MACTAN-CEBU INTERNATIONAL AIRPORT
AUTHORITY v. BENJAMIN TUDTUD, et al. 571
SCRA 165 (2008)
The National Airports Corporation (NAC) filed a
complaint for expropriation in order to expand the
Cebu Lahug Airport. It sought to acquire, by
negotiated sale or expropriation, several lots
adjoining the then existing airport which included the
parcels of land owned by the predecessors-in- interest
of respondents Benjamin Tudtud et al. NAC assured
the owners that they would reacquire the land if it is
no longer needed by the airport. The Court of First
Instance of Cebu granted the expropriation. No
structures related to the operation of the Cebu Lahug
Airport were constructed on the land expropriated.
Respondent Lydia Adlawan (Lydia), acting as
attorney-in-fact of the original owners, sent a letter to
the general manager of the petitioner Mactan Cebu
International Airport Authority (MCIAA), the new
owner of the lot and demanded to repurchase the lot
at the same price paid at the time of the taking,
without interest. Lydia filed a complaint before the
Regional Trial Court (RTC) of Cebu City for
reconveyance and damages against the MCIAA. The
RTC of Cebu rendered judgment in favor of Tudtud
et al. MCIAA appealed to the Court of Appeals but it
affirmed the RTC decision. MCIAA then filed a
Motion for Reconsideration but was denied.
ISSUE:
Whether or not Tudtud et al. are entitled for the re-
conveyance of the land expropriated
HELD:
Tudtud et al.s witness respondent Justiniano Borga
declared that the original owners did not oppose the
expropriation of the lot upon the assurance of the
NAC that they would reacquire it if it is no longer
needed by the airport. The rights and duties between
the MCIAA and Tudtud et al are governed by Article
1190 of the Civil Code which provides: When the
conditions have for their purpose the extinguishment
of an obligation to give, the parties, upon the
fulfillment of said conditions, shall return to each
other what they have received. In case of the loss,
deterioration, or improvement of the thing, the
provisions which, with respect to the debtor, are laid
down in the preceding article [Article 1189] shall be
applied to the party who is bound to return. While the
MCIAA is obliged to re-convey Lot No. 988 to
Tudtud et al., they must return to the MCIAA what
they received as just compensation for the
expropriation of Lot No. 988, plus legal interest to be
computed from default, which in this case runs from
the time the MCIAA complies with its obligation to
the respondents. Tudtud et al., must likewise pay the
MCIAA the necessary expenses it may have incurred
in sustaining Lot No. 988 and the monetary value of
its services in managing it to the extent that Tudtud et
al., were benefited thereby. Following Article 1187 of
the Civil Code, the MCIAA may keep whatever
income or fruits it may have obtained from Lot No.
988, and Tudtud et al., need not account for the
interests that the amounts they received as just
compensation may have earned in the meantime.
FACTS: Subject of this case is a lot (Lot No. 88)
located in Lahug, Cebu City. Its original owner was
Anastacio Deiparine when the same was subject to
expropriation proceedings, initiated by Republic,
represented by the then Civil Aeronautics
Administration (CAA), for the expansion and
improvement of the Lahug Airport. During the
pendency of the expropriation proceedings,
respondent Bernardo L. Lozada, Sr. acquired Lot No.
88 from Deiparine. The trial court ruled for the
Republic and ordered the latter to pay Lozada the fair
market value of the lot. However, the projected
improvement and expansion plan of the old Lahug
Airport, however, was not pursued. The plaintiff-
respondents initiated a complaint for the recovery of
possession and reconveyance of ownership the
subject lot. On the other hand, the petitioners asked
for the immediate dismissal of the complaint. They
specifically denied that the Government had made
assurances to reconvey Lot No. 88 to respondents in
the event that the property would no longer be needed
for airport operations. Petitioners instead asserted that
the judgment of condemnation was unconditional,
and respondents were, therefore, not entitled to
recover the expropriated property notwithstanding
non-use or abandonment thereof. The lower court
ruled for herein plaintiff-respondents, which decision
was affirmed by the Court of Appeals. In this
petition, the petitioners argued that the judgment in
Civil Case No. R-1881 was absolute and
unconditional, giving title in fee simple to the
Republic.
ISSUE: Whether or not a constructive trust was
constituted in this case, and as such, the respondents
herein are entitled to the restitution of the
expropriated property which was not used for a
public purpose.
HELD: YES. Art. 1454 of the Civil Code provides:
If an absolute conveyance of property is made in
order to secure the performance of an obligation of
the grantor toward the grantee, a trust by virtue of
law is established. If the fulfillment of the obligation
is offered by the grantor when it becomes due, he
may demand the reconveyance of the property to
him.
Constructive trusts are fictions of equity which are
bound by no unyielding formula when they are used
by courts as devices to remedy any situation in which
the holder of legal title may not in good conscience
retain the beneficial interest.
In constructive trusts, the arrangement is temporary
and passive in which the trustees sole duty is to
transfer the title and possession over the property to
the plaintiff-beneficiary. Of course, the wronged
party seeking the aid of a court of equity in
establishing a constructive trust must himself do
equity. Accordingly, the court will exercise its
discretion in deciding what acts are required of the
plaintiff-beneficiary as conditions precedent to
obtaining such decree and has the obligation to
reimburse the trustee the consideration received from
the latter just as the plaintiff-beneficiary would if he
proceeded on the theory of rescission. In the good
judgment of the court, the trustee may also be paid
the necessary expenses he may have incurred in
sustaining the property, his fixed costs for
improvements thereon, and the monetary value of his
services in managing the property to the extent that
plaintiff-beneficiary will secure a benefit from his
acts.
The rights and obligations between the constructive
trustee and the beneficiary, in this case, respondent
MCIAA and petitioners over Lots Nos. 916 and 920,
are echoed in Art. 1190 of the Civil Code, When the
conditions have for their purpose the extinguishment
of an obligation to give, the parties, upon the
fulfillment of said conditions, shall return to each
other what they have received x x x In case of the
loss, deterioration or improvement of the thing, the
provisions which, with respect to the debtor, are laid
down in the preceding article shall be applied to the
party who is bound to return x x x.
Coronel v. CA
Facts:
The case arose from a complaint for specific
performance filed by private respondent Alcaraz
against petitioners to consummate the sale of a parcel
of land in Quezon City.
On January 19, 1985, petitioners executed a Receipt
of Down Payment of P50,000 in favor of plaintiff
Ramona Alcaraz, binding themselves to transfer the
ownership of the land in their name from their
deceased father, afterwhich the balance of P1,190,000
shall be paid in full by Alcaraz. On February 6, 1985,
the property was transferred to petitioners. On
February 18, 1985, petitioners sold the property to
Mabanag. For this reason, Concepcion, Ramonas
mother, filed an action for specific performance.
Issue:
Whether the contract between petitioners and private
respondent was that of a conditional sale or a mere
contract to sell
Held:
Sale, by its very nature, is a consensual contract
because it is perfected by mere consent. The essential
elements of a contract of sale are the following: a)
Consent or meeting of the minds, that is, consent to
transfer ownership in exchange for the price; b)
Determinate subject matter; and c) Price certain in
money or its equivalent.
Under this definition, a Contract to Sell may not be
considered as a Contract of Sale because the first
essential element is lacking. In a contract to sell, the
prospective seller explicity reserves the transfer of
title to the prospective buyer, meaning, the
prospective seller does not as yet agree or consent to
transfer ownership of the property subject of the
contract to sell until the happening of an event, which
for present purposes we shall take as the full payment
of the purchase price. What the seller agrees or
obliges himself to do is to fulfill his promise to sell
the subject property when the entire amount of the
purchase price is delivered to him. In other words the
full payment of the purchase price partakes of a
suspensive condition, the non-fulfillment of which
prevents the obligation to sell from arising and thus,
ownership is retained by the prospective seller
without further remedies by the prospective buyer. A
contract to sell may thus be defined as a bilateral
contract whereby the prospective seller, while
expressly reserving the ownership of the subject
property despite delivery thereof to the prospective
buyer, binds himself to sell the said property
exclusively to the prospective buyer upon fulfillment
of the condition agreed upon, that is, full payment of
the purchase price.
A contract to sell may not even be considered as a
conditional contract of sale where the seller may
likewise reserve title to the property subject of the
sale until the fulfillment of a suspensive condition,
because in a conditional contract of sale, the first
element of consent is present, although it is
conditioned upon the happening of a contingent event
which may or may not occur. If the suspensive
condition is not fulfilled, the perfection of the
contract of sale is completely abated. However, if the
suspensive condition is fulfilled, the contract of sale
is thereby perfected, such that if there had already
been previous delivery of the property subject of the
sale to the buyer, ownership thereto automatically
transfers to the buyer by operation of law without any
further act having to be performed by the seller. In a
contract to sell, upon the fulfillment of the suspensive
condition which is the full payment of the purchase
price, ownership will not automatically transfer to the
buyer although the property may have been
previously delivered to him. The prospective seller
still has to convey title to the prospective buyer by
entering into a contract of absolute sale.
It is essential to distinguish between a contract to sell
and a conditional contract of sale specially in cases
where the subject property is sold by the owner not to
the party the seller contracted with, but to a third
person, as in the case at bench. In a contract to sell,
there being no previous sale of the property, a third
person buying such property despite the fulfillment of
the suspensive condition such as the full payment of
the purchase price, for instance, cannot be deemed a
buyer in bad faith and the prospective buyer cannot
seek the relief of reconveyance of the property. There
is no double sale in such case. Title to the property
will transfer to the buyer after registration because
there is no defect in the owner-seller's title per se, but
the latter, of course, may be used for damages by the
intending buyer.
In a conditional contract of sale, however, upon the
fulfillment of the suspensive condition, the sale
becomes absolute and this will definitely affect the
seller's title thereto. In fact, if there had been previous
delivery of the subject property, the seller's
ownership or title to the property is automatically
transferred to the buyer such that, the seller will no
longer have any title to transfer to any third person.
Such second buyer of the property who may have had
actual or constructive knowledge of such defect in
the seller's title, or at least was charged with the
obligation to discover such defect, cannot be a
registrant in good faith. Such second buyer cannot
defeat the first buyer's title. In case a title is issued to
the second buyer, the first buyer may seek
reconveyance of the property subject of the sale.
The agreement could not have been a contract to sell
because the sellers herein made no express
reservation of ownership or title to the subject parcel
of land. Furthermore, the circumstance which
prevented the parties from entering into an absolute
contract of sale pertained to the sellers themselves
(the certificate of title was not in their names) and not
the full payment of the purchase price. Under the
established facts and circumstances of the case, the
Court may safely presume that, had the certificate of
title been in the names of petitioners-sellers at that
time, there would have been no reason why an
absolute contract of sale could not have been
executed and consummated right there and then.
What is clearly established by the plain language of
the subject document is that when the said "Receipt
of Down Payment" was prepared and signed by
petitioners Romeo A. Coronel, et al., the parties had
agreed to a conditional contract of sale,
consummation of which is subject only to the
successful transfer of the certificate of title from the
name of petitioners' father, Constancio P. Coronel, to
their names.
The provision on double sale presumes title or
ownership to pass to the first buyer, the exceptions
being: (a) when the second buyer, in good faith,
registers the sale ahead of the first buyer, and (b)
should there be no inscription by either of the two
buyers, when the second buyer, in good faith,
acquires possession of the property ahead of the first
buyer. Unless, the second buyer satisfies these
requirements, title or ownership will not transfer to
him to the prejudice of the first buyer. In a case of
double sale, what finds relevance and materiality is
not whether or not the second buyer was a buyer in
good faith but whether or not said second buyer
registers such second sale in good faith, that is,
without knowledge of any defect in the title of the
property sold. If a vendee in a double sale registers
that sale after he has acquired knowledge that there
was a previous sale of the same property to a third
party or that another person claims said property in a
pervious sale, the registration will constitute a
registration in bad faith and will not confer upon him
any right.
Parks vs. Province of Tarlac
Art. 1181, Suspensive vs. Resolutory Condition
Facts
Plaintiff bought the land from Concepcon Ciper and
James Hill
Prior to the sale, Ciper and Hill donated the land to
province of Tarlac subject to the condition that it will
be absolutely used for erection of a central school and
a public park and the work shall commence within
six months from the ratification for the donation
Issue
W/N Parks has the right of action to recover the land
from municipality of Tarlac on the condition that the
condition is suspensive and therefore the said
municipality had never acquired a right thereto since
the condition was never performed
Ruling
The Condition is not suspensive it is resolutory
In the present case, the condition that a public school
be erected and a public park made on the donated
land, work on the same to commence within 6months
from date of ratification of the donation by parties,
could not be complied with except after giving effect
to the donation
The done could not do any work on the donated land
if the donation had not really been effected, because
it would be an invasion if anothers title for the land
would have continued to belong to the donor so long
as the condition was imposed was not complied with.
The condition was a condition subsequent
FACTS:
In 1939, the late Don Ramon Lopez was a member of
the board of trustees of Central Philippine University
when he executed a donation to the school, stating
that the land must be for exclusive use of a medical
college. 50 years later, The heirs of Ramon Lopez
filed an action to annul the donation, stating the
failure of the school to construct the medical college
over the land. RTC ruled in favor of respondents,
which the CA affirmed.
ISSUE: Whether there is a resolutory condition
RULING:
The donation was an onerous one, where failure of
the school to construct a medical college would give
the heirs the power to revoke the donation, reverting
the property back to the heirs of the donor. It is
therefore a resolutory condition. Although, the period
was not stated, and the courts should have fixed a
period, in this case, 50 years has lapsed since the
donation was executed, thus fixing a period would
serve no purpose and the property must already be
reverted back.
Dissenting Opinion:
Davide considered the donation as "modal" where the
obligations are unconditional, and the fulfillment,
performance, existence or extinguishment is not
dependent on any future and uncertain event. It is
more accurate to say that the condition stated is not a
resolutory condition, rather a obligation itself, being
an onerous donation. Since this is an onerous
donation, it has to comply with the rules on Oblicon,
and therefore the courts should have fixed a period.
FACTS:
In 1939, Don Ramon Lopez Sr. executed a deed of
donation in favor of CPU together with the following
conditions:
a) The land should be utilized by CPU exclusively for
the establishment & use of medical college;
b) The said college shall not sell transfer or convey to
any 3rd party;
c) The said land shall be called Ramon Lopez
Campus and any income from that land shall be put
in the fund to be known as Ramon Lopez Campus
Fund.
However, on May 31, 1989, PR, who are the heirs of
Don Ramon filed an action for annulment of
donation, reconveyance & damages against CPU for
not complying with the conditions. The heirs also
argued that CPU had negotiated with the NHA to
exchange the donated property with another land
owned by the latter.
Petitioner alleged that the right of private respondents
to file the action had prescribed.
ISSUE:
1) WON petitioner failed to comply the resolutely
conditions annotated at the back of petitioners
certificate of title without a fixed period when to
comply with such conditions? YES
2) WON there is a need to fix the period for
compliance of the condition? NO
HELD:
1)
Under Art. 1181, on conditional obligations, the
acquisition of rights as well the extinguishment or
loss of those already acquired shall depend upon the
happening of the event which constitutes the
condition. Thus, when a person donates land to
another on the condition that the latter would build
upon the land a school is such a resolutory one. The
donation had to be valid before the fulfillment of the
condition. If there was no fulfillment with the
condition such as what obtains in the instant case, the
donation may be revoked & all rights which the
donee may have acquired shall be deemed lost &
extinguished.
More than a reasonable period of fifty (50) years has
already been allowed petitioner to avail of the
opportunity to comply with the condition even if it be
burdensome, to make the donation in its favor forever
valid. But, 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 and would serve no
purpose than to delay or lead to an unnecessary and
expensive multiplication of suits.
Records are clear and facts are undisputed that since
the execution of the deed of donation up to the time
of filing of the instant action, petitioner has failed to
comply with its obligation as donee. Petitioner has
slept on its obligation for an unreasonable length of
time. Hence, it is only just and equitable now to
declare the subject donation already ineffective and,
for all purposes, revoked so that petitioner as donee
should now return the donated property to the heirs of
the donor, private respondents herein, by means of
reconveyance.
2)
Under Art. 1197, when the obligation does not fix a
period but from its nature & circumstance it can be
inferred that the period was intended, the court may
fix the duration thereof because the fulfillment of the
obligation itself cannot be demanded until after the
court has fixed the period for compliance therewith &
such period has arrived. However, this general rule
cannot be applied in this case considering the
different set of circumstances existing more than a
reasonable period of 50yrs has already been allowed
to petitioner to avail of the opportunity to comply but
unfortunately, it failed to do so. Hence, there is no
need to fix a period when such procedure would be a
mere technicality & formality & would serve no
purpose than to delay or load to unnecessary and
expensive multiplication of suits.
Under Art. 1191, when one of the obligors cannot
comply with what is incumbent upon him, the obligee
may seek rescission before the court unless there is
just cause authorizing the fixing of a period. In the
absence of any just cause for the court to determine
the period of compliance there is no more obstacle
for the court to decree recission
Quijada v. CA
Facts:
On April 5, 1956, Trinidad Quijada and her sisters
executed a deed of conditional donation in favor of
the Municipality of Talacogon, the condition being
that the land shall be used exclusively for the
construction of a provincial high school. Trinidad
remained in possession of the land. On July 29, 1962,
Trinidad sold the land to respondent Regalado
Mondejar. In 1980, the heirs of Trinidad, herein
petitioners, filed a complaint for forcible entry
against the respondent. In 1987, the proposed campus
did not materialize, and the Sangguniang Bayan
enacted a resolution donating back the land to the
donor. In the meantime, respondent Mondejar
conveyed portions of the land to the other
respondents. On July 5, 1988, petitioners filed a
complaint for quieting of title, recovery of possession
and ownership of the land.
Issue:
Whether the sale between Trinidad and Regalado is
valid considering the capacity of the vendor to
execute the contract in view of the conditional deed
of donation
Held:
The donor may have an inchoate interest in the
donated property during the time that ownership of
the land has not reverted to her. Such inchoate
interest may be 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 have been different if the donor-seller sold her
interests over the property under the deed of donation
which is subject to the possibility of reversion of
ownership arising from the non-fulfillment of the
resolutory condition.
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 three (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; hence, the sale is still valid.
The consummation, however, of the perfected
contract is another 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 acquires ownership thereof.
Such circumstance happened in this case when
petitioners who are Trinidad Quijada's heirs and
successors-in-interest became the owners of the
subject property upon the reversion of the ownership
of the land to them. Consequently, ownership is
transferred to respondent Mondejar and those who
claim their right from him. Article 1434 of the New
Civil Code supports the ruling that the seller's "title
passes by operation of law to the buyer." This rule HELD:
applies not only when the subject matter of the PETITION GRANTED. CA DECISION
contract of sale is goods, but also to other kinds of REVERSED AND SET ASIDE.
property, including real property.
1. Return or repurchase of the condemned properties
Heirs of Moreno vs. MACTAN of petitioners could be readily justified as the
GR- 156273 October 15, 2003 manifest legal effect or consequence of the trial
courts underlying presumption that Lahug Airport
FACTS: will continue to be in operation when it granted the
MORENO: successors of 2 parcels of land complaint for eminent domain and the airport
MACTAN wanted to acquire land: discontinued its activities.
i. Government assured
landowners that they could repurchase their lands 2. ARTICLE 1454: If an absolute conveyance of
once Lahug Airport was closed or its operations property is made in order to secure the performance
transferred to Mactan Airport of an obligation of the grantor toward the grantee, a
ii. Moreno refused trust by virtue of law is established. If the fulfillment
offer. of the obligation is offered by the grantor when it
iii. Civil Aeronautics becomes due, he may demand the reconveyance of
Administration as the successor agency of the the property to him.
National Airport Corporation filed a complaint with a. In the case at bar, government obliged itself to
the Court of First Instance of Cebu, for the use of land for the expansion of Lahug Airport
expropriation of land. i. Failure to keep
iv. Trial court its bargain: can be compelled to reconvey, otherwise,
promulgated public use upon payment of just petitioners would be denied the use of their properties
compensation. upon a state of affairs that was not conceived nor
v. MORENO were contemplated when the expropriation was authorized.
paid; no appeal.
vi. Certificates of title 3. ARTICLE 1189: If the thing is improved by its
were issued. nature, or by time, the improvement shall inure to the
LAHUG AIRPORT CEASED OPERATIONS, lands benefit of the creditor.
not utilized. a. CREDITOR: person who stands to receive
Moreno plead for repurchase of land. something as a result of the process of restitution.
i. Filed complaint for i. Petitioners must
reconveyance and damages. pay MCIAA the necessary expenses in sustaining the
ii. Averred that they properties and services
have been convinced not to oppose since they could ii. Government may
repurchase. keep whatever income or fruits it may have obtained
iii. MCIAA did not from the parcels of land.
object. iii. Petitioners need
ENCHUAN FILED FOR MOTION OF TRANSFER not account for the interests that the amounts they
Acquired through deeds of assignment the rights of received as just compensation may have earned in the
land. meantime.
DPWH claimed it leased in good faith from MCIAA
to Regional Equipment Services and Region 7 Office. Boysaw vs. Interphil Promotions
Boxer (P) vs. Promoter (D)
TRIAL COURT GRANTED RIGHT TO GR L-22590 [T]
REPURCHASE but subject to the alleged property
rights of Richard E. Enchuan and the leasehold of Summary: A boxer signed an agreement with a
DPWH. promotions agency to arrange and promote a boxing
CA reversed: rights gained by MCIAA were match with Flash Elorde. The boxer violated the
indicative of ownership in fee simple terms of the contract, but in spite of these, the agency
proceeded except it negotiated for a new date for the
ISSUE: match. Eventually, the match as originally stated in
Do they have right to repurchase? Or right to the contract did not materialize. Boxer and manager
reversion? is now suing the promotion agency for breach of
contract.

Rule of Law: Where one party did not perform the
undertaking which he was bound by the terms of the
agreement to perform, he is not entitled to insist upon
the performance of the contract by the other party, or
recover damages by reason of his own breach.
Facts: Solomon Boysaw (P), signed with Interphil
Promotions, Inc. (D), a contract to engage Gabriel
"Flash" Elorde in a boxing contest for the junior
lightweight championship of the world. Thereafter,
Interphil (D) signed Gabriel "Flash" Elorde to a
similar agreementthat is, to engage Boysaw in a
title fight.
The managerial rights over Boysaw (P) was assigned
and eventually reassigned to Alfredo Yulo, Jr. (P)
without the consent of Interphil (D) in violation of
their contract. When informed of the change,
Interphil (D) referred the matter to the Games and
Amusement Board culminating to a decision by the
board to approve a new date for the match. Yulo (P)
protested against the new date even when another
proposed date was within the 30-day allowable
postponements.
Boysaw (P) and Yulo (P) filed for breach of contract
when the fight contemplated in the original boxing
contract did not materialize.
Issues: May the offending party in a reciprocal
obligation compel the other party for specific
performance?
Ruling: No. Evidence established that the contract
was violated by Boysaw (P) when, without the
approval or consent of Interphil (D), he fought a
boxing match in Las Vegas. Another violation was
the assignment and transfer of the managerial rights
over Boysaw (P) without the knowledge or consent
of Interphil (D).
While the contract imposed no penalty for such
violation, this does not grant any of the parties the
unbridled liberty to breach it with impunity. Our law
on contracts recognizes the principle that actionable
injury inheres in every contractual breach.
Those who in the performance of their obligations are
guilty of fraud, negligence or delay, and those who in
any manner contravene the terms thereof, are liable
for damages.
Article 1170, Civil Code.
The power to rescind obligations is implied, in
reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.
Article 1191, Civil Code.
The contract in question gave rise to reciprocal
obligations.
Reciprocal obligations are those which arise from the
same cause, and in which each party is a debtor and a
creditor of the other, such that the obligation of one is
dependent upon the obligation of the other. They are
to be performed simultaneously, so that the
performance of one is conditioned upon the
simultaneous fulfillment of the other.
Tolentino, Civil Code of the Philippines, Vol. IV,
p. 175.
UNIVERSITY OF THE PHILIPPINES VS. DE LOS
ANGELES
35 SCRA 102
FACTS:
On November 2, 1960, UP and ALUMCO entered
into a logging agreement whereby the latter was
granted
exclusive authority to cut, collect and remove timber
from
the Land Grant for a period starting from the date of
agreement to December 31, 1965, extendible for a
period of
5 years by mutual agreement.
On December 8, 1964, ALUMCO incurred an
unpaid account of P219,362.94. Despite repeated
demands, ALUMCO still failed to pay, so UP sent a
notice
to rescind the logging agreement. On the other hand,
ALUMCO executed an instrument entitled
Acknowledgment of Debt and Proposed Manner of
Payments. It was approved by the president of UP,
which
stipulated the following:
3. In the event that the payments called for are not
sufficient to liquidate the foregoing indebtedness,
the balance outstanding after the said payments
have been applied shall be paid by the debtor in
full no later than June 30, 1965.
5. In the event that the debtor fails to comply with
any of its promises, the Debtor agrees without
reservation that Creditor shall have the right to
consider the Logging Agreement rescinded,
without the necessity of any judicial suit
ALUMCO continued its logging operations, but
again incurred an unpaid account. On July 19,1965,
UP
informed ALUMCO that it had, as of that date,
considered
rescinded and of no further legal effect the logging
agreement, and that UP had already taken steps to
have
another concessionaire take over the logging
operation.
ALUMCO filed a petition to enjoin UP from
conducting the
bidding. The lower court ruled in favor of ALUMCO,
hence, this appeal.
ISSUE:
Can petitioner UP treat its contract with ALUMCO
rescinded, and may disregard the same before any
judicial
pronouncement to that effect?
RULING:
Yes. In the first place, UP and ALUMCO had
expressly stipulated that upon default by the debtor,
UP
has the right and the power to consider the Logging
Agreement of December 2, 1960 as rescinded
without the necessity of any judicial suit. As to such
special stipulation
and in connection with Article 1191 of the Civil
Code, the
Supreme Court, stated in Froilan vs. Pan Oriental
Shipping
Co:
There is nothing in the law that prohibits the
parties from entering into agreement that violation
of the terms of the contract would cause
cancellation thereof, even without court
intervention. In other words, it is not always
necessary for the injured party to resort to court
for rescission of the contract.
FACTS:
On December 19, 1957, defendants-appellants
Ursula Torres Calasanz and plaintiffs-appellees
Buenaventura Angeles and Teofila Juani entered into
a RULING:
contract to sell a piece of land located in Cainta,
Rizal for
the amount of P3,920.00 plus 7% interest per annum.
The
plaintiffs-appellees made a downpayment of P392.00
upon
the execution of the contract. They promised to pay
the
balance in monthly installments of P41.20 until fully
paid,
the installment being due and payable on the 19th day
of
each month. The plaintiffs-appellees paid the monthly
installments until July 1966, when their aggregate
payment already amounted to P4,533.38.
On December 7, 1966, the defendants-appellants
wrote the plantiffs-appellees a letter requesting the
remittance of past due accounts. On January 28,
1967, the
defendants-appellants cancelled the said contract
because
the plaintiffs failed to meet subsequent payments.
The
plaintiffs letter with their plea for reconsideration of
the
said cancellation was denied by the defendants.
The plaintiffs-appellees filed a case before the
Court of First Instance to compel the defendant to
execute
in their favor the final deed of sale alleging inter alia
that
after computing all subsequent payments for the land
in
question, they found out that they have already paid
the
total amount including interests, realty taxes and
incidental expenses. The defendants alleged in their
answer that the plaintiffs violated par. 6 of the
contract to
sell when they failed and refused to pay and/or offer
to pay
monthly installments corresponding to the month of
August, 1966 for more than 5 months, thereby
constraining the defendants to cancel the said
contract.
The Court of First Instance rendered judgment in
favor of the plaintiffs, hence this appeal.
ISSUE:
Has the Contract to Sell been automatically and
validly cancelled by the defendants-appellants?
No. While it is true that par.2 of the contract
obligated the plaintiffs-appellees to pay the
defendants the
sum of P3,920 plus 7% interest per annum, it is
likewise
true that under par 12 the seller is obligated to
transfer the
title to the buyer upon payment of the said price.
The contract to sell, being a contract of adhesion,
must be construed against the party causing it. The
Supreme Court agree with the observation of the
plaintiffsappellees
to the effect that the terms of a contract must be
interpreted against the party who drafted the same,
especially where such interpretation will help effect
justice
to buyers who, after having invested a big amount of
money, are now sought to be deprived of the same
thru the
prayed application of a contract clever in its
phraseology,
condemnable in its lopsidedness and injurious in its
effect
which, in essence, and its entirety is most unfair to
the
buyers.
Thus, since the principal obligation under the
contract is only P3,920.00 and the plaintiffs-appellees
have already paid an aggregate amount of P4,533.38,
the
courts should only order the payment of the few
remaining
installments but not uphold the cancellation of the
contract. Upon payment of the balance of P671.67
without
any interest thereon, the defendant must immediately
execute the final deed of sale in favor of the plaintiffs
and
execute the necessary transfer of documents, as
provided
in par.12 of the contract.
GO ONG VS. CA
OCTOBER 30, 2011 ~ VBDIAZ
GO ONG VS. CA
G.R. No. 75884
September 24, 1987
FACTS: 2 parcels of land under 1 TCT are owned by
alfredo and when he died, his wife julita go ong was
appointed administratrix of his estate. Julita thereafter
mortgaged 1 lot to Allied Banking Corp. to secure a
loan obtained by JK Exports, annotated as a lien on
the original TCT, with the following notation:
mortgagees consent necessary in case of subsequent
alienation or encumbrance of the property
On the loan there was due a sum and Allied tried to
collect it from Julita. Hence, the complaint alleging
nullity of the contract for lack of judicial approval
which the bank had allegedly promised to secure
from the court. In response thereto, the bank averred
that it was Julita who promised to secure the courts
approval.
Trial court ruled for Julita, stating that the contract is
valid. CA affirmed with modification the lower
courts decision
ISSUE: WHETHER OR NOT THE MORTGAGE
CONSTITUTED OVER THE PARCEL OF LAND
UNDER PETITIONERS ADMINISTRATION IS
NULL AND VOID FOR WANT OF JUDICIAL
APPROVAL.
HELD: contract is valid
Petitioner, asserting that the mortgage is void for
want of judicial approval, quoted Section 7 of Rule
89 of the Rules of Court . The CA aptly ruled that
Section 7 of Rule 89 of the Rules of Court is not
applicable, since the mortgage was constituted in her
personal capacity and not in her capacity as
administratrix of the estate of her husband. Sec. 7,
Art. 89 of the Civil Code applies in a case where
judicial approval has to be sought in connection with,
for instance, the sale or mortgage of property under
administration for the payment, say of a conjugal
debt, and even here, the conjugal and hereditary
shares of the wife are excluded from the requisite
judicial approval for the reason already adverted to
hereinabove, provided of course no prejudice is
caused others, including the government.
Consequently, in the case at bar, the trial court and
the CA cannot be faulted in ruling that the questioned
mortgage constituted on the property under
administration, by authority of the petitioner, is valid,
notwithstanding the lack of judicial approval, with
respect to her conjugal share and to her hereditary
rights.
Petitioner cited cases arguing that in the settlement
proceedings of the estate of the deceased spouse, the
entire conjugal partnership property of the marriage
is under administration. While such may be in a sense
true, that fact alone is not sufficient to invalidate the
whole mortgage, willingly and voluntarily entered
into by the petitioner.. Under similar circumstances,
this Court applied the provisions of Article 493 of the
Civil Code, where the heirs as co-owners shall each
have the full ownership of his part and the fruits and
benefits pertaining thereto, and he may therefore
alienate, assign or mortgage it, and even effect of the
alienation or mortgage, with respect to the co-owners,
shall be limited to the portion which may be allotted
to him in the division upon the termination of the co-
ownership
The reference to judicial approval in Sec. 7, Rule 89
of the Rules of Court cannot adversely affect the
substantive rights of private respondent to dispose of
her Ideal [not inchoate, for the conjugal partnership
ended with her husbands death, and her hereditary
rights accrued from the moment of the death of the
decedent (Art. 777, Civil Code) share in the co-
heirship and/or co-ownership formed between her
and the other heirs/co-owners (See Art. 493, Civil
Code, supra.).
ROQUE VS. LAPUS
96 SCRA 741
FACTS:
Sometime in 1964, plaintiff and defendant entered
into an agreement of sale covering Lots 1, 2 and 9,
Block 1, of said property, payable in 120 equal
monthly installments at the rate of P16.00, P15.00 per
square meter, respectively. In accordance with said
agreement, defendant paid to plaintiff the sum of
P150.00 as deposit and the further sum of P740.56 to
complete the payment of four monthly installments
covering the months of July, August, September, and
October, 1954.
On January 24, 1955, defendant requested plaintiff
that he be allowed to abandon and substitute Lots 1, 2
and 9, the subject with Lots 4 and 12, Block 2 of the
Rockville Subdivision, which are corner lots, to
which request plaintiff graciously acceded. The
evidence discloses that defendant proposed to
plaintiff modification of their previous contract to sell
because he found it quite difficult to pay the monthly
installments on the three lots, and besides the two lots
he had chosen were better lots, being corner lots. In
addition, it was agreed that the purchase price of
these two lots would be at the uniform rate of P17.00
per square meter payable in 120 equal monthly
installments, with interest at 8% annually on the
balance unpaid. Pursuant to this new agreement,
defendant occupied and possessed Lots 4 and 12, and
enclosed them, including the portion where his house
now stands, with barbed wires and adobe walls.
However, aside from the deposit of P150.00 and the
amount of P740.56, which were paid under their
previous agreement, defendant failed to make any
further payment on account of the agreed monthly
installments for the two lots in dispute, under the new
contract to sell. Plaintiff demanded upon defendant
not only to pay the stipulated monthly installments in
arrears, but also to make up-to-date his payments, but
defendant refused to comply with plaintiff's demands.
On or about November 3, 1957, plaintiff demanded
upon defendant to vacate the lots in question and to
pay the reasonable rentals thereon at the rate of
P60.00 per month from August, 1955. On January 22,
1960, petitioner Felipe C, Roque filed the complaint
against defendant Nicanor Lapuz for rescission and
cancellation of the agreement of sale between them
involving the two lots in question and prayed that
judgment be rendered ordering the rescission and
cancellation of the agreement of sale, the defendant
to vacate the two parcels of land and remove his
house therefrom and to pay to the plaintiff the
reasonable rental thereof at the rate of P60.00 a
month from August 1955 until such time as he shall
have vacated the premises, and to pay the sum of
P2,000.00 as attorney's fees, costs of the suit and
award such other relief or remedy as may be deemed
just and equitable in the premises.
The Court of Appeals rendered its decision that the
defendant Nicanor Lapuz is granted a period of
ninety (90) days from entry hereof within which to
pay the balance. Hence, this appeal.
ISSUE:
Can private respondent be entitled to the Benefits of
the third paragraph of Article 1191, New Civil Code,
for the fixing of period
RULING:
No. Respondent as obligor is not entitled to the
benefits of paragraph 3 of Art. 1191, NCC Having
been in default and acted in bad faith, he is not
entitled to the new period of 90 days from entry of
judgment within which to pay petitioner the balance
of P11,434.44 with interest due on the purchase price
of P12,325.00 for the two lots. To allow and grant
respondent an additional period for him to pay the
balance of the purchase price, which balance is about
92% of the agreed price, would be tantamount to
excusing his bad faith and sanctioning the deliberate
infringement of a contractual obligation that is
repugnant and contrary to the stability, security and
obligatory force of contracts. Moreover, respondent's
failure to pay the succeeding 116 monthly
installments after paying only 4 monthly installments
is a substantial and material breach on his part, not
merely casual, which takes the case out of the
application of the benefits of pa paragraph 3, Art.
1191, N.C.C.
Pursuant to Art. 1191, New Civil Code, petitioner is
entitled to rescission with payment of damages which
the trial court and the appellate court, in the latter's
original decision, granted in the form of rental at the
rate of P60.00 per month from August, 1955 until
respondent shall have actually vacated the premises,
plus P2,000.00 as attorney's fees. The Court affirmed
the same to be fair and reasonable. The Court also
sustained the right of the petitioner to the possession
of the land, ordering thereby respondent to vacate the
same and remove his house therefrom.
Agency Estoppel
In 1997, while the spouses Viloria were in the United
States, they approached Holiday Travel, a travel
agency working for Continental Airlines, to purchase
tickets from Newark to San Diego. The travel agent,
Margaret Mager, advised the couple that they cannot
travel by train because it was already fully booked;
that they must purchase plane tickets for Continental
Airlines; that if they wont purchase plane tickets;
theyll never reach their destination in time. The
couple believed Magers representations and so they
purchased two plane tickets worth $800.00.
Later however, the spouses found out that the train
trip wasnt really fully booked and so they purchased
train tickets and went to their destination by train
instead. Then they called up Mager to request for a
refund for the plane tickets. Mager referred the
couple to Continental Airlines. As the couple were
now in the Philippines, they filed their request with
Continental Airlines office in Ayala. The spouses
Viloria alleged that Mager misled them into believing
that the only way to travel was by plane and so they
were fooled into buying expensive plane tickets.
Continental Airlines refused to refund the amount of
the tickets and so the spouses sued the airline
company. In its defense, Continental Airlines claimed
that the tickets sold to them by Mager were non-
refundable; that, if any, they were not bound by the
misrepresentations of Mager because theres no
contract of agency existing between Continental
Airlines and Mager.
The trial court ruled in favor of spouses Viloria but
the Court of Appeals reversed the ruling of the RTC.
ISSUE: Whether or not a contract of agency exists
between Continental Airlines and Mager.
HELD: Yes. All the elements of agency are present,
to wit:
there is consent, express or implied of the parties to
establish the relationship;
the object is the execution of a juridical act in relation
to a third person;
the agent acts as a representative and not for himself,
and
the agent acts within the scope of his authority.
The first and second elements are present as
Continental Airlines does not deny that it concluded
an agreement with Holiday Travel to which Mager is
part of, whereby Holiday Travel would enter into
contracts of carriage with third persons on the
airlines behalf. The third element is also present as it
is undisputed that Holiday Travel merely acted in a
representative capacity and it is Continental Airlines
and not Holiday Travel who is bound by the contracts
of carriage entered into by Holiday Travel on its
behalf. The fourth element is also present considering
that Continental Airlines has not made any allegation
that Holiday Travel exceeded the authority that was
granted to it.
Continental Airlines also never questioned the
validity of the transaction between Mager and the
spouses. Continental Airlines is therefore in estoppel.
Continental Airlines cannot be allowed to take an
altogether different position and deny that Holiday
Travel is its agent without condoning or giving
imprimatur to whatever damage or prejudice that may
result from such denial or retraction to Spouses
Viloria, who relied on good faith on Continental
Airlines acts in recognition of Holiday Travels
authority. Estoppel is primarily based on the doctrine
of good faith and the avoidance of harm that will
befall an innocent party due to its injurious reliance,
the failure to apply it in this case would result in
gross travesty of justice.
ARANETA VS PHIL. SUGAR ESTATES
DEVELOPMENT CO.
20 SCRA 330
FACTS:
J. M. Tuason & Co., Inc. is the owner of a big tract
land situated in Quezon City, and on July 28, 1950,
[through Gregorio Araneta, Inc.] sold a portion
thereof to
Philippine Sugar Estates Development Co., Ltd.
The parties stipulated, among in the contract of
purchase and sale with mortgage, that the buyer will
build
on the said parcel land the Sto. Domingo Church and
Convent while the seller for its part will construct
streets.
But the seller, Gregorio Araneta, Inc., which began
constructing the streets, is unable to finish the
construction of the street in the Northeast side
because a
certain third-party, by the name of Manuel Abundo,
who
has been physically occupying a middle part thereof,
refused to vacate the same;
Both buyer and seller know of the presence of
squatters that may hamper the construction of the
streets
by the seller. On May 7, 1958, Philippine Sugar
Estates
Development Co., Lt. filed its complaint against J. M.
Tuason & Co., Inc., and instance, seeking to compel
the
latter to comply with their obligation, as stipulated in
the
above-mentioned deed of sale, and/or to pay damages
in
the event they failed or refused to perform said
obligation.
The lower court and the appellate court ruled in
favor of Phil. Sugar estates, and gave defendant
Gregorio
Araneta, Inc., a period of two (2) years from notice
hereof,
within which to comply with its obligation under the
contract, Annex "A".
Gregorio Araneta, Inc. resorted to a petition for
review by certiorari to this Court.
ISSUES:
Was there a period fixed?
RULING:
Yes. The fixing of a period by the courts under
Article 1197 of the Civil Code of the Philippines is
sought to
be justified on the basis that petitioner (defendant
below)
placed the absence of a period in issue by pleading in
its
answer that the contract with respondent Philippine
Sugar
Estates Development Co., Ltd. gave petitioner
Gregorio
Araneta, Inc. "reasonable time within which to
comply
with its obligation to construct and complete the
streets."
If the contract so provided, then there was a period
fixed, a
"reasonable time;" and all that the court should have
done
was to determine if that reasonable time had already
elapsed when suit was filed if it had passed, then the
court
should declare that petitioner had breached the
contract,
Was it within the powers of the lower court to set the
performance of the obligation in two years time?
NO. Even on the assumption that the court should
have
found that no reasonable time or no period at all had
been
fixed (and the trial court's amended decision nowhere
declared any such fact) still, the complaint not having
sought that the Court should set a period, the court
could
not proceed to do so unless the complaint included it
as
first amended;
Granting, however, that it lay within the Court's
power to
fix the period of performance, still the amended
decision is
defective in that no basis is stated to support the
conclusion that the period should be set at two years
after
finality of the judgment. The list paragraph of Article
1197
is clear that the period can not be set arbitrarily. The
law
expressly prescribes that the Court shall determine
such
period as may under the circumstances been probably
contemplated by the parties.
It must be recalled that Article 1197 of the Civil Code
involves a two-step process. The Court must first
determine that "the obligation does not fix a period"
(or
that the period is made to depend upon the will of the
debtor)," but from the nature and the circumstances it
can
be inferred that a period was intended" (Art. 1197,
pars. 1
and 2). This preliminary point settled, the Court must
then
proceed to the second step, and decide what period
was
"probably contemplated by the parties" (Do., par. 3).
So
that, ultimately, the Court can not fix a period merely
because in its opinion it is or should be reasonable,
but
must set the time that the parties are shown to have
intended. As the record stands, the trial Court appears
to
have pulled the two-year period set in its decision out
of
thin air, since no circumstances are mentioned to
support
it. Plainly, this is not warranted by the Civil Code.
Does reasonable time mean that the date of
performance
would be indefinite?
The Court of Appeals objected to this conclusion that
it
would render the date of performance indefinite. Yet,
the
circumstances admit no other reasonable view; and
this
very indefiniteness is what explains why the
agreement did
not specify any exact periods or dates of performance
Central Philippine University v CA
GR No. 112127
July 17, 1995
DONATION
FACTS: (1) In 1939, the late Don Ramon Lopez, Sr.,
who was then a member of the Board of Trustees of
the Central Philippine College (now Central
Philippine University [CPU]), executed a deed of
donation in favor of the latter of a parcel of land
identified as Lot No. 3174-B-1 of the subdivision
plan Psd-1144, then a portion of Lot No. 3174-B, for
which Transfer Certificate of Title No. T-3910-A was
issued in the name of the donee CPU with the
following annotations copied from the deed of
donation
1. The land described shall be utilized by the CPU
exclusively for the establishment and use of a
medical college with all its buildings as part of the
curriculum;
2. The said college shall not sell, transfer or convey
to any third party nor in any way encumber said land;
3. The said land shall be called "RAMON LOPEZ
CAMPUS", and the said college shall be under
obligation to erect a cornerstone bearing that name.
Any net income from the land or any of its parks
shall be put in a fund to be known as the "RAMON
LOPEZ CAMPUS FUND" to be used for
improvements of said campus and erection of a
building thereon.
(2) On 31 May 1989, private respondents, who are
the heirs of Don Ramon Lopez, Sr., filed an action for
annulment of donation, reconveyance and damages
against CPU alleging that since 1939 up to the time
the action was filed the latter had not complied with
the conditions of the donation.
RTC: On 31 May 1991, the trial court held that
petitioner failed to comply with the conditions of the
donation and declared it null and void.
CA: 18 June 1993 ruled that the annotations at the
back of petitioner's certificate of title were resolutory
conditions breach of which should terminate the
rights of the donee thus making the donation
revocable.
----------------------------------------------------------------
-----------------------------------------------
APPLICABLE LAW/S:
Art. 1181. In conditional obligations, the acquisition
of rights, as well as the extinguishment or loss of
those already acquired, shall depend upon the
happening of the event which constitutes the
condition. (1114)
Art. 1197. If the obligation does not fix a period, but
from its nature and the circumstances it can be
inferred that a period was intended, the courts may
fix the duration thereof.
The courts shall also fix the duration of the period
when it depends upon the will of the debtor.
In every case, the courts shall determine such period
as may under the circumstances have been probably
contemplated by the parties. Once fixed by the
courts, the period cannot be changed by them.
(1128a)
Art. 1191. The power to rescind obligations is
implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment
and the rescission of the obligation, with the payment
of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the
latter should become impossible.
The court shall decree the rescission claimed, unless
there be just cause authorizing the fixing of a period.
This is understood to be without prejudice to the
rights of third persons who have acquired the thing,
in accordance with Articles 1385 and 1388 and the
Mortgage Law. (1124)
----------------------------------------------------------------
-----------------------------------------------
HELD: (1) The donation was onerous. A clear perusal
of the conditions set forth in the deed of donation
executed by Don Ramon Lopez, Sr., gives us no
alternative but to conclude that his donation was
onerous, one executed for a valuable consideration
which is considered the equivalent of the donation
itself, e.g., when a donation imposes a burden
equivalent to the value of the donation. The donation
had to be valid before the fulfillment of the condition.
5 If there was no fulfillment or compliance with the
condition, such as what obtains in the instant case,
the donation may now be revoked and all rights
which the donee may have acquired under it shall be
deemed lost and extinguished.
(2) The action has not prescribed. It has been held
that its absolute acceptance and the acknowledgment
of its obligation provided in the deed of donation
were sufficient to prevent the statute of limitations
from barring the action of private respondents upon
the original contract which was the deed of donation.
(3) Courts fixing a period is now moot and rescission
is proper. Petitioner has slept on its obligation for an
unreasonable length of time. Hence, it is only just and
equitable now to declare the subject donation already
ineffective and, for all purposes, revoked so that
petitioner as donee should now return the donated
property to the heirs of the donor, private respondents
herein, by means of reconveyance.
Gaite v. Fonacier
Facts:
Gaite was appointed by Fonacier as attorney-in-fact
to contract any party for the exploration and
development of mining claims. Gaite executed a deed
of assignment in favor of a single proprietorship
owned by him. For some reasons, Fonacier revoked
the agency, which was acceded to by Gaite, subject to
certain conditions, one of which being the transfer of
ores extracted from the mineral claims for P75,000,
of which P10,000 has already been paid upon signing
of the agreement and the balance to be paid from the
first letter of credit for the first local sale of the iron
ores. To secure payment, Fonacier delivered a surety
agreement with Larap Mines and some of its
stockholders, and another one with Far Eastern
Insurance. When the second surety agreement
expired with no sale being made on the ores, Gaite
demanded the P65,000 balance. Defendants
contended that the payment was subject to the
condition that the ores will be sold.
Issue:
(1) Whether the sale is conditional or one with a
period
(2) Whether there were insufficient tons of ores
Held:
(1) The shipment or local sale of the iron ore is not a
condition precedent (or suspensive) to the payment of
the balance of P65,000.00, but was only a suspensive
period or term. What characterizes a conditional
obligation is the fact that its efficacy or obligatory
force (as distinguished from its demandability) is
subordinated to the happening of a future and
uncertain event; so that if the suspensive condition
does not take place, the parties would stand as if the
conditional obligation had never existed.
A contract of sale is normally commutative and
onerous: not only does each one of the parties assume
a correlative obligation (the seller to deliver and
transfer ownership of the thing sold and the buyer to
pay the price),but each party anticipates performance
by the other from the very start. While in a sale the
obligation of one party can be lawfully subordinated
to an uncertain event, so that the other understands
that he assumes the risk of receiving nothing for what
he gives (as in the case of a sale of hopes or
expectations, emptio spei), it is not in the usual
course of business to do so; hence, the contingent
character of the obligation must clearly appear.
Nothing is found in the record to evidence that Gaite
desired or assumed to run the risk of losing his right
over the ore without getting paid for it, or that
Fonacier understood that Gaite assumed any such
risk. This is proved by the fact that Gaite insisted on a
bond a to guarantee payment of the P65,000.00, an
not only upon a bond by Fonacier, the Larap Mines &
Smelting Co., and the company's stockholders, but
also on one by a surety company; and the fact that
appellants did put up such bonds indicates that they
admitted the definite existence of their obligation to
pay the balance of P65,000.00.
The appellant have forfeited the right court below
that the appellants have forfeited the right to compel
Gaite to wait for the sale of the ore before receiving
payment of the balance of P65,000.00, because of
their failure to renew the bond of the Far Eastern
Surety Company or else replace it with an equivalent
guarantee. The expiration of the bonding company's
undertaking on December 8, 1955 substantially
reduced the security of the vendor's rights as creditor
for the unpaid P65,000.00, a security that Gaite
considered essential and upon which he had insisted
when he executed the deed of sale of the ore to
Fonacier.
(2) The sale between the parties is a sale of a specific
mass or iron ore because 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 of P75,000,00 agreed upon by the
parties based upon any such measurement.(see Art.
1480, second par., New Civil Code). The subject
matter of the sale is, therefore, a determinate object,
the mass, and not the actual number of units or tons
contained therein, so that all that was required of the
seller Gaite was to deliver in good faith to his buyer
all of the ore found in the mass, notwithstanding that
the quantity delivered is less than the amount
estimated by them.