail, for any reason, to
arrive in the city of Manila within a period of six months
from date hereof, this contract may be cancelled by the
party of the second part at its option, such cancellation,
however, not to occur before the expiration of such six
months.

•The machinery failed to arrive within 6 months from

the making of the contract

-reason as to what happened is not stipulated

-however, preponderance of evidence shows that

defendants either cancelled the order for the machinery
or were unable to finance the said project (since in the
first months of 1919, the oil business no longer
promised large returns)

•June 28, 1919 — availing themselves of the option

given in the stipulation, defendants communicated in
writing to the plaintiff the fact that they decided to
rescind the contract, effective June 30

•plaintiff instituted this action to recover damages for

P13,000 (salary and perquisites due and to become due
under the contract)
-plaintiff contends that defendants will only have the
right to rescind the contract if the cause as to why the
machinery did not arrive is not due to their fault but
upon circumstances beyond their will or act

-plaintiff relies on the following articles:

Article 1256 of the Civil Code, which is to the effect that

the validity and fulfillment of contracts cannot be left to
the will of one of the contracting parties, and to Article
1119, which says that a condition shall be deemed
fulfilled if the obligor intentionally impedes its fulfilment

ISSUE(S) + RULING: WON it is lawful to have a

stipulation wherein the condition is made to depend
upon the will of the obligor — YES (but not all the time)

•the language of the contract (“for any reason”) which

gives defendants the right of cancellation is broad
enough to cover any case of the nonarrival of the
machinery, due to whatever cause

-language used in the stipulation should be given effect

in its ordinary sense, without technicality or
circumvention

•Article 1256 of the Civil Code creates no impediment

to the stipulation in a contract for personal service of a
resolutory condition permitting the cancellation of the
contract by one of the parties

-Article 1256 contemplates a situation wherein the

contract will be valid only if its stipulated conditions
arise (and such conditions are left to the will of one of
the parties)

-in the case at bar, the contract stipulates a resolutory

condition (meaning, upon the happening of such
condition, the contract will be cancelled which is not
what Article 1256 talks about)

•it is entirely licit to leave the fulfillment of the contract

to the will of either of the parties in the negative form of
rescission for in such supposed case, neither is the
article inrfinged nor is there any lack of equality
between the persons contracting

-as long as the validity and the fulfillment of the

contract is not left to the will of one of them

•there is nothing in Article 1256 which will make it

necessary to give another meaning to the stipulation of
the parties “for any reason”

-to impose another interpretation (for any reason not

having its origin in the will or acts of the defendants)
would constitute an unjustifiable invasion of the power
of the parties to establish the terms which they deem
advisable, a right which is expressed in article 1255 of
the Civil Code and constitutes one of the most
fundamental conceptions of contract right enshrined in
the Code

•With regard to Article 1119 (where the obligor

intentionally impedes the fulfillment of a condition
which would entitle the obligee to exact performance
from the obligor; and an assumption underlying the
provision is that the obligor prevents the obligee from
performing some act which the obligee is entitled to
perform as a condition precedent to the exaction of
what is due to him), the act that is considered
unwarranted and unlawful should involve a breach of
the implied terms of the contract

-the Article can have no application to an external

contingency which, like that involved in this case, is
lawfully within the control of the obligor
•a condition which is facultative and resolutory may be
valid even though the condition is made to depend
upon the will of the obligor

•with regard to damages, CFI committed no error in

rejecting the plaintiff’s claim for damages sought for the
period subsequent to the expiration of the first six
months

-however, it overlooked the item of P60, which

represents commutation of house rent for the month of
June 1919

-in addition to P300 awarded by the CFI, plaintiff is

entitled to another P60

The judgment appealed from will be modified by

declaring that the defendants shall pay to the plaintiff
the sum of P360, instead of P300, as allowed by the
lower court, and as thus modified the judgment will be
affirmed with interest from November 4, 1919.

Rustan Pulp and Paper Mills v. IAC

Facts: Sometime in 1966, petitioner Rustan established

a pulp and paper mill. In 1967, respondent Lluch who is
a holder of a forest products license transmitted a letter
to petitioner Rustan for the supply of raw materials by
the former to the latter. Petitioner, in response thereto,
proposed that the contract to supply to not be exclusive
because Rustan shall have the option to purchase from
other qualified suppliers.

These prefatory business proposals culminated in the

execution of a contract of sale whereby Lluch agreed to
sell and Rustan undertook to pay the price of the pulp
wood raw materials to be delivered in the buyer’s plant.
Buyer in the contract stipulated that he shall have the
right to stop delivery of the said raw materials by the
seller covered by the contract when it shall become
necessary with sufficient notice to seller.

In the installation of the plant facilities, the technical

staff of Rustan recommended the acceptance of
deliveries from other suppliers which corresponding
deliveries were made. During the test run of the pulp
mill, the machinery line had major defect while the
deliveries of the raw materials piled up which prompted
the Japanese supplier to recommend the cessation of
the deliveries. The suppliers were informed to stop the
deliveries.

Private respondent LLuch sought to clarify the tenor of

the letter as to whether the cessation of delivery or the
termination of the contract of sale was intended but to
no avail. With the ambiguity notwithstanding, Lluch and
the other suppliers resumed the deliveries.

In 1969, the complaint for contractual breach was filed

but was dismissed so they took it with the respondent
court which ordered the payment by the petitioners of
damages to private respondents.

ISSUE: W/N the contractual stipulations by Rustan as

regards to stoppage of delivery of the materials are
valid.

W/N Petitioners should be held liable for damages.

HELD: Lluch was correctly apprehensive as to the

stipulations as regards the delivery considering that the
conditions resented was solely dependent upon the will
of Rustan. The resumption of the delivery was
dependent also on the sole will of Rustan. Futher, given
that the company continued receiving the supplies from
Lluch and the other suppliers, it was doubtful that
Rustan had sufficient suppliers.

Because of the purely potestative imposition, the

stipulation should be stricken out without affecting the
other validly stipulated conditions relating to the
fulfillment of an already existing obligation. The
condition which is both potestative and resolutory may
be valid however it would only be valid at the beginning
of the contract and not during the fulfillment of an
already existent obligation.

However, the private petitioners may not be held liable

for damages as individuals even if they entered into the
contract in their official capacities because the
corporation has a distinct and separate identity from
their members. Absent stipulations to the contrary, they
may not be held liable in their personal capacities.

Roman Catholic of Malolos v IAC

Facts: The property subject matter of the contract

consists of a parcel of land in the Province of Bulacan,
issued and registered in the name of the petitioner
which it sold to the private respondent.

On July 7, 1971, the subject contract over the land in

question was executed between the petitioner as
vendor and the private respondent through its then
president, Mr. Carlos F. Robes, as vendee, stipulating for
a downpayment of P23,930.00 and the balance of
P100,000.00 plus 12% interest per annum to be paid
within four (4) years from execution of the contract. The
contract likewise provides for cancellation, forfeiture of
previous payments, and reconveyance of the land in
question in case the private respondent would fail to
complete payment within the said period.

After the expiration of the stipulated period for

payment, Atty. Adalia Francisco (president of the
company who bought land) wrote the petitioner a
formal request that her company be allowed to pay the
principal amount of P100,000.00 in three (3) equal
installments of six (6) months each with the first
installment and the accrued interest of P24,000.00 to
be paid immediately upon approval of the said request.

The petitioner formally denied the said request of the

private respondent, but granted the latter a grace
period of five (5) days from the receipt of the denial to
pay the total balance of P124,000.00. The private
respondent wrote the petitioner requesting an
extension of 30 days from said date to fully settle its
account but this was still denied.

Consequently, Atty. Francisco wrote a letter directly

addressed to the petitioner, protesting the alleged
refusal of the latter to accept tender of payment made
by the former on the last day of the grace period. But
the private respondent demanded the execution of a
deed of absolute sale over the land in question

Atty. Fernandez, wrote a reply to the private respondent

stating the refusal of his client to execute the deed of
absolute sale so the petitioner cancelled the contract
and considered all previous payments forfeited and the
land as ipso facto reconveyed.

From a perusal of the foregoing facts, we find that both

the contending parties have conflicting versions on the
main question of tender of payment.

According to the trial court: . . . What made Atty.

Francisco suddenly decide to pay plaintiff’s obligation
on tender her payment, when her request to extend the
grace period has not yet been acted upon? Atty.
Francisco’s claim that she made a tender of payment is
not worthy of credence.
The trial court considered as fatal the failure of Atty.
Francisco to present in court the certified personal
check allegedly tendered as payment or, at least, its
xerox copy, or even bank records thereof.

Not satisfied with the said decision, the private

respondent appealed to the IAC. The IAC reversed the
decision of the trial court. The IAC, in finding that the
private respondent had sufficient available funds, ipso
facto concluded that the latter had tendered payment.

ISSUE:1.Whether or not the finding of the IAC that Atty.

Francisco had sufficient available funds did tender
payment for the said obligation.

2.Whether or not an offer of a check is a valid tender of

payment of an obligation under a contract which
stipulates that the consideration of the sale is in
Philippine Currency.

HELD: 1.No. Tender of payment involves a positive and

unconditional act by the obligor of offering legal tender
currency as payment to the obligee for the former’s
obligation and demanding that the latter accept the
same. Thus, tender of payment cannot be presumed by
a mere inference from surrounding circumstances. At
most, sufficiency of available funds is only affirmative of
the capacity or ability of the obligor to fulfill his part of
the bargain. The respondent court was therefore in
error.

2. No. In the case of Philippine Airlines v. Court of

Appeals: Since a negotiable instrument is only a
substitute for money and not money, the delivery of
such an instrument does not, by itself, operate as
payment. A check, whether a manager’s check or
ordinary check, is not legal tender, and an offer of a
check in payment of a debt is not a valid tender of
payment and may be refused receipt by the obligee or
creditor. The tender of payment by the private
respondent was not valid for failure to comply with the
requisite payment in legal tender or currency stipulated
within the grace period the DECISION of the IAC is
hereby SET ASIDE and ANNULLED and the DECISION of
the trial court is REINSTATED.

Herrera vs. Leviste GR L-55744

FACTS:1.LEVISTE OBTAINED LOAN FROM GSIS

P1,900,000.

1.Mortgaged 2 lots. 1.Sold Buendia property to Herrera

for P3,750,000.

i. CONDITIONS:1. Pay Leviste P11,900,000. 2.Assume

Leviste’s indebtedness P1,900,000 to GSIS 3.Substitute
Paranaque property with his own in 6 months.

ii.Leviste arranged conformity of GSIS to petitioner’s

assumption of obligation.

1.CONTRACT TO SELL: failyre to comply shall render

contract automatically cancelled, all payments
forfeited, plus rental and damages.

2.HERRERA only remitted P300,000 to GSIS despite

receiving rentals P21,000 monthly and P800,000 in 4
years.

1Requested GSIS for restructuring of the mortgage

obligation because of his own arrarages in the payment
of the amortizations

1GSIS replied that as a matter of policy, it could not act

on his request unless he first made proper substitution
of property, updated the account, and paid 20% thereof
to the GSIS.
3GSIS sent notice to Leviste to foreclose mortgage by
reason of default in payment of amortizations.

1Application for foreclosure filed, properties sold at

public auction with certificate in favor of GSIS.

1Leviste assigned its right to redeem both foreclosed

properties to respondent Jose Marcelo, Jr. (Marcelo for
brevity).

1Marcelo redeemed the properties from the GSIS by

paying it the sum of P3,232,766.94 for which he was
issued a certificate of redemption.

i.Paranaque property turned over to Levisted for

P250,000.00

ii.Herrera informed GSIS of his right to redeem the

foreclosed properties and asking that he be allowed to
do so in installments.

1. GSIS had not favorably acted thereon.

4Herrera instituted suit against Leviste for "Injunction,

Damages, and Cancellation of Annotation."

1Trial Court rendered lack of basis in fact and in law:

i.Ordered payments made by petitioner to Leviste

forfeited pursuant to their contract providing for
automatic forfeiture "in the event of failure to comply
with any of the conditions contained therein,
particularly the payment of the scheduled
amortizations."

ISSUE: Can Herrera file petition for lack of merit?

HELD:HERRERA’S PETITION FOR RECONSIDERATION

DENIED.
5The GSIS has not benefited in any way at the expense
of Herrera. What it received, by way of redemption from
Marcelo, was the mortgage loan it had extended plus
interest and sundry charges.

1Neither has Marcelo and Leviste did not benefit due to

expenses on mortgage.

1Herrera’s loss is attributable to his fault in:

i.Not having been able to submit collateral to GSIS in

substitution of the Paranaque Property;

ii.Not paying off the mortgage debt when GSIS decided

to foreclose; and

iii.Not making an earnest effort to redeem the property

as a possible redemptioner.

6HERRERA did not comply to the conditions of contract.

1He was not able to substitute the Parañaque Property

with another collateral for the GSIS loan.

7Leviste was not in a financial position to redeem the

foreclosed property

1Has no other alternative, but to assign the right of

redemption to a person willing and capable to assume
the same, if only to protect his interest in the said
property.

1Appellant could have preserved and protected

whatever right he may have to the property by
tendering the redemption price to Marcelo.