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QUIJADA vs.

CA resolution that it cannot comply with the condition of building a school and the
same was made known to the donor. Only then, that ownership of the donated
FACTS: On April 5, 1956, Trinidad Quijada together with her siblings property reverted to the donor.
executed a conditional deed of donation in favor of the Municipality of
Talacogon, the condition being that the parcel of land shall be used The donor may have an interest in the donated property during the time that
exclusively for the construction of high school in Talacogon. Trinidad ownership of the land has not reverted to her. Such inchoate interest may be
remained in possession of the parcel of land despite the donation. the subject of contracts including a contract of sale. In this case, however,
what the donor sold was the land itself which she no longer owns. It would
Trinidad sold the land to respondent Mondejar. The proposed have been different if the donor-seller sold her interests over the property
provincial high school having failed to materialize, the Sangguniang Bayan of under the deed of donation which is subject to the possibility of reversion of
the municipality of Talacogon enacted a resolution reverting the two (2) ownership arising from the non-fulfillment of the resolutory condition.
hectares of land donated back to the donors.
Sale, being a consensual contract, is perfected by mere consent,
In the meantime, respondent Mondejar conveyed portions of the land
which is manifested the moment there is a meeting of the minds as to the offer
to the other respondents. On July 5, 1988 petitioners filed this action against
and acceptance thereof on three (3) elements: subject matter, price and
respondents. In the complaint, petitioners alleged that their deceased mother terms of payment of the price ownership by the seller on the thing sold at the
never sold the property to any person or entity much less to Regalado time of the perfection of the contract of sale is not an element for its perfection.
Mondejar; that at the time of the alleged sale to Mondejar by Quijada, the land What the law requires is that the seller has the right to transfer ownership at
still belongs to the Municipality of Talacogon, hence, the supposed sale is null the time the thing sold is delivered. Perfection per se does not transfer
and void. The trial court rendered a decision in favor of the heirs. CA reversed ownership which occurs upon the actual or constructive delivery of the thing
the decision of the trial court. 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; hence, the sale
ISSUE: (1) W/N THE DEED OF DONATION HAD A SUSPENSIVE CONDITION OR is still valid. The consummation, however, of the perfected contract is another
A RESOLUTORY CONDITION (2) W/N THE SALE IS VALID. matter. It occurs upon the constructive or actual delivery of the subject matter
to the buyer when the seller or her successors-in-interest subsequently
HELD: When the Municipality's acceptance of the donation was made known acquires ownership thereof. Such circumstance happened in this case when
to the donor, the former became the new owner of the donated property.The petitioners -- who are Trinidad Quijada's heirs and successors-in-interest --
donation is perfected once the acceptance by the donee is made known to became the owners of the subject property upon the reversion of the
the donor. Ownership is immediately transferred to the latter and that ownership of the land to them. Consequently, ownership is transferred to
ownership will only revert to the donor if the resolutory condition is not fulfilled. respondent Mondejar and those who claim their right from him.

In this case, that resolutory condition is the construction of the SC Affirmed the decision of the CA
school. At the time of the sales made, the alleged Trinidad could not have sold
the lots since she had earlier transferred ownership thereof by virtue of the
deed of donation. So long as the resolutory condition subsists and is capable
of fulfillment, the donation remains effective and the donee continues to be
the owner. Since no period was imposed by the donor on when must the
donee comply with the condition, the latter remains the owner so long as he
has tried to comply with the condition within a reasonable period. Such period,
however, became irrelevant herein when the donee manifested through a
LIM vs. CA NATELCO vs. CA

FACTS: Records show that Francisco Lim, entered into a contract of lease FACTS: NATELCO and CASURECO entered into a contract for the use by
with Benito Dy for a period of 3 years, from 1976 to 1979. After the stipulated NATELCO in the operation of its telephone service the electric light posts of
term expired the respondent refused to leave the premises, so Francisco Lim CASURECO in Naga City. In consideration therefor, petitioners agreed to
filed an ejectment suit against Benito Dy. This case was then taken over by a install, free of charge, ten (10) telephone connections for the use by private
judicially approved compromise agreement which provides an automatic respondent.
increase in rent of 20% every 3 years or as long as defendant needed the The contract also provided that the term or period of this contract
premises and can meet and pay the said increases, the defendant to give shall be as long as the party of the first part has need for the electric light posts
notice of his intent to renew sixty (60) days before the expiration of the term. of the party of the second part it being understood that this contract shall
By reason of said compromise agreement the lease continued from terminate when for any reason whatsoever, the party of the second part is
1979 to 1982, then from 1982 to 1985. On April 1985, petitioner advised forced to stop, abandoned its operation as a public service and it becomes
private respondent that he would no longer renew the contract effective necessary to remove the electric lightpost. The contract was prepared with
October, 1985. On August 1985 Dy, informed Lim of his intention to renew the the assistanc of Atty. Luciano, then a member of Board of Directors of
lease up to 1988, Lim did not agree to the renewal. CASURECO and at the same time legal counsel of NATELCO.

In 1987 another ejectment suit was filed by Lim after the failure of Dy (1st Cause of Action) After the contract had been enforced for over
to vacate the premises. It was dismissed by the RTC and later affirmed by the ten (10) years, private respondent with the RTC of Naga City against
CA for the following reasons: (1) the lease contract has not expired, being a petitioners for reformation of the contract with damages, on the ground that it
continuous one the period whereof depended upon the lessee's need for the is too one-sided in favor of petitioners; that it is not in conformity with the
premises and his ability to pay the rents; being a resolutory condition, and guidelines of the NEA which direct that the reasonable compensation for the
therefore beyond the ambit of art 1308 of the NCC; and (2) the compromise use of the posts is P10.00 per post, per month; that after eleven (11) years of
agreement has the effect of res judicata. RTC Manila affirmed the decision of petitioners' use of the posts, the telephone cables strung by them thereon
the trial court. CA affirmed the decision of the RTC. have become much heavier with the increase in the volume of their
subscribers, worsened by the fact that their linemen bore holes through the
ISSUE: W/N THE STIPULATION IN THE COMPROMISE AGREEMENT WHICH posts at which points those posts were broken during typhoons; that a post
ALLOWS THE LESSEE TO STAY ON THE PREMISES AS LONG AS HE NEEDS now costs as much as P2,630.00; so that justice and equity demand that the
IT AND CAN PAY RENTS IS VALID? contract be reformed to abolish the inequities thereon.
HELD: The court ruled that the stipulation is not valid. Since the stipulation (2nd COA) Private respondent alleged that starting with the year
“for as long as the defendant needed the premises and can meet and pay said 1981, petitioners have used 319 posts in towns outside Naga City, without
increases” is a purely potestative condition because it leaves the effectivity any contract with it; that at the rate of P10.00 per post, petitioners should pay
and enjoyment of leasehold rights to the sole and exclusive will of the lessee. private respondent for the use thereof from 1981 up to the filing of its
The continuance, effectivity, and fulfillment of a contract of lease cannot be complaint; and that petitioners had refused to pay private respondent said
made to depend exclusively upon the free and uncontrolled choice of the amount despite demands.
lessee between continuing payment of the rentals or not, completely depriving
the owner of any say in the matter. Mutuality does not obtain in such a contract (3rd COA) Private respondent complained about the poor servicing
of lease and no equality exists between the lessor and the lessee. The by petitioners of the ten (10) telephone units which had caused it great
decision of the Court of Appeals is REVERSED AND SET ASIDE. inconvenience and damages to the tune of not less than P100,000.00
Petitioners’ answer to the 1st COA, they averred that the petition be in which case, the conditional obligation is void. Based on this definition,
dismissed on the ff grounds: 1. It does not sufficiently state a cause of action respondent court's finding that the provision in the contract, is a potestative
for the reformation of the contract; 2. Barred by prescription having been filed condition, is correct. However, it must have overlooked the other conditions in
more than 10 yrs after execution of the contract; 3. It is barred by estoppek the same provision which are casual conditions since they depend on chance,
since ATELCO seeks to enforce contract in the same action; 4. That their hazard, or the will of a third person. In sum, the contract is subject to mixed
utilization of CASURECO’s post could not have caused deterioration because conditions, that is, they depend partly on the will of the debtor and partly on
they have already been in use for 11 yrs and that the vakue of their expenses chance, hazard or the will of a third person, which do not invalidate the
for the 10 telephone lines enjoyed by CASURECO free of charged are far in aforementioned provision.
excess of amounts claimed by them for the use of their posts, so that if there
OSMENA vs. RAMA
was inequity, it was suffered by NATELCO.
FACTS: Dona Cenona Rama entered into a contract with Don Osmena for a
Regarding the second cause of action, petitioners claimed that
sum of money with a stipulated condition that she will pay in sugar in the
CASURECO had asked for telephone lines in areas outside Naga City for
month of January or February of the coming year, at the price ruling on the
which its posts were used by them; and that if petitioners had refused to
day of delivering the sugar into his warehouse, and I will pay him interest at
comply with private respondent's demands for payment for the use of the
the rate of half a cuartillo per month on each peso, beginning on this date until
posts outside Naga City, it was probably because what is due to them from
the day of the settlement; and if I can not pay in full, a balance shall be struck,
private respondent is more than its claim against them.
showing the amount outstanding at the end of each June, including interest,
To the third cause of action, NATELCO claimed, that their telephone and such as may be outstanding against me shall be considered as capital
service had been categorized by the National Telecommunication Corporation which I will always pay in sugar, together with the interest mentioned above. I
(NTC) as "very high" and of "superior quality." further promise that I will sell to the said Señor Osmeña all the sugar that I
may harvest, and as a guarantee, pledge as security all of my present and
The trial court rendered a decision ordering the reformation of the
future property, and as special security the house with tile roof and ground
agreement; ordering the defendants to pay plaintiff's electric poles in Naga
floor of stone in which I live in Pagina; in proof whereof, I sign this document,
City and in towns outside Naga City and in other places where defendant
and he shall be entitled to make claim against me at the expiration of the term
NATELCO uses plaintiff's electric poles, the sum of TEN (P10.00) PESOS per
stated in this document.
pole, per month beginning January, 1989 and ordering also the plaintiff to pay
defendant NATELCO the monthly dues of all its telephones including those The following year Rama contracted an additional loan from
installed at the residence of its officers beginning January, 1989. petitioner. However, before the loans can be paid, Don Osmena died. As a
result, the said contractual agreements became properties of one of his heirs.
Court of Appeals affirmed the decision of the trial court, but based
When the stipulated payment period came, defendant was not able to pay the
on different grounds: (1) that Article 1267 of the New Civil Code is applicable
said obligation. The heir filed a case demanding for the execution and delivery
and (2) that the contract was subject to a potestative condition which rendered
of said contracts. The trial court rendered a decision in favor of the plaintiff.
said condition void
Dissatisfied with the decision the defendants appealed.
ISSUE: W/N CA committed an error in ruling that the contract was subject to
ISSUE: W/N THE CONDITION UPON THE PAYMENT OF THE
a potestative condition in favor of petitioners. OBLIGATION IS VALID
HELD: SC AFFIRMED THE DECISION OF THE CA. A potestative condition
HELD: If that statement found in her acknowledgment of the indebtedness
is a condition, the fulfillment of which depends upon the sole will of the debtor,
should be regarded as a condition, it was a condition which depended upon
her exclusive will, and is therefore, void. (Art. 1115, Civil Code.) The To impose this interpretation upon those words would in our opinion constitute
acknowledgment, therefore, was an absolute acknowledgment of the an unjustifiable invasion of the power of the parties to establish the terms
obligation and was sufficient to prevent the statute of limitation from barring which they deem advisable, a right which is expressed in article 1255 of the
the action upon the original contract. The judgment of the lower court Civil Code and constitutes one of the most fundamental conceptions of
should be affirmed. contract right enshrined in the Code.
The view already expressed with regard to the legality and interpretation of
the clause under consideration disposes in a great measure of the argument
TAYLOR vs. UY TIENG PIAO
of the appellant in so far as the same is based on article 1119 of the Civil
FACTS: On December 12, 1918, Taylor contracted his services to Tan Liuan Code. This provision supposes a case where the obligor intentionally impedes
& Co., as superintendent of an oil factory which the latter establishing in this the fulfillment of a condition which would entitle the obligee to exact
city. The period of the contract extended over two years from the date performance from the obligor; and an assumption underlying the provision is
mentioned and the salary rate of P600 per month during 1st year and P700 that the obligor prevents the obligee from performing some act which the
per month during the second year, with electric light and water for domestic obligee is entitled to perform as a condition precedent to the exaction of what
consumption and a residence to live or in lieu thereof of 60 per month at the is due to him. Such an act must be considered unwarranted and unlawful,
time. involving per se 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
At the time this agreement was made, the machinery for the factory case, is lawfully within the control of the obligor.
had not been acquired, though ten expellers had been ordered from the U.S.
as agreed, for any reason the machinery failed to arrive in the city of Manila A condition at once facultative and resolutory may be valid even though the
for the period of six months from the date given, the contract may be cancelled condition is made to depend upon the will of the obligor.
by the party of the second part.
If it were apparent, or could be demonstrated, that the defendants were under
The machinery stated in the contract did not arrive in the city of a positive obligation to cause the machinery to arrive in Manila, they would of
manila within the six month after the making of the contract, and other course be liable, in the absence of affirmative proof showing that the
equipment necessary for the factory. June 28, 1919, the defendants informed nonarrival of the machinery was due to some cause not having its origin in
the plaintiff that they had decided to rescind the contract effective June 30th. their own act or will. The contract, however, expresses no such positive
The plaintiff instituted the action to recover damages in the amount of obligation, and its existence cannot be implied in the fact of stipulation,
P13,000.00 covering salary and perquisite due and to become due under the defining the conditions under which the defendants can cancel the contract.
contract. Taylor contends that defendants will only have the right to rescind
SC affirmed and modify the decision of the lower court.
the contract if the cause as to why the machinery did not arrive is not due to
their fault.
ISSUE: W/N IT IS VALID TO HAVE A STIPULATION WHEREIN THE
CONDITION IS MADE TO DEPEND UPON THE WILL OF THE OBLIGOR.
HELD: There is nothing in article 1256 which makes it necessary for us to
warp the language used by the parties from its natural meaning and thereby
in legal effect to restrict the words "for any reason," as used in the contract, to
mean "for any reason not having its origin in the will or acts of the defendants."
ROMERO vs. CA of a party thereto. When ownership is retained until the fulfillment of a positive
condition the breach of the condition will simply prevent the duty to convey
FACTS: Romero, a civil engineer was engaged in the business of production, title from acquiring an obligatory force. If the condition is imposed on an
manufacture and exportation of perlite filter aids, permalite insulations and
obligation of a party which is not complied with, the other party may either
processed perlite ore. In 1988, he decided to put up a central warehouse in refuse to proceed or waive said condition (Art. 1545, Civil Code). Where, of
Manila. Flores and his wife offered a parcel of land in the name of respondent
course, the condition is imposed upon the perfection of the contract itself, the
Enriqueta Chua. Petitioner visited the property he found the place suitable for failure of such condition would prevent the juridical relation itself from coming
a central warehouse except for the presence of the squatters in the area.
into existence.
Flores called on petitioner with a proposal that shoukd he advance
In determining the real character of the contract, the title given to it
the amount of 50,000 which could be used in taking up an ejectment case
by the parties is not as much significant as its substance. For example, a deed
against the squatter, respondent would agree to sell the property. Romero
of sale, although denominated as a deed of conditional sale, may be treated
agreed. Later a deed of conditional sale was executed between Flores and
as absolute in nature, if title to the property sold is not reserved in the vendor
Ongsiong. 50K downpayment, balance to be paid 45days after the removal of
or if the vendor is not granted the right to unilaterally rescind the contract
the squatters; upon full payment, Ongsiong shall execute a deed of absolute
predicated on the fulfillment or non-fulfillment, as the case may be, of the
sle in favor of romero.
prescribed condition.
Ongsiong sought to return the 50k she received from Romero since,
From the moment the contract is perfected, the parties are bound not
she said she could not get rid of the squatters. She opted to rescind the sale
only to the fulfillment of what has been expressly stipulated but also to all the
in view of her failure to get rid of the squatters.
consequences which, according to their nature, may be in keeping with good
RTC Makati ruled that respondent had no right to rescind the contract faith, usage and law. Under the agreement, private respondent is obligated to
since it was she who "violated her obligation to eject the squatters from the evict the squatters on the property. The ejectment of the squatters is a
subject property" and that petitioner, being the injured party, was the party condition the operative act of which sets into motion the period of compliance
who could, under Article 1191 of the Civil Code, rescind the agreement. by petitioner of his own obligation, i.e., to pay the balance of the purchase
price. Private respondent's failure "to remove the squatters from the property"
CA reversed the decision of the RTC. It opined that the contract within the stipulated period gives petitioner the right to either refuse to proceed
entered into by the parties was subject to a resolutory condition, i.e., the with the agreement or waive that condition in consonance with Article 1545 of
ejectment of the squatters from the land, the non-occurrence of which resulted the Civil Code. This option clearly belongs to petitioner and not to private
in the failure of the object of the contract; that private respondent substantially respondent.
complied with her obligation to evict the squatters; that it was petitioner who
was not ready to pay the purchase price and fulfill his part of the contract, and We share the opinion of the appellate court that the undertaking
that the provision requiring a mandatory return/reimbursement of the required of private respondent does not constitute a "potestative condition
P50,000.00 in case private respondent would fail to eject the squatters within dependent solely on his will" that might, otherwise, be void in accordance with
the 60-day period. Article 1182 of the Civil Code but a "mixed" condition "dependent not on the
will of the vendor alone but also of third persons like the squatters and
ISSUE: W/N THE SALE WAS PERFECTED government agencies and personnel concerned.
HELD: A perfected contract of sale may either be absolute or conditional
depending on whether the agreement is devoid of, or subject to, any condition
imposed on the passing of title of the thing to be conveyed or on the obligation
CATUNGAL vs. RODRIGUEZ an exclusive right to rescind the contract and that the contract, being
reciprocal, meant both parties had the right to rescind.
FACTS: Catungal owned a parcel of land in Talamban Ceby. She
entered into a Contract to Sell with Rodriguez. Subsequently, the contract was RTC ruled in favor of Rodriguez. finding that: (a) under the contract
upgraded into a Conditional Deed of Sale between the same parties. In it was complainant (Rodriguez) that had the option to rescind the sale; (b)
accordance with the Conditional Deed of Sale, Rodriguez purportedly secured Rodriguezs obligation to pay the balance of the purchase price arises only
the necessary surveys and plans and through his efforts, the property was upon successful negotiation of the road right of way; (c) he proved his diligent
reclassified from agricultural land into residential land which he claimed efforts to negotiate the road right of way; (d) the spouses Catungal were guilty
substantially increased the property’s value. He likewise alleged that he of misrepresentation which defeated Rodriguezs efforts to acquire the road
actively negotiated for the road right of way as stipulated in the contract. right of way; and (e) the Catungals rescission of the contract had no basis and
was in bad faith. Thus, the trial court made the injunction permanent,
The spouses Catungal requested an advance of 5M on the purchase
ordered the Catungals to reduce the purchase and ordered them
price. Rodriquez allegedly refused on the ground that the amount was
damages, attorneys fees and costs. CA affirmed the decision of the RTC.
substantial and was not due under the terms of their agreement. Shortly after
his refusal to pay the advance, he learned that the Catungals were offering ISSUE: W/N paragraphs 1(b) and 5 of the Conditional Deed of Sale violate
the property for sale to third parties. the principle of mutuality of contracts under Article 1308 of the Civil
Code?
Thereafter, he received a letter from Atty. Catungal demanding that
the former make up his mind about buying the land or exercising his option to HELD: Paragraph 1(b) of the Conditional Deed of Sale, is a condition imposed
buy, should Rodriguez fail to exercise his option to buy the land, the Catungals only on respondents obligation to pay the remainder of the purchase price. In
warned that they would consider the contract cancelled and that they were our view and applying Article 1182, such a condition is not purely potestative
free to look for other buyers. as petitioners contend. It is not dependent on the sole will of the debtor but
also on the will of third persons who own the adjacent land and from whom
Rodriguez registered his objections to what he termed the Catungals
the road right of way shall be negotiated. This type of mixed condition is
unwarranted demands in view of the terms of the Conditional Deed of Sale
expressly allowed under Article 1182 of the Civil Code.
which allowed him sufficient time to negotiate a road right of way and granted
him, the vendee, the exclusive right to rescind the contract. Still, Rodriguez Rodriguez’ option to rescind the contract is not absolute it is limited to the
purportedly received a letter from Atty. Catungal, stating that the contract had contingency that Rodriguez shall not be able to secure the road right of
been cancelled and terminated. way. Rodriguez’ option to rescind the contract is not purely potestative but
rather also subject to the same mixed condition as his obligation to pay the
Rodriguez filed a complaint contending that Catungals unilateral
balance of the purchase price. In the event the condition is fulfilled (or the
recission of the Conditional Deed of Sale was unjustified, arbitrary and
negotiation is successful), Rodriguez must pay the balance of the purchase
unwarranted.
price. In the event the condition is not fulfilled (or the negotiation fails),
The spouses Catungal filed their Answer alleging that they had the Rodriguez has the choice either (a) to not proceed with the sale and demand
right to rescind the contract in view of (1) Rodriguezs failure to negotiate the return of his downpayment or (b) considering that the condition was imposed
road right of way despite the lapse of several months since the signing of the for his benefit, to waive the condition and still pay the purchase price despite
contract, and (2) his refusal to pay the additional amount of P5,000,000.00 the lack of road access. This is the most just interpretation of the parties
asked by the Catungals, which to them indicated his lack of funds to purchase contract that gives effect to all its provisions. SC AFFIRMED THE DECISION
the property. The Catungals likewise contended that Rodriguez did not have OF THE CA WITH MODIFICATIONS.

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