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Enrique Abad vs. Goldloop Properties, Inc.

FACTS:
Petitioners were owners of 13 parcels of titled agricultural land in Tanza, Cavite. Goldloop
Properties (GP) entered into a Deed of Conditional Sale with petitioners to buy the entire
land area for P34, 815,300. GP entered the contract by paying an earnest money of P1,
000,000 to the petitioners. Upon signing the contract, GP was obliged to pay P6, 765,660 as
first payment on August 17, 1997. They are also obliged to pay the remaining balance of
P27, 049,640 on or before December 31, 1997 as full payment. However, GP failed to pay on
the stipulated periods. Pursuant to Paragraph 8 of the contract, if GP fails to comply with its
obligation, they shall request for an extension of the contract. If they fail to comply within
the specified extension period, the earnest money would be forfeited in favor of the
petitioners, while the first payment shall be returned to GP. A year later, GP notified the
petitioners of its intention to withdraw from the contract since it was adversely affected by
economic conditions, and thus, they demand the return of the first payment.
Petitioners contend that they are not obliged to return the first payment because GP did not
request for an extension within the stipulated period. Thus, GP has no right to demand
refund on the first payment.
On the other hand, respondents aver that the sale did not materialize, the obligation of
petitioners to return the first payment became unqualified and unconditional. Pursuant to
the contract, the petitioners are only entitled to the earnest money, and not the first
payment.
Petitioners now contend that the remedy available GP is not to demand the first payment,
but to ask the court to fix the period within which to return the first payment, pursuant to
Article 1197 of the Civil Code. While there was no period indicated in the contract, a period
was intended by the parties.
ISSUE:
Is the obligation of petitioners to return the first payment an unconditional obligation, hence,
demandable at once?
Is there a need for the Court to fix the duration of the period?
DECISION:
1. YES. The return of the first payment is a pure or unconditional obligation, hence,
demandable at once. Under Article 1179, pure obligations or those without a condition or
term, are demandable at once. Paragraph 8 of the contract is clear on this: the first
payment xxx shall be returned to the BUYER without any additional charges to the SELLER.
In view of GPs failure to comply with its obligation, its earnest money is forfeited in favor of
the petitioners, while the first payment should be returned to GP.
2. NO, theres no need for the Court to fix the duration of the period because there is no
showing that the parties had intended such a period and there are no evidences presented
to prove such intent. Thus, Article 1197 will not apply. Indeed, the parties to a contract are

bound by their agreement, considering that obligations arising from contracts have the force
of law between the contracting parties and should be complied with in good faith.

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