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.

GAITE vs FONACIER | G.R. No. L-11827

FACTS
Fonacier, owner of mining claims, constituted Gaite as his attorney-in-fact. Gaite was authorized to enter into a contract with
other persons with respect to the mining claims.

Gaite then entered into a contract with Larap Iron Mines, a company Gaite solely owned, to develop the mining claims. Later,
Fonacier abruptly decided to revoke Gaite’s authority as attorney-in-fact.

Afterwards, Gaite sold the developments his company made in the mining claims areas and the ore already mined for a sum of
money to Fonacier. Fonacier secured the sale with a surety company. Part of the money was paid upon sale while the other part
was payable out of the first loan of credit covering the first shipment of iron ore and the first amount derived from the local sale of
the iron ore.

After the surety expired, Gaite demanded payment of the remainder of the purchase price but Fonacier refused arguing no sale
of iron ore had yet taken place.
ISSUE
WHETHER OR NOT THE SELLING OF THE IRON ORES IS A SUSPENSIVE CONDITION FOR PAYING GAITE
HELD: NO.

The sale isn’t a suspensive condition but is only a suspensive period or term. This interpretation is supported by:
1. The contract expresses no contingency in the buyer’s obligation to pay. The contract
recognizes the existence of an obligation to pay and only the maturity is deferred

2. Gaite never desired or assumed to run the risk of losing his right over the ore without getting paid for it as shown by his
insistence on a surety

3. Treating the condition as a suspensive condition would leave payment at the debtor’s
discretion because the ore will be sold only when the debtor wants it to be sold.

4. In onerous contracts the rules of interpretation favor the greater reciprocity of interest and because sale is onerous this rule
applies. Greater reciprocity is obtained if the buyer’s
obligation to pay is deemed existing compared to such obligation non-existing until the ore was sold.
Gonzales vs. Heirs of Thomas and Paula Cruz

Gonzales vs. Heirs of Thomas and Paula Cruz

GR No. 131784

FACTS:
Petition for Review on Certiorari on decision of CA:
“WHEREFORE, premises considered, this Court hereby renders judgment in favor of the defendant, Felix Gonzales, and
against the plaintiffs, as follows:

i. Ordering the dismissal of the case;

ii. Sentencing the plaintiffs, jointly and severally, the sum of P20,000.00 as moral damages and
the other sum of P10,000.00 as and for attorney’s fees; and
iii. to pay the costs.”

CRUZ entered into a Contract of Lease/Purchase with Gonzales (sole proprietor and manager of Felgon Farms) of a half-portion
of a ‘parcel of land containing an area of 12 hectares, more or less, and an accretion of 2 hectares, more or less, situated in
Rodriguez Town, Province of Rizal’ UNDER TERMS:

Term of contract is for a period of one year upon the signing thereof.

After the period, GONZALES shall purchase the property P1,000,000.00, 2 years payable with 12% per annum interest subject
to the devalued amount of the Philippine Peso, according to the following schedule of payment:
i. Upon the execution of deed 50%
ii. 25% every 6 months thereafter

1. Payable within first 10 days of the beginning of each 6 months

GONZALES shall pay annual rental equivalent to P2,500.00 per hectare, upon the signing of this contract

LESSORS (CRUZ) shall undertake to obtain a separate certificate over leased portion to the LESSEE within a reasonable
period of time which shall not in any case exceed four (4) years

i. A new Contract shall be executed by the herein parties which shall be the same in all respects
with this Contract of Lease/Purchase insofar as the terms and conditions are concerned.

GONZALES paid the P2,500.00 per hectare or P15,000.00 annual rental on the half-portion of the property covered by
certificate in accordance with the second provision of the Contract of Lease/Purchase, took possession of the property, installing
thereon the defendant Jesus Sambrano as his caretaker.
Did not purchase the property immediately after the expiration of the one-year lease

Remained in possession of the property without paying the purchase price and without paying any further rentals
CRUZ SENT LETTER TO GONZALES INFORMING DECISION TO RESCIND CONTRACT DUE TO GONZALES BREACH
Demanded defendant to vacate the premises within 10 days from receipt of said letter.
GONZALES refused to vacate the property and continued possession, case brought against GONZALES.

LESSOR, PAULA CRUZ DIED.

Final demand letter to vacate the premises was sent by the remaining lessors.

Title to the property remains in the name of CRUZ

Filed a complaint for recovery of possession of the property - subject of the contract with damages, both moral and
compensatory and attorney’s fees and litigation expenses.

SAMBRANO (FOR GONZALES), upon motion, declared in default for failure to file an answer despite valid service of summons.

ISSUES SUBMITTED AT THAT TIME:

WON PAR 9 is a condition precedent before the defendant is to pay the down payment;

i. PAR 9: LESSORS (CRUZ) shall undertake to obtain a separate certificate over leased portion
to the LESSEE within a reasonable period of time which shall not in any case exceed four (4) years

ii. A new Contract shall be executed by the herein parties which shall be the same in all respects
with this Contract of Lease/Purchase insofar as the terms and conditions are concerned.
WON CRUZ can rescind the Contract of Lease/Purchase
WON CRUZ can terminate the Contract of Lease.
DECISION OF LOWER COURT: COMPLAINT DISMISSED.
WON PAR 9 IS A CONDITION PRECEDENT BEFORE DOWNPAYMENT? –YES.
i. PAR 9 indicates CRUZ to obtain TCT for GONZALES within 4 years.

1. Thus, before a deed of Sale can be entered into between the plaintiffs and the defendant, the plaintiffs have to obtain TCT in
favor of GONZALES

WON CRUZ can rescind the Contract of Lease/Purchase –NO.

i. Failure of the plaintiffs to secure TCT, as provided for in the contract, does not entitle them to
rescind the contract

1. ART 1191: 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 of the obligation, with the payment of damages in
either case. He may seek rescission, even after he has chosen fulfillment, if the latter should become impossible.’ The power to
rescind is given to the injured party.

2. Where the plaintiff is the party who did not perform, he is not entitled to insist upon the performance of the contract by the
defendant or recover damages by reason of his own breach

ii. CRUZ failed to comply with the conditions precedent after 2-1/2 years from the execution of the
contract so as to entitle them to rescind the contract. Although the contract stated that the same be done within 4 years from
execution, still, the defendant has to be assured that the land subject of the case will be transferred in his name without any
encumbrances

1. The failure to secure the Transfer Certificate of Title in favor of the defendant entitles not the plaintiffs but, rather, the
defendant to either rescind or to ask for specific performances.

WON CRUZ can terminate the Contract of Lease. –NO

i. Article 1670 of the New Civil Code states that:

1. If at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with the acquies[c]ence of
the lessor and unless a notice to the contrary by either party has previously been given, it is understood that there is an implied
new lease
10. CA REVERSED TRIAL COURT DECISION.

Transfer of title to the property cannot be interpreted as a condition precedent to the payment of the agreed purchase price
because such interpretation IS COUNTER-EXPLICIT and CONTRARY TO NORMAL COURTS OF SALE OF REAL
PROPERTIES.

Normal course: There must first be payment of the agreed purchase price before transfer of title to the vendee’s name can be
made.

Reason for this four (4) year period is [that] title to the property still remains in the name of the original owners, the
predecessors-in-interest of the herein appellants and [transferring] the title to their names and eventually to the lessee-
purchaser, appellee herein, would take quite some time.

GONZALES wanted to have the title to the property transferred in his name first before he exercises his option to purchase
allegedly in accordance with the ninth provision of the contract. But the ninth provision does not give him this right:

i. 4-year period asked for by the appellants within which to have title to the property transferred in
the appellee’s name will only start to run when the appellee exercises his option to purchase.

Since the appellee never exercised his option to purchase, then appellee is not entitled to have the title to the property
transferred in his name.”

ISSUES:
WON CA has gravely erred and committed grave abuse of discretion in the interpretation of [the] law between the parties.

WON CA committed serious mistakes in the finding of facts which resulted [in] departing from the usual course of judicial
proceedings.
For these issues to be resolved, petitioner asks this Court to answer the following questions:
Is there a conflict between the statement in paragraph 1 of the Lease/Purchase Contract and that [in] paragraph No. 9 thereof?

Is paragraph 9 of the Lease/Purchase Contract a condition precedent before petitioner could exercise his option to buy the
property?
Can plaintiff rescind or terminate the Contract of Lease after the one-year period?”

HELD:

PETITION GRANTED; appealed decision is REVERSED and SET ASIDE.

The Decision of the trial court is REINSTATED, but the award of moral damages and attorney’s fees is DELETED for lack of
basis. No costs.

WON CA has gravely erred and committed grave abuse of discretion in the interpretation of [the] law between the parties. –YES.
CA relied on a literal interpretation to the effect that the TCT should be obtained in the name of the petitioner-vendee.

i. It reasoned that the title could be transferred to the name of the buyer only after the completion
of the purchase. Thus, petitioner should first purchase the property before respondents could be obliged to transfer the TCT to
his name.

WE DISAGREE. PAR 9 does not say that the TCT should be obtained in the name of the lessee.

i. In fact, PAR 9 requires respondents to obtain a “TCT over the herein leased portion to the
LESSEE,” thereby showing that the crucial phrase “to the LESSEE” adverts to “the leased portion” and not to the name which
should appear in the new TCT.

ii. If GONZALES should purchase the property first before the title can be transferred to his name,
why should there be a waiting period of four years before the parties can execute the new contract evidencing the sale? Why
should the petitioner still be required to pay rentals after it purchases and pays for the property?
PAR 9 can only mean that the respondents should first obtain a TCT in their names, after which petitioner is given time to
purchase and pay for the property.

RECORDS SHOW THAT the land in question respondents’ predecessors-in-interest.

i. No showing whether respondents were the only heirs.

ii. They admit that extrajudicial proceedings were still ongoing.

iii. Hence, when the Contract of Lease/Purchase was executed, there was no assurance that the
respondents were indeed the owners of the specific portion of the lot that petitioner wanted to buy, and if so, in what concept
and to what extent.

iv. Thus, the clear intent of the ninth paragraph was for respondents to obtain a separate and
distinct TCT in their names.
1. 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.

2. Absent any title in their names, they could not have sold the disputed parcel of land.

Because the property remained registered in the names of their predecessors-in-interest, private respondents could validly sell
only their undivided interest in the estate of predecessor, the extent of which was however not shown in the records.

There being no partition of the estate thus far, there was no guarantee as to how much and which portion would be adjudicated
to respondents.
They could not deliver ownership or title to a specific portion of the yet undivided property.
Parties under PAR 9 wanted the specific portion of the land to be segregated, identified and specifically titled.

i. Hence, by the said Contract, the respondents as sellers were given a maximum of four years
within which to acquire a separate TCT in their names, preparatory to the execution of the deed of sale and the payment of the
agreed price in the manner described in PAR 9.
1. P50,000 advance given by GONZALES is proof of helping them expedite the transfer of the TCT to their names.

2. Ineluctably, intention of the parties was to have the title transferred first to respondents’ names as a condition for the
completion of the purchase.

WON CA committed serious mistakes in the finding of facts which resulted [in] departing from the usual course of judicial
proceedings.
PAR 9 required respondents to obtain a separate and distinct TCT in their names and not in the name of petitioner

i. Logically follows that it was condition precedent to the latter’s obligation to purchase and pay
for the land.

ii. CONDITION: every future and uncertain event upon which an obligation or provision is made to
depend.

1. It is a future and uncertain event upon which the acquisition or resolution of rights is made to depend by those who execute
the juridical act.
Without it, the sale of the property under the contract cannot be perfected, and petitioner cannot be obliged to purchase the
property.

When obligation assumed by a party to a contract is expressly subjected to a condition, the obligation cannot be enforced
against him unless the condition is complied with.

i. 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.

Can plaintiff rescind or terminate the Contract of Lease after the one-year period?” –NO. BECAUSE THEY HAVE NOT CAUSED
TRANSFER OF TCT TO THEIR NAMES.
There can be no rescission (or more properly, resolution) of an obligation as yet non-existent, because the suspensive condition
has not happened.
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 that 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 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, Ramona’s 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.
Romulo Coronel vs Court of Appeals , Conception Alcaraz
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.

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 that 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.

CIR vs Petron Corporation, G.R. No. 185568, March 21, 2012

Facts:

Respondent Petron is a corporation engaged in the production of petroleum products and is aBoard of Investment (BOI) –
registered enterprise in accordance with the provisions of the OmnibusInvestments Code of 1987 (E.O. 226) under Certificate of
Registration Nos. 89-1037 and D95-136. Duringthe period covering the taxable years 1995 to 1998, Petron had been an
assignee of several Tax CreditCertificates (TCCs) from various BOI-registered entities for which it utilized in the payment of its
excise taxliabilities for the taxable years 1995 to 1998.

The transfers and assignments of the said TCCs wereapproved by the Department of Finance’s One Stop Shop Inter-Agency
Tax Credit and Duty DrawbackCenter (DOF Center) composed of representatives from the appropriate government
agencies.Taking ground on a BOI letter issued on May 15, 1998 which states that ‘hydraulic oil, penetratingoil, diesel fuels and
industrial gases are classified as supplies and considered the suppliers thereof asqualified transferees of tax credit, Petron
acknowledged and accepted the transfers of the TCCs from thevarious BOI-registered entities. Such acceptance and use of the
TCCs as payment of its excise taxliabilities for the taxable years 1995 to 1998 had been continuously approved by the DOF as
well as theBIR’s Collection Program Division.

On January 30, 2002, Petitioner CIR issued an Assessment against petitioner for deficiency excisetaxes for the taxable years
1995 to 1998 in the total amount of P 739,003,036.32, inclusive of surchargesand interests on the ground that the TCCs utilized
by petitioner in the payment of excise taxes have beencancelled by the DOF for having been fraudulently issued and
transferred.

Thus, petitioner, through lettersdated August 31, 1999 and September 1, 1999, was required by the DOF Center to submit
copies of itssales invoices and delivery receipts showing the consummation of the sale transaction to certain TCCtransferors.

Instead of submitting the said documents, Petron filed a protest on February 27, 2002. On March27, 2002, CIR served a
Warrant of Distraint and/or Levy on petitioner to enforce payment of the taxdeficiencies without first acting on its letter- protest.
Construing the Warrant of Distraint and/or Levy as thefinal adverse decision of the BIR on its protest of the assessment, Petron
filed the petition before the CTASecond Division on April 2, 2002.

On May 4, 2007, the CTA Second Division promulgated a Decisionordering Petron to pay the reduced amount of
P600,769,353.95 representing deficiency excise taxes for thetaxable years 1995 to 1998 and 25% late payment surcharge and
20% delinquency interest per annum onthe said amount, computed from June 27, 2002 until the amount is fully paid.

Petron filed a motion forreconsideration but was denied. Aggrieved, Petron appealed the Decision to the CTA En Banc through a
Petition for Review.
The CTA en banc reversed and set aside the CTA Second Division and absolvedPetron from any deficiency excise tax liability
for taxable years 1995 to 1998.

The CIR moved for thereconsideration of the CTA En Banc Decision, but the motion was denied.

Issue:
Did CTA commit reversible error in holding that Petron is not liable for its excise tax liabilities from1995 to 1998?

Ruling: No.
Petron is a transferee in good faith and for value of the subject TCCs since the CIR had noallegation that there was a deviation
from the process for the approval of the TCCs, which Petron used aspayment to settle its excise tax liabilities for the years 1995
to 1998. The CIR’s claim that Petron haveparticipated in the fraudulent issuance and transfer of the TCCs is negated by the
Joint Stipulation it enteredinto with Petron in the proceedings before the CTA which states that Petron did not participate in
theprocurement and issuance of the TCCs, which TCCs were transferred to Petron and later utilized by Petronin payment of its
excise taxes. This stipulation of fact by the CIR amounts to an admission and, having been made by the partiesin a stipulation of
facts at pretrial, is treated as a judicial admission.

The joint stipulation made by the partiesconsequently obviated the opportunity of the CIR to present evidence on this matter, as
no proof is requiredfor an admission made by a party in the course of the proceedings. Thus, the CIR cannot be allowed
tochange its stand and renege on that admission.

Further, the post-audit report on which the CIR based its allegations does not have the effect of asuspensive condition that
would determine the validity of the TCCs.

As held in Petron v. CIR (G.R. No.180385, 28 July 2010, 626 SCRA 100), which is on all fours with the instant case, TCCs are
valid andeffective from their issuance and are not subject to a post-audit as a suspensive condition for their validity.

The implication on the instant case of the said earlier ruling is that Petron has the right to rely on the validityand effectivity of the
TCCs that were assigned to it. The validity of those TCCs should not depend on theresults of the DOF’s post-audit findings.
Taxes are the nation’s lifeblood through which government agencies continue to operate and withwhich the State discharges its
functions for the welfare of its constituents. As an exception, however, thisgeneral rule cannot be applied if it would work
injustice against an innocent party. Petron, in this case, wasnot proven to have had any participation in or knowledge of the
CIR’s allegation of the fraudulent transferand utilization of the subject TCCs. Respondent’s status as a transferee in good faith
and for value of theseTCCs has been established and even stipulated upon by petitioner.

Respondent was thereby providedample protection from the adverse findings subsequently made by the Center. Given the
circumstances, theCIR’s invocation of the non-applicability of estoppel in this case is misplaced

Central Philippine University vs CA

BELLOSILLO

FACTS
in 1939, Don Ramon Lopez, Sr. who was a member of the Board of Trustees of theCentral Philippine College (now Central
Philippine University) executed a deed of donation in favor of the latter of a parcel of land with the following annotations:

1.the land described shall be utilized by the CPU exclusively for theestablishment 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 saidcollege 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 beknown as the RAMON LOPEZ CAMPUS FUND to be used for improvements of said campus and erection of a
building thereon- on May 31, 1989, the heirs of Don Ramon Lopez, Sr. filed an action for annulment of donation, reconveyance
and damages against CPU alleging that:

1.since 1939 up to the time the action was filed the latter had notcomplied with the conditions of the donation

2.that CPU had in fact negotiated with the National Housing Authority toexchange the donated property with another land owned
by the latter- CPU, in its answer alleged that:

1.the right of the private respondents to file the action had prescribed

2.that it did not violate any of the conditions in the deed of donationbecause it never used the donated property for any other
purpose than thatfor which it was intended

3.that it did not sell, transfer, or convey it to any third party- the TC held that petitioner failed to comply with the conditions of the
donation anddeclared it null and void. It further directed the petitioner to execute a deed of reconveyance of the property in favor
of the heirs of the donor, namely, privaterespondents herein-- the CA ruled that the annotations at the back of petitioner’s
certificate of title wereresolutory conditions breach of which should terminate the rights of the donee thusmaking the donation
revocable. It also found that while the first conditionmandated petitioner to utilize the donated property for the establishment of
amedical school, the donor did not fix a period within which the condition must befulfilled, hence, until a period was fixed for the
fulfillment of the condition, petitionercould not be considered as having failed to comply with its part of the bargain,thus, it
remanded the case to the court of origin for the determination of the timewithin which the petitioner should comply with the first
condition annotated in thecertificate of title

ISSUES
1.WON the quoted annotations are onerous obligations and resolutory conditions

WON the right of the respondents to initiate an action has already prescribed

WON the Court may fix a period within which petitioner would establish a medicalcollege

HELD

Yes. Don Ramon Lopez, Sr. executed for a valuable consideration which isconsidered the equivalent of the donation itself.
Under Art. 1181 of the Civil Code,on conditional obligations, the acquisition of rights, as well as the extinguishment orloss of
those already acquired, shall depend upon the happening of the even whichconstitutes the condition.

No. The condition imposed by the donor depended upon the exclusive will of thedonee as to when this condition shall be
fulfilled. Since the time within which thecondition should be fulfilled depended upon the exclusive will of the petitioner, ithas been
held that its absolute acceptance and the acknowledgment of itsobligation provided in the deed of donation were sufficient to
prevent the statute of limitations from barring the action of private respondents upon the original contractwhich was the deed of
donation. In this case, the starting point from which theobligation to comply must be counted from the expiration of a reasonable
periodand opportunity for petitioner to fulfill what has been charged upon it by the donor.

No. Art. 1197, where the courts may fix the duration for fulfillment, cannot beapplied in this case. More than a reasonable period
of 50 years has already beenallowed petitioner to avail of the opportunity to comply with the condition even if itbe burdensome,
to make the donation in its favor forever valid, hence, there is nomore need to fix the duration of a term of the obligation when
such procedurewould be a mere technicality and formality and would serve no purpose than todelay or lead to an unnecessary
and expensive multiplication of suits.

SEPARATEOPINION

DAVIDE dissent
pointed out an inconsistency in the majority opinion’s description of the donationin question. In one part, it says that the donation
in question is onerous. Yet in thelast paragraph it states that the donation is basically a gratuitous one.- the discussion on
conditional obligations is unnecessary as there is no conditionalobligation to speak of in this case. The conditions imposed by
the donor determinesneither the existence nor the extinguishment of the obligations of the donor and thedonee with respect to
the donation. In fact, the conditions imposed are the veryobligations of the donation.- the court should fix the duration for the
performance of the conditions/obligationsin the donation. The mere fact that there is no time fixed as to when the conditionsof
the donation are to be fulfilled does not ipso facto mean that the statute of limitations will not apply anymore and the action to
revoke the donation becomesimprescriptible

Quijada VS CA

NATURE
Certiorari of CA’s decision
FACTS

April 5, 1956-Trinidad Quijada , together with her siblings, donated a two-hectareland to the Municipality of Talacogon, Agusan
del Sur with the condition that theparcel of land shall be used SOLELY and EXCLUSIVELY as part of the campus of
theproposed provincial high school of the said municipality.

Trinidad remained in possession of the land despite the donation.

July 29, 1962- Trinidad sold one hectare of the said land to Regalado Mondejar(respondent) without the benefit of a deed of sale
and evidenced only by receipts of payment.- 1980- the heirs of Trinidad (who at this time was dead already) instituted
acomplaint which was dismissed for failure to prosecute.

1987- the proposed provincial high school failed to materialize, the SangguniangBayan of the municipality enacted a resolution
reverting the two-hectare land donated back to the donors.- In the meantime, Mondejar sold portions of the land to respondents,
FernandoBautista, Rodolfo Goloran, Efren Guden, and Ernesto Goloran.

The heirs of Trinidad filed for this action (quieting of title, recovery of possessionand ownership of parcels of land with claim for
attorney’s fees and damages.)

According to the heirs, their mother Trinidad never sold, conveyed, transferred ordisposed of the property in question to any
person or entity much less to Mondejarsave the donation made to the Municipality of Talacogon.

Since the land still belonged to the municipality at the time of the alleged sale toMondejar, the supposed sale is null and void.

Mondejar claims that one hectare of the land was sold to him on July 29, 1962, andthe remaining one-hectare on installment
basis until fully paid. As a defense, heclaims that the action is barred by LACHES or has prescribed.

TC- Trinidad had no legal right to sell the land to Mondejar since the ownershipbelongs to the municipality and the deed of sale
executed by Trinidad to Mondejardid not carry with it the conformity and acquiescence of her children since she wasa widow and
63 yrs old at that time. So the respondents were asked to vacate theland and restore the possession to the heirs.- CA- reversed
the decision of the TC; sale to Mondejar was valid as Trinidadretained an inchoate interest on the lots by virtue of the automatic
reversion clausein the deed of donation.

ISSUE
WON the sale of the land to Mondejar was valid since the ownership of the said landbelonged to the municipality at the time of
the sale by virtue of the conditionaldeed of donation executed by Trinidad and her siblings and WON the action isbarred by
laches

HELD

The decision of the CA is upheld; sale is valid. No atty’s fees awarded; No moraldamages were likewise awarded.
Reasoning
On donation

When the Municipality’s acceptance of the donation was made known to thedonor, the Municipality became the new owner of
the donated property

donationbeing a mode of acquiring and transmitting ownership-notwithstanding thecondition imposed by the donee.

The condition was that if the school never materializes or that it is opened butdiscontinued or closed in the future, the property
shall revert to the donor.
The donation is perfected once the acceptance by the donee is made known to thedonor.

The resolutory condition is the construction of the school. It has been ruled thatwhen a person donates land to another on the
condition that the latter would buildupon the land a school, the condition imposed is not a condition precedent or asuspensive
condition but a resolutory one.

At the time of the sales, Trinidad could not have sold the lots since the ownershiphad been transferred by virtue of the deed of
donation. So long as the resolutorycondtion subsists and capable of fulfillment, the donation remains effective and thedonee
continues to be the owner subject only to the rights of the donor or hissuccessors-in-interest under the deed of donation.

Since no period was imposed by the donor on when the must the donee mustcomply with the condition, the latter remains the
owner so long as he has tried tocomply with the condition within a reasonable period. In this case, the Municipalitymanifested in
a resolution that they cannot comply with the condition of building aschool and the same was made known to the donor. This
was when the ownershipreverted back to Trinidad as provided in the reversion clause of the deed of donation.

The donor may have inchoate (meaning: imperfect) interest in the donatedproperty during the time that ownership of the land
has not reverted to her. Suchinchoate interest may be the subject of contracts including a contract of sale. Herewhat the donor
sold was the land itself which she no longer owned. It would havebeen different if what she sold were her interests over the
property under the deedof donation which is subject to the possibility of reversion of ownership arising fromthe non-fulfillment of
the resolutory condition.

On laches

The petitioners’ action in NOT YET barred by laches. It cannot be said that thepetitioners had slept on their rights for along time
since they initiated the action ayear after upon knowledge of the reversion of the property to the donor.

Laches presupposes failure or neglect for an unreasonable and unexplained lengthof time, to do that which, by exercising due
diligence, could have or should havebeen done earlier; it is negligence or omission to assert a right within a reasonabletime,
thus, giving rise to a presumption that the party entitled to assert it either hasabandoned or declined to assert it.

Essential elements:

a. Conduct on the part of the defendant, or of one under whom he claims, givingrise to the situation complained of;
b. delay in asserting complainant’s right after he had knowledge of the defendant’sconduct and after he has an opportunity to
sue;

c. Lack of knowledge or notice on the part of the defendant that the complainantwould assert the right on which he bases his
suit;

d. injury or prejudice to the defendant in the event relief is accorded to thecomplaint.- these elements are not present in this case
On sale-

Sale being a consensual contract is perfected by mere consent which ismanifested the moment there is a meeting of the minds
as to the offer andacceptance 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 thecontract of sale is not an element for its perfection.
Perfection per se does nottransfer ownership which occurs upon the actual or constructive delivery of thething sold.
The consummation of the perfected contract is another matter. It occurs upon theactual or constructive delivery of the subject
matter to the buyer when the seller orher successors-in-interest subsequently acquires ownership thereof.

LAO LIM VS CA
REGALADOOctober 31, 1990

NATURE

Petition to review the decision of the Court of Appeals

FACTS
Dy entered into a contract of lease with Lim foe a period of 3 years (1976-1979).After the stipulated term expired, Dy refused to
vacate the premises, hence Limfiled for an ejectment suit against Dy. The case was terminated by a judiciallyapproved
compromise agreement.

The compromise agreement provides “that the term of lease shall be renewedevery three years retroacting from Oct 1979 –
1982; after which the rental shall beraised automatically by 20% every three years for as long as the defendant (DY)needed the
premises and can meet and pay the said increases, the defendant togive notice of his intent to renew 60 days before the
expiration of the term.”

April 17, 1985 – petitioner advised that he would no longer renew the contractOctober 1985. On August 5, 1985, Dy informed
the petitioner in writing of hisintention to renew the contract of lease for another term. Lim advised that he didnot agree to a
renewal.

January 15, 1986 – Lim filed another ejectment suit which was dismissed on the grounds that

the lease contract has not expired being a continuous one theperiod whereof depended on upon the lessee’s need for the
premises and his ability to pay rents and

the compromise agreement constitutes res judicata.

On appeal, the respondent court affirmed the lower court’s judgment in toto.

ISSUES

WON the lease contract only depends on the party’s need for the premises andhis ability to pay the rents

WON the compromise agreement constitute res judicata

HELD
1.Ratio
The lease contract cannot be made to depend solely on the free anduncontrolled choice of the lessee.

Reasoning
The stipulation “for as long as the defendant needed the premises and can meetand pay the said increases” is purely
potestative. The continuance, effectivity andfulfillment of a contract of lease cannot be made to depend exclusively upon thefree
and uncontrolled choice of the lessee between continuing payment of therentals or not, depriving the owner of any say in the
matter.

Where the instrument is susceptible of two interpretations, the one which willmake it valid and legal should be adopted.

2.
Ratio
The second action for ejectment does not constitute res judicata. Reasoning
For a judgment be a bar to a subsequent case, it must be

(1) a final judgment,

(2)rendered by a court with jurisdiction over the subject matter of the parties,
(3) itmust be judgment on the merits, and

(4) there must be identity between the twocases as to parties, subject matter and cause of action.- The fourth is lacking in the
case at bar. There is no identity of subject matter andcause of action.
Disposition
Wherefore, the decision of respondent Court of Appeals is reversedand set aside. Private respondent is hereby ordered to
immediately vacate andreturn the possession of the leased premises subject of the present action to thepetitioner and to pay the
monthly rentals due thereon in accordance with thecompromise agreement until he has actually vacated the same

M.D. TAYLOR VS. UY TIENG PIAO AND TAN LIUAN& COMPANY

NATURE
Appeal from a judgment of CFI of Manila FACTS
Taylor contracted his services to Tan Liuan& Co as superintendent of an oilfactory which the latter contemplated establishing

The contract extended over 2 years and the salary was P600/month during thefirst year and P700/month during the second with
electric, light and water fordomestic consumption or in lieu thereof, P60/month

At this time, the machinery for contemplated factory had not been acquired,though ten expellers had been ordered from the US

It was understood that should the machinery to be installed fail, for any reason, toarrive in Manila within the period of 6 months,
the contract may be cancelled by theparty of the second part at its option, such cancellation not to occur before theexpiration of
such 6 months

The machinery did not arrive in Manila within the 6 months; the reason does notappear, but a preponderance of evidence show
that the defendants seeing that oilbusiness no longer promised large returns, either cancelled the order for machineryfrom
choice or were unable to supply the capital necessary to finance the project.

Defendants communicated to Taylor that they had decided to rescind the contract.

Taylor instituted this action to recover damages in the amount of P13k, coveringsalary and perks due and to become due

ISSUE

WON in a contract for the prestation of service, it is lawful for the parties to insert aprovision giving the employer the power to
cancel the contract in contingencywhich may be dominated by himself

HELD: YES

One of the consequences of the stipulation was that the employers were left in aposition where they could dominate the
contingency, and the result was about thesame as if they had been given an unqualified option to dispense with the servicesof
Taylor at the end of 6 months. But this circumstance does not make thestipulation illegal.

A condition at once facultative and resolutory may be valid even though thecondition is made to depend upon the will of the
obligor.

If it were apparent, or could be demonstrated that the defendants were underpositive obligation to cause the machinery to arrive
in Manila, they would of coursebe liable, in the absence of affirmative proof showing that the non-arrival of themachinery was
due to some cause not having its origin in their own act or will.
The contract, however, expresses no such positive obligation, and its existencecannot be implied in the face of the stipulation,
defining the conditions under whichthe defendants can cancel the contract.

CFI no error in rejecting Taylor’s claim in so far as damages are sought for theperiod subsequent to the expiration of 6 months,
but in assessing the damages duefor the six-month period, the trial judge overlooked the item of P60 (commutation of house
rent) This amount Taylor is entitled to recover in addition to P300 awardedby CFI.
RUSTAN PULP AND PAPER MILLS VS Intermediate Appellate Court

NATURE
Petition for review of the decision of the then Intermediate Appellate

Court.
FACTS

Rustan established a pulp and paper mill in Lanao del Norte in 1966.

Lluch, a holder of a forest products license, wrote to Rustan and offered to supplyraw materials. In response, petitioner Rustan
proposed, among other things, in aletter “That the contract to supply is not exclusive because Rustan shall have theoption to buy
from other suppliers who are qualified and holder of appropriategovernment authority or license to sell and dispose pulp wood."

On April 1968, they executed a contract of sale whereby Lluch agreed to sell, andRustan Pulp and Paper Mill, Inc. to pay the
price of P30.00 per cubic meter of pulpwood raw materials to be delivered at the buyer's plant.

In the bilateral undertaking, they stipulated the following:"That BUYER shall have the option to buy from other SELLERS…
thatBUYER shall not buy from any other seller whose pulp woods being sold shall havebeen established to have emanated from
the SELLER'S lumber and/or firewoodconcession. . . .And that SELLER has the priority to supply the pulp wood
materialsrequirement of the

BUYER;

“(Par 7)

That the BUYER shall have the right to stop delivery of the saidraw materials by the seller covered by this contract when supply
of the same shallbecome sufficient until such time when need for said raw materials shall havebecome necessary provided,
however, that the SELLER is given sufficient notice."

During the test run of the pulp mill, the machinery line had major defects whiledeliveries of the raw materials piled up, which
prompted the Japanese supplier of the machinery to recommend the stoppage of the deliveries.

The suppliers were informed to stop deliveries and Rustan sent a letter (datedSept 1968) to Lluch informing him that “the supply
of raw materials to us hasbecome sufficient and we will not be needing further delivery from you. As per theterms of our
contract, please stop delivery 30 days from today.” It was signed byDr. Romeo Vergara, the resident manager.

Lluch sought to clarify whether stoppage of delivery or termination of the contractof sale was intended, but the query was not
answered by petitioners. This allegedambiguity notwithstanding, Lluch and the other suppliers resumed deliveries afterthe series
of talks between Vergara and Lluch.

On January 23, 1969, a complaint for contractual breach was filed. The trial courtdismissed it. On appeal, the IAC modified the
judgment by directing Rustan, Tantoco and Vergara to pay respondents, jointly and severally, the sum of P30,000.00 as moral
damages and P15,000.00 as attorney's fees

ISSUES

WON the contractual provisions mentioned above as regards the stoppage of delivery when there issufficient supply of raw
materials are valid
WON Tantoco and Vergara should be personally liable

HELD

1. NO

The SC’s simple understanding of the literal import of par 7 of the obligation inquestion is that petitioners can stop delivery of
pulp wood from private respondentsif supply at the plant is sufficient as ascertained by petitioners, subject to redeliverywhen the
need arises as determined likewise by petitioners.
This is a potestativeimposition in the contract which must be obliterated for being invalid as it is purelydependent upon the will of
one party.

Though it is a legal truism that a condition which is both potestative and resolutorymay be valid even though that saving clause
is left entirely to the will of the obligor,the same cannot be said to apply in the present case.

Petitioners contend that they are within the right stoppage guaranteed by par 7. There is no doubt that the contract speaks
loudly about petitioners' prerogative butwhat diminishes the legal efficacy of such right is the condition attached to it whichis
dependent exclusively on will of the petitioner… for which reason, the SC treatedthe controversial stipulation as inoperative

2. NO.

The President and Manager of a corporation who entered into and signed acontract in his official capacity, cannot be made
liable thereunder in his individualcapacity in the absence of stipulation to that effect due to the personality of thecorporation
being separate and distinct from the persons composing it. Andbecause of this precept, Vergara's supposed non-participation in
the contract of salealthough he signed the letter dated Sept 30, 1968 is completely immaterial.

Thetwo exceptions contemplated by Article 1897 of the New Civil Code where agentsare directly responsible are absent and
wanting.

Disposition

The decision appealed from is MODIFIED in the sense that onlypetitioner Rustan Pulp and Paper Mills is ordered to pay moral
damages andattorney's fees as awarded by respondent Court.

ROMERO VS CA

VITUG November 23, 1995

FACTS

-Petitioner Virgilio R. Romero, his foreign partners decided to put up a centralwarehouse in Metro Manila on a land area of
approximately 2,000 square meters.

-The project was made known to several freelance real estate brokers.

-A day or so after the announcement, Alfonso Flores and his wife offered a parcel of land measuring 1,952 square meters
located in Barangay San Dionisio, Parañaque,Metro Manila, the lot was in the name of private respondent Enriqueta Chua vda.
DeOngsiong.

-Petitioner visited the property and, except for the presence of squatters in thearea, he found the place suitable for a central
warehouse.
-Flores spouses called on petitioner with a proposal that should he advance theamount of P50,000.00 which could be used in
taking up an ejectment case against the squatters, private respondent would agree to sell the property for only P800.00 per
square meter.

–-Petitioner expressed his concurrence. On 09 June 1988, a contract denominated"Deed of Conditional Sale," was executed
between petitioner and privaterespondent.

with the following terms and conditions:

"1. That the sum of FIFTY THOUSAND PESOS (P50,000.00) ONLY Philippine Currency,is to be paid upon signing and
execution of this instrument.

"2. The balance of the purchase price in the amount of (P1,511,600.00) ONLY shall be paid 45days after the removal of all
squatters from the above described property."

Upon full payment of the overall purchase price as aforesaid, VENDOR withoutnecessity of demand shall immediately sign,
execute, acknowledged (sic) anddeliver the corresponding deed of
absolute sale in favor of the VENDEE free from allliens and encumbrances and all Real Estate taxes are all paid and updated.

4.That if after 60 days from the date of the signing of this contract the VENDORshall not be able to remove the squatters from
the property being purchased, thedownpayment made by the buyer shall be returned /reimbursed by the VENDOR tothe
VENDEE.

5.That in the event that the VENDEE shall not be able to pay the VENDOR thebalance of the purchase price of (P1,511,600.00)
ONLY after 45 days from written notificationto the VENDEE of the removal of the squatters from the property being
purchased,the (P50,000, 00) previously paid as downpayment shall beforfeited in favor of the VENDOR.

6.Expenses for the registration such as registration fees, documentary stamp,transfer fee, assurances and such other fees and
expenses as may be necessary totransfer the title to the name of the VENDEE shall be for the account of the VENDEEwhile
capital gains tax shall be paid by the VENDOR.

Alfonso Flores, in behalf of private respondent, forthwith received andacknowledged a check for P50,000 002 from petitioner.-
Private respondent filed a complaint for ejectment (Civil Case No. 7579) againstMelchor Musa and 29 other squatter families
with the Metropolitan Trial Court of Parañaque.

-A few months later, or on 21 February 1989, judgment was rendered ordering thedefendants to vacate the premises. The
decision was handed down beyond the 60- day period (expiring 09 August 1988) stipulated in the contract. The writ of execution
of the judgment was issued, still later, on 30 March 1989.

-In a letter, dated 07 April 1989, private respondent sought to return the P50,000.00she received from petitioner since, she said,
she could not "get rid of the squatters"on the lot. Atty. Sergio A. F. Apostol, counsel for petitioner, in his reply of 17 April1989,
refused the tender and stated:

“Our client believes that with the exercise of reasonable diligence considering thefavorable decision rendered by the Court and
the writ of execution issued pursuant thereto, it is now possible to eject the squatters from the premises of the subject property,
for which reason, he proposes that he shall take it upon himself to eject the squatters, provided, that expenses which shall be
incurred by reason thereof shall be chargeable to the purchase price of the land .

ISSUE

WON the vendor may demand the rescission of a contract for the sale of a parcel of land for a cause traceable to his own failure
to have the squatters on the subjectproperty evicted within the contractually stipulated period

HELD

NO. Private respondent's failure "to remove the squatters from the property" withinthe stipulated period gives petitioner the right
to either refuse to proceed with theagreement or waive that condition in consonance with Article 1545 of the CivilCode."

This option clearly belongs to petitioner and not to private respondent.

-The undertaking required of private respondent does not constitute a "potestativecondition dependent solely on his will" that
might, otherwise, be void in accordancewith Article 1182 of the Civil Codebut a "mixed" condition "dependent not on thewill of
the vendor alone but also of third persons like the squatters and governmentagencies and personnel concerned." Where the so-
called "potestative condition" isimposed not on the birth of the obligation but on its fulfillment, only the condition isavoided,
leaving unaffected the obligation itself.
-In contracts of sale particularly, Article 1545 of the Civil Code, aforementioned,allows the obligee to choose between
proceeding with the agreement or waivingthe performance of the condition. Petitioner has waived the performance of
thecondition imposed on private respondent to free the property from squatters.
-Private respondent's action for rescission is not warranted. She is not the injuredparty. The right of resolution of a party to an
obligation under Article 1191 of theCivil Code is predicated on a breach of faith by the other party that violates thereciprocity
between them. It is private respondent who has failed in her obligationunder the contract. Petitioner did not breach the
agreement. He has agreed, in fact, to shoulder the expenses of the execution of the judgment in the ejectment caseand to make
arrangements with the sheriff to effect such execution.

In his letter of 23 June 1989, counsel for petitioner has tendered payment and demanded forthwiththe execution of the deed of
absolute sale. Parenthetically, this offer to pay, havingbeen made prior to the demand for rescission, assuming for the sake of
argumentthat such a demand is proper under Article 159223 of the Civil Code, would likewisesuffice to defeat private
respondent's prerogative to rescind thereunder.

BOYSAW VS. INTERPHIL PROMOTIONS Fernan March 20,1987

NATURE

Appeal from the decision of the court of first instance of Rizal, Br. V.

FACTS

On May 1, 1961, Boysaw and manager Ketchum signed with Interphil(represented by Sarreal) a contract to engage Flash Elorde
in a boxing match atRizal Memorial Stadium on Sept 30, 1961 or not later than 30 days should apostponement be mutually
agreed upon. Boysaw, accdg to contract, should notengage in other bouts prior to the contest.

Interphil signed Elorde to a similar agreement.

Boysaw fought and defeated Louis Avila in Nevada.

Ketchum assigned to Amado Araneta his managerial rights, who later transferredthe rights to Alfredo Yulo.

Sarreal wrote to Games and Amusement Board (GAB) regarding this switch of managersbec they weren’t notified.

GAB called for conferences and decided to schedule the Elorde-Boysaw bout onNov 4, 1961. USA National Boxing Assoc
approved.

Sarreal offered to move the fight to Oct 28 for it to be w/in the 30 day allowablepostponement in the contract. Yulo refused. He
was willing to approve the fight onNov 4 provided it will be promoted by a certain MamertoBesa.

The fight contemplated in the May 1 contract never materialized. Boysaw and Yulo sued Interphil, Sarreal and Nieto.

Boysaw was abroad when he was scheduled to take the witness stand. Lowercourt reset the trial. Boysaw was still absent on
the later date. Court reset. On thethird instance, a motion for postponement was denied.

Boysaw and Yulo moved for a new trial, but it was denied. Hence, this appeal.
ISSUES
WON there was a violation of the May 1 contract and if so, who was guilty
WON there was legal ground for postponement of the fight

WON lower court erred in refusing postponement of the trial for 3rdtime
WON lower court erred in denying new trial

WON lower court erred in awarding appellees damages

HELD

Boysaw violated the contract when he fought with Avila. Civil Code provides, thepower to rescind obligations is implied, in
reciprocal ones, (as in this case) in caseone of the obligors should not comply w/ what is incumbent upon him.Another violation
was made in the transfers of managerial rights. These were infact novations which, to
be valid, must be consented to by Interphil. When acontract is unlawfully novated, the aggrieved creditor may not deal with
thesubstitute.

The appellees could have opted to rescind or refuse to recognize the newmanager, but all they wanted was to postpone the fight
owing to an injury Elordesustained. The desire to postpone the fight is lawful and reasonable. The GAB did not act arbitrarily in
acceding to the request to reset the date of thefight and Yulo himself agreed to abide by the GAB ruling. The appellees offered
to move the fight w/in the 30 day period for postponementbut this was refused by the appellants, notwithstanding the fact that by
virtue of the appellants’ violations, they have forfeited any right to the enforcement of thecontract.

The issue of denial of postponement of trial was raised in another petition forcertiorari and prohibition. It can’t be resurrected in
this case.

The court was correct in denying new trial. The alleged newly discoveredevidence are merely clearances from clerk of court,
which can’t alter the result of thetrial.

Because the appellants willfully refused to participate in the final hearing andrefused to present documentary evidence, they
prevented themselves from objectingto or presenting proof contrary to those adduced by the appellees.

DEIPARINE JR V CA , .
CRUZ April ; 23, 1993
NATURE
Petition for review of decision of CA

FACTS

Spouses Carungay entered into an agreement withDeiparine for the construction of a 3-storey dormitory. The Carungays agreed
to pay Php970K, and Deiparinebound himself to erect the building in strict accordance to the plans and specifications. In the
General Conditions and Specifications document, the minimum acceptable compressive strength of the building was set at
3,000 psi (pounds per square inch).

However, the Carungays found out that Deiparine was deviating fromthe plans and specifications, thus impairing the strength
and safety of the building.

The spouses even issued a memorandum complaining that the construction workswere faulty and done haphazardly mainly due
to lax supervision coupled withinexperienced and unqualified staff. The memorandum was ignored.

After several conferences, the parties agreed to conduct cylinder tests to ascertaincompliance with safety standards. Carungay
suggested core testing (a more reliabletest of safety and strength), and although Deiparine was relunctant at first, he

agreed to it and even promised that should the structure fail the test, he wouldshoulder the test expenses. The core test was
conducted, and the building wasfound to be structurally defective.

The spouses then filed in the RTC for rescission of the construction contract andfor damages. Deiparine alleged that RTC did
not have jurisdiction for constructioncontracts are now cognizable by the Philippine Construction Development Board.

RTC declared the contract rescinded, Deiparine to have forfeited his expenses in theconstruction, and ordered Deiparine to
reimburse the spouses for the core testingand restore the premises to their former condition before the construction began.

CA affirmed RTC.
ISSUES
WON RTC had jurisdiction over the case
WON rescission is the proper remedy

HELD

Yes. Firstly, there is no Philippine Construction Development Board in existence.

There is however, a Philippine Domestic Construction Board (PDCB), but this body has jurisdiction to settle claims and disputes
in the implementation of PUBLIC construction contracts (only), and thus
does not have jurisdiction over private construction contracts. (Deiparine’s counsel is even held in contempt of court
forchanging the wording of the relevant provision in the law, making it appear that thePDCB had jurisdiction over the instant
case.)

2. Yes.

The facts show that Deiparine deliberately deviated from the specifications of the Carungays (changing the minimum strength,
concrete mixture, etc.), possibly toavoid additional expenses so as to avoid reduction in profits. His breach of duty constituted a
substantial violation of the contract, which is correctible by judicial rescission.

Particularly for reciprocal obligations, Art.1191 CC provides that: “The power torewind obligations is implied in reciprocal ones,
in case one of the obligors shouldnot comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of theobligation, with the payment of damages in either
case. He may also seekrescission, even after he has chosen fulfillment, if the latter should becomeimpossible.

The court shall decree the rescission claimed, unless there be just cause authorizingthe fixing of a period.”

Clearly, the construction contract falls squarely under the coverage of Art.1191because it imposes upon Deiparine the
obligation to build the structure and uponthe Carungays the obligation to pay for the project upon its completion.

Art.1191 is not predicated on economic prejudice to one of the parties but onbreach of faith by one of them that violates the
reciprocity between them. Theviolation of reciprocity between the parties, to wit, the breach caused by Deiparine'sfailure to
follow the stipulated plans and specifications, has given the Carungayspouses the right to rescind or cancel the contract.

PLDT v Jeturian

Facts:

 PLDT adopted in 1923 a Plan for Employees’ Pension.

 Condition of pension: If they reach the age of 60 and served for 20 years.

 In 1945 the BOD adopted a resolution discontinuing the pension plan – some retirees did not get the pension because they did not satisfy the conditions.

 PLDT argued that employees cannot compel them to continue program when it was based on expectancy.

Issue:

WON the pre-war employees are entitled to the pension.

Held:

Yes. But with the exception of those who died or left before the outbreak of the war. The pension plan was not a gratuity but an inducement for employees to
continue indefinitely in service. The plan ripened into a binding contract upon its implied acceptance of the employees. Acceptance is inferred from their entering
the employ of the company and staying after the plan was made known. PLDT argues that it can only be held liable under the conditions expressly set in the
pension plan. But the Court held that the Company that violated the contract with its employees, by discontinuing the plan without their consent, is not in the
position to insist upon the terms of the very contract they have breached.

PLDT vs. Jeturian—Pension bago gera.

PLDT adopted in 1923 a Plan for Emloyees Pension. In 1945 the BOD adopted a resolution discontinuing the pension plan. Hence this action of Resp.
Issue: WON the pre-war employees are entitled to the pension.

Held: Yes. But with the exception of those who died or left before the outbreak of the war. The pension plan was not a gratuity but an inducement for employees
to continue indefinitely in service. The plan ripened into a binding contract upon its implied acceptance of the employees. Acceptance is inferred from their
entering the employ of the company and staying after the plan was made known. PLDT argues that it can only be held liable under the conditions expressly set
in the pension plan. But the Court held that the Company that violated the contract with its employees, by discontinuing the plan without their consent, is not in
the position to insist upon the terms of the very contract they have breached.

PLDT vs Jeturian

Policy that employees who serve 20 years and reaching 60 yrs old. shall get a retirement benefit was abolished. Employees who waited to be retired will not
receive the benefit. The trial court said it is a form of Constructive fulfilment. PLDT said that the right was only an expectancy. According to the SC there is an
action to preserve the right in a suspensive condition situation.

--- Subsequently, or on December 22, 1951, Crispin Jeturian and about sixty-three (63) other persons, who had served the Company as its prewar employees,
instituted in the Court of Industrial Relations a proceeding for the collection of their proportionate shares in said Employees' Pension Plan, which had been
discontinued by a resolution dated November 6, 1945, unilaterally taken by the Board of Directors of the Company, to be effective retroactively as of January 1,
1942. In due course, a decision was, on February 23, 1954, rendered in said proceeding, docketed as Case No. 639-V of the Court of Industrial Relations,
directing payment to the petitioners therein of their respective proportionate shares in the aforementioned Employees' Pension Plan, as well as — to those who
had not received their 30-day notice of dismissal from the service of the Company before the resumption of its business operations in 1946 — a severance pay
equivalent to one month salary. With a slight modification, immaterial to the case at bar, said decision was affirmed by the Supreme Court in Philippine Long
Distance Telephone Co. vs. Jeturian, et al., G.R. No. L-7756, decided on June 20, 1955.

Central Philippine University vs. Court of Appeals

G.R. No. 112230. July 17, 1995
246 SCRA 511

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.

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. The court a quo further
directed petitioner to execute a deed of the reconveyance of the property in favor of the heirs of the donor, namely, private respondents herein.

Petitioner appealed to the Court of Appeals which on 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.

The appellate court also found that while the first condition mandated petitioner to utilize the donated property for the establishment of a medical school, the
donor did not fix a period within which the condition must be fulfilled, hence, until a period was fixed for the fulfillment of the condition, petitioner could not be
considered as having failed to comply with its part of the bargain. Thus, the appellate court rendered its decision reversing the appealed decision and remanding
the case to the court of origin for the determination of the time within which petitioner should comply with the first condition annotated in the certificate of title.

Petitioner now alleges that the Court of Appeals erred: (a) in holding that the quoted annotations in the certificate of title of petitioner are onerous obligations
and resolutory conditions of the donation which must be fulfilled non-compliance of which would render the donation revocable; (b) in holding that the issue of
prescription does not deserve "disquisition;" and, (c) in remanding the case to the trial court for the fixing of the period within which petitioner would establish a
medical college. 2
ISSUE:
1) WON petitioner failed to comply the resolutely conditions annotated at the back of petitioner’s 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.