Limketkai Sons Milling Inc. v.

CA
FACTS:
Phil.Remnants Co. constituted BPI to manage, administer and
sell its real property located in Pasig, Metro Manila.
BPI gave authority to real estate broker Pedro Revilla Jr. to
sell the lot for P1000 per square meter.
Revilla contacted Alfonso Lim of petitioner company who
agreed to buy the land and thereafter was allowed to view the
land.
Lim and Alfonso LImketkai went to BPI to confirm the sale and
both finally agreed that the land would be sold for P1000 per
square meter. Notwithstanding the agreement, Alfonso asked
BPI if it was possible to pay in terms provided that in case the
term is disapproved, the price shall be paid in cash.
Two or three days later, petitioner learned that its offer to pay
on terms had been frozen. Alfonso Lim went to BPI on July 18,
1988 and tendered the full payment of P33,056,000.00
to Albano. The payment was refused because Albano stated
that the authority to sell that particular piece of property
in Pasig had been withdrawn from his unit
An action for specific performance with damages was
thereupon filed on August 25, 1988 by petitioner against BPI.
In the course of the trial, BPI informed the trial court that it
had sold the property under litigation to NBS

ISSUE:
WON there was a perfected contract of sale between Limketkai
Co. and BPI.

HELD:
There was already a perfected contract of sale because both
parties already agreed to the sale of P1000/sq.m. Even if Lim
tried to negotiate for a payment in terms, it is clear that if it
be disapproved, the payment will be made in cash.
The perfection of the contract took place when Aromin
and Albano, acting for BPI, agreed to sell and Alfonso Lim with
Albino Limketkai, acting for petitioner Limketkai, agreed to
buy the disputed lot at P1,000.00 per square meter. Aside
from this there was the earlier agreement between petitioner
and the authorized broker. There was a concurrence of offer
and acceptance, on the object, and on the cause thereof.

The phases that a contract goes through may be summarized
as follows:
a. preparation, conception or generation, which is the period
of negotiation and bargaining, ending at the moment of
agreement of the parties;
b. perfection or birth of the contract, which is the moment
when the parties come to agree on the terms of the contract;
and
c. consummation or death, which is the fulfillment or
performance of the terms agreed upon in the contract



Coronel v. CA
FACTS:
Coronel et al. consummated the sale of his property located
in Quezon City to respondent Alcaraz. Since the title of the
property was still in the name of the deceased father of the
Coronels, they agreed to transfer its title to their name upon
payment of the down payment of 50K. and thereafter an
absolute deed of sale will be executed.

Alcarazs mother paid the down payment in behalf of her
daughter and as such, Coronel made the transfer of title to
their name. Notwithstanding this fact, Coronel sold the
property to petitioner Mabanag and rescinded its prior contract
with Alcaraz.

ISSUE:
WON the rescission of the first contract between Coronel and
Alcaraz is valid.

HELD:
The case is a contract of sale subject to a suspensive condition
in which consummation is subject only to the successful
transfer of the certificate of title from the name of petitioners'
father, to their names. Thus, the contract of sale became
obligatory.

With regard to double sale, the rule that the first in time,
stronger in right should apply. The contention of the petitioner
that she was a buyer in good faith because the notice of lis
pendens in the title was annotated after she bought the
property is of no merit. In 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.

The ruling should be in favor of Alcaraz because Mabanag
registered the property two months after the notice of lis
pendens was annotated in the title and hence, she cannot be a
buyer in good faith.



Toyota Shaw v. CA
FACTS:
Private respondent Luna L. Sosa wanted to purchase a Toyota
Lite Ace. With his his son, Gilbert, he went to the Toyota office
at Shaw Boulevard, Pasig and met Popong Bernardo, a sales
representative of Toyota. Sosa emphasized to Bernardo that
he needed the Lite Ace not later than 17 June 1989. Bernardo
assured him that a unit would be ready for pick up at 10:00
a.m. on that date. They contracted an agreement on the
delivery of the unit and that the balance of the purchase price
would be paid by credit financing through B.A. Finance. The
next day, Sosa and Gilbert delivered the downpayment and
met Bernardo who then accomplished a printed Vehicle Sales
Proposal (VSP) in which the amount was filled-up but the
spaces provided for Delivery Terms were not filled-up.
However, on 17 June 1989, at 9:30 am, Bernardo called
Gilbert to inform him that the car could not be delivered
because nasulot ang unit ng ibang malakas.

Toyota contends, on the other hand, that the Lite Ace was not
delivered to Sosa because of the disapproval by B.A. Finance
of the credit financing application of Sosa. Toyota then gave
Sosa the option to purchase the unit by paying the full
purchase price in cash but Sosa refused. Sosa asked that his
down payment be refunded. Toyota did so on the very same
day by issuing a Far East Bank check for the full amount,
which Sosa signed with the reservation, without prejudice to
our future claims for damages. Thereafter, Sosa sent two
letters to Toyota. In the first letter, he demanded the refund
of the down payment plus interest from the time he paid it.
The second, he demanded one million pesos representing
interest and damages, both with a warning that legal action
would be taken if payment not paid. Toyotas refused to
accede to the demands of Sosa. The latter filed with RTC a
complaint against Toyota for damages under Articles 19 and
21 of the Civil Code. In its answer to the complaint, Toyota
alleged that no sale was entered into between it and Sosa,
that Bernardo had no authority to sign for and in its behalf. It
alleged that the VSP did not state the date of delivery.

ISSUE:
Whether or not there was a perfected contract of sale.

HELD:
There was no perfected contract of sale.
What is clear from the agreement signed by Sosa and Gilbert
is not a contract of sale. No obligation on the part of Toyota to
transfer ownership of a determinate thing to Sosa and no
correlative obligation on the part of the latter to pay therefore
a price certain appears therein. The provision on the down
payment of PIOO,OOO.OO made no specific reference to a
sale of a vehicle. If it was intended for a contract of sale, it
could only refer to a sale on installment basis, as the VSP
executed the following day con finned. Nothing was mentioned
about the full purchase price and the manner the installments
were to be paid. A definite agreement on the manner of
payment of the price is an essential element in the formation
of a binding and enforceable contract of sale. This is so
because the agreement as to the manner of payment goes,
into the price such that a disagreement on the manner of
payment is tantamount to a failure to agree on the price.
Definiteness as to the price is an essential element of a
binding agreement to sell personal property.



Ang Yu Asuncion v. CA
FACTS:
Petitioners allege that they are tenants or lessees of
residential and commercial spaces owned by defendants in
Ongpin Street, Binondo, Manila since 1935 and that on several
occasions before October 9, 1986, defendants informed
plaintiffs that they are offering to sell the premises and are
giving them priority to acquire the same. During the
negotiations, Bobby Cu Unjieng offered a price of P6-million
while petitioners made a counter offer of P5-million. On
October 24, 1986, petitioners asked the respondents to
specify the terms and conditions of the offer to sell. Petitioners
now raise that since respondents failed to specify the terms
and conditions of the offer to sell and because of information
received that the latter were about to sell the property,
plaintiffs were compelled to file the complaint to compel
defendants to sell the property to them.
The trial court found that the respondents offer to sell was
never accepted by the petitioners for the reason that they did
not agree upon the terms and conditions of the proposed sale,
hence, there was no contract of sale at all. The Court of
Appeals affirmed the decision of the lower court. This decision
was brought to the Supreme Court by petition for review on
certiorari which subsequently denied the appeal on May 6,
1991 for insufficiency in form and substance.

On November 15, 1990, while CA-G.R. CV No. 21123 was
pending consideration by this Court, the Cu Unjieng spouses
executed a Deed of Sale transferring the property in question
to herein respondent Buen Realty and Development
Corporation, for P15,000,000.00. On July 1, 1991, respondent
as the new owner of the subject property wrote a letter to the
petitioners demanding that the latter vacate the premises. On
July 16, 1991, the petitioners wrote a reply to respondent
corporation stating that the latter brought the property
subject to the notice of lis pendens regarding Civil Case No.
87-41058 annotated on TCT No. 105254/T-881 in the name of
the Cu Unjiengs.

The lessees filed a Motion for Execution dated August 27,
1991 of the Decision in Civil Case No. 87-41058 as modified
by the Court of Appeals in CA-G.R. CV No. 21123.

On August 30, 1991, the RTC ordered the Cu Unjiengs to
execute the necessary Deed of Sale of the property in
litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong and
Arthur Go for the consideration of P15 Million pesos in
recognition of petitioners right of first refusal and that a new
Transfer Certificate of Title be issued in favor of the buyer.
The court also set aside the title issued to Buen Realty
Corporation for having been executed in bad faith. On
September 22, 1991, the Judge issued a writ of execution.
On 04 December 1991, the appellate court, on appeal to it by
private respondent, set aside and declared without force and
effect the above questioned orders of the court a quo.

ISSUE
Whether or not Buen Realty can be bound by the writ of
execution by virtue of the notice of lis pendens, carried over
on TCT No. 195816 issued in the name of Buen Realty, at the
time of the latters purchase of the property on 15 November
1991 from the Cu Unjiengs.

HELD

We affirm the decision of the appellate court.
In the law on sales, the so-called right of first refusal is an
innovative juridical relation. Needless to point out, it cannot
be deemed a perfected contract of sale under Article 1458 of
the Civil Code.
In a right of first refusal, while the object might be made
determinate, the exercise of the right, however, would be
dependent not only on the grantors eventual intention to
enter into a binding juridical relation with another but also on
terms, including the price, that obviously are yet to be later
firmed up. Prior thereto, it can at best be so described as
merely belonging to a class of preparatory juridical relations
governed not by contracts (since the essential elements to
establish the vinculum juris would still be indefinite and
inconclusive) but by, among other laws of general application,
the pertinent scattered provisions of the Civil Code on human
conduct.

The final judgment in Civil Case No. 87-41058, it must be
stressed, has merely accorded a right of first refusal in favor
of petitioners. The consequence of such a declaration entails
no more than what has heretofore been said. In fine, if, as it
is here so conveyed to us, petitioners are aggrieved by the
failure of private respondents to honor the right of first
refusal, the remedy is not a writ of execution on the
judgment, since there is none to execute, but an action for
damages in a proper forum for the purpose.
Furthermore, Buen Realty, not having been impleaded in Civil
Case No. 87-41058, cannot be held subject to the writ of
execution issued by respondent Judge, let alone ousted from
the ownership and possession of the property, without first
being duly afforded its day in court.


Fule v. CA
Facts:
Gregorio Fule, a banker and a jeweller, offered to sell his
parcel of land to Dr. Cruz in exchange for P40,000 and a
diamond earring owned by the latter. A deed of absolute sale
was prepared by Atty. Belarmino, and on the same day Fule
went to the bank with Dichoso and Mendoza, and Dr. Cruz
arrived shortly thereafter. Dr. Cruz got the earrings from her
safety deposit box and handed it to Fule who, when asked if
those were alright, nodded and took the earrings. Two hours
after, Fule complained that the earrings were fake. He files a
complaint to declare the sale null and void on the ground of
fraud and deceit.

Issue:
Whether the sale should be nullified on the ground of fraud

Held:
A contract of sale is perfected at the moment there is a
meeting of the minds upon the thing which is the object of the
contract and upon the price. Being consensual, a contract of
sale has the force of law between the contracting parties and
they are expected to abide in good faith by their respective
contractual commitments. It is evident from the facts of the
case that there was a meeting of the minds between petitioner
and Dr. Cruz. As such, they are bound by the contract unless
there are reasons or circumstances that warrant its
nullification.

Contracts that are voidable or annullable, even though there
may have been no damage to the contracting parties are: (1)
those where one of the parties is incapable of giving consent
to a contract; and (2) those where the consent is vitiated by
mistake, violence, intimidation, undue influence or fraud. The
records, however, are bare of any evidence manifesting that
private respondents employed such insidious words or
machinations to entice petitioner into entering the contract of
barter. It was in fact petitioner who resorted to machinations
to convince Dr. Cruz to exchange her jewelry for the Tanay
property.

Furthermore, petitioner was afforded the reasonable
opportunity required in Article 1584 of the Civil Code within
which to examine the jewelry as he in fact accepted them
when asked by Dr. Cruz if he was satisfied with the same. By
taking the jewelry outside the bank, petitioner executed an act
which was more consistent with his exercise of ownership over
it. This gains credence when it is borne in mind that he
himself had earlier delivered the Tanay property to Dr. Cruz
by affixing his signature to the contract of sale. That after two
hours he later claimed that the jewelry was not the one he
intended in exchange for his Tanay property, could not sever
the juridical tie that now bound him and Dr. Cruz. The nature
and value of the thing he had taken preclude its return after
that supervening period within which anything could have
happened, not excluding the alteration of the jewelry or its
being switched with an inferior kind.

Ownership over the parcel of land and the pair of emerald-cut
diamond earrings had been transferred to Dr. Cruz and
petitioner, respectively, upon the actual and constructive
delivery thereof. Said contract of sale being absolute in
nature, title passed to the vendee upon delivery of the thing
sold since there was no stipulation in the contract that title to
the property sold has been reserved in the seller until full
payment of the price or that the vendor has the right to
unilaterally resolve the contract the moment the buyer fails to
pay within a fixed period.

While it is true that the amount of P40,000.00 forming part of
the consideration was still payable to petitioner, its
nonpayment by Dr. Cruz is not a sufficient cause to invalidate
the contract or bar the transfer of ownership and possession
of the things exchanged considering the fact that their
contract is silent as to when it becomes due and demandable.


Gaite v. Fonacier
Facts: Defendant-appellant Fonacier was the owner/holder of
11 iron lode mineral claims, known as the Dawahan Group,
situated in Camrines Norte.
By Deed of Assignment, Respondent constituted and
appointed plaintiff-appellee Gaite as attorney-in-fact to enter
into contract for the exploration and development of the said
mining claims on. On March 1954, petitioner executed a
general assignment conveying the claims into the Larap Iron
Mines, which owned solely and belonging to him. Thereafter,
he underwent development and the exploitation for the mining
claims which he estimates to be approximately 24 metric tons
of iron ore.
However, Fonacier decide to revoke the authority given to
Gaite, whereas respondent assented subject to certain
conditions. Consequently a revocation of Power of Attorney
and Contract was executed transferring P20k plus royalties
from the mining claims, all rights and interest on the road and
other developments done, as well as , the right to use of the
business name, goodwill, records, documents related to the
mines. Furthermore, included in the transfer was the rights
and interest over the 24K+ tons of iron ore that had been
extracted. Lastly the balance of P65K was to be paid for
covering the first shipment of iron ores.
To secure the payment of P65k, respondent executed a surety
bond with himself as principal, the Larap Mines and Smelting
Co. and its stockholder as sureties. Yet, this was refused by
petitioner. Appelle further required another bond underwritten
by a bonding company to secure the payment of the balance.
Hence a second bond was produced with Far Eastern Surety as
an additional surety, provided the liability of Far Eastern would
only prosper when there had been an actual sale of the iron
ores of not less than the agreed amount of P65k, moreover,
its liability was to automatically expire on December 1955.
On December 1955, the second bond had expired and no sale
amounting to the stipulation as prior agreed nor had the
balance been paid to petitioner by respondent. Thus such
failure, prompted petitioner to file a complaint in the CFI of
Manila for the payment of the balance and other damages.

The Trial Court ruled in favor of plaintiff ordering defendant to
pay the balance of P65k with interest. Afterwards an appeal
was affected by the respondent where several motions were
presented for resolution: a motion for contempt; two motions
to dismiss the appeal for becoming moot and academic;
motion for a new trial, filed by appellee Gaite. The motion for
contempt was held unmeritorious, while the rest of the
motions were held unnecessary to resolve

Issue: Whether or not the Lower Court erred in holding the
obligation of appellant Fonacier to pay appelle Gaite the
balance of P65k, as one with a period or term and not one
with a suspensive condition; and that the term expired on
December 1955

Held: No error was found, affirming the decision of the lower
court. Gaite acted within his rights in demanding payment and
instituting this action one year from and after the contract was
executed, either because the appellant debtors had impaired
the securities originally given and thereby forfeited any further
time within which to pay; or because the term of payment was
originally of no more than one year, and the balance of P65k,
became due and payable thereafter.

The Lower Court was legally correct in holding the shipment or
sale of the iron ore is not a condition or suspensive to the
payment of the balance of P65k, 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.
The sale of the ore to Fonacier was a sale on credit, and not
an aleatory contract where the transferor, Gaite, would
assume the risk of not being paid at all; and that the previous
sale or shipment of the ore was not a suspensive condition for
the payment of the balance of the agreed price, but was
intended merely to fix the future date of the payment.

While as to the right of Fonacier to insist that Gaite should
wait for the sale or shipment of the ore before receiving
payment; or, in other words, whether or not they are entitled
to take full advantage of the period granted them for making
the payment. The appellant had indeed 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 (first bond).

Under paragraphs 2 and 3 of Article 1198 of the Civil Code of
the Philippines: ART. 1198. The debtor shall lose every right to
make use of the period: (2) When he does not furnish to the
creditor the guaranties or securities which he has promised.
(3) When by his own acts he has impaired said guaranties or
securities after their establishment, and when through
fortuitous event they disappear, unless he immediately gives
new ones equally satisfactory.

Appellants' failure to renew or extend the surety company's
bond upon its expiration plainly impaired the securities given
to the creditor (appellee Gaite), unless immediately renewed
or replaced.

Nevertheless, there is no merit in appellants' argument that
Gaite's acceptance of the surety company's bond with full
knowledge that on its face it would automatically expire within
one year was a waiver of its renewal after the expiration date.
No such waiver could have been intended, for Gaite stood to
lose and had nothing to gain barely; and if there was any, it
could be rationally explained only if the appellants had agreed
to sell the ore and pay Gaite before the surety company's
bond expired on December 8, 1955. But in the latter case the
defendants-appellants' obligation to pay became absolute
after one year from the transfer of the ore to Fonacier by
virtue of the deed, first bond.

Gaite vs. Fonacier
FACTS:
1. FONACIER: OWNER OF DAWAHAN GROUP (11 iron
lode mineral claims)
1. Appointed GAITE (attorney-in-fact) to enter
to contract with any individual/juridical
person for development of mining claims in a
royalty basis of not less than P.50/ton.
2. GAITE: executed general assignment conveying
development and exploitation of mining claims into
LARAP IRON MINES (single proprietorship owned by
him)
1. Paved roads, development and facilities
2. Extracted 24,000 metric tons of iron ore
3. FONACIER: revoked GAITE authority
1. Revocation of Power of Attorney and Contract
2. GAITE assented subject to certain conditions:
i. Consideration of
P20,000.00, plus 10% of the royalties that Fonacier would
receive from the mining claims
ii. All his rights and interests
on all the roads, improvements, and facilities in or outside
said claims,
iii. Right to use the business
name "Larap Iron Mines" and its goodwill, and all the records
and documents relative to the mines.
iv. Gaite transferred to
Fonacier all his rights and interests over the "24,000 tons of
iron ore, more or less" that the former had already extracted
from the mineral claims
1. In consideration of the sum of P75,000.00, P10,000.00 of
which was paid upon the signing of the agreement
2. P65,000 will be paid from and out of the first letter of
credit covering the first shipment of iron ores and of the first
amount derived from the local sale of iron ore made by the
Larap Mines & Smelting Co. Inc.
3. To secure P65,000, Fonacier promised to
execute in favor of Gaite a surety bond with
himself (Fonacier) as principal and the Larap
Mines and Smelting Co. and its stockholders
George Krakower, Segundina Vivas, Pacifico
Escandor, Francisco Dante, and Fernando Ty
as sureties (Exhibit "A-1").
i. GAITE REFUSED TO SIGN
REVOCATION unless another bond under written by a bonding
company was put up by defendants to secure the payment of
the P65,000 balance.
1. Hence, a second bond with Far Eastern Surety and
Insurance Co. as additional surety
a. Provided liability of the surety company would attach only
when there had been an actual sale of iron ore by the Larap
Mines & Smelting Co. for an amount of not less then
P65,000.00
b. Liability of said surety company would automatically
expire on December 8, 1955.
c. Both bonds were attached to the "Revocation of Power of
Attorney and Contract", Exhibit "A", and made integral parts
thereof.
4. On same day Fonacier revoked the power of
attorney and entered into a "Contract of
Mining Operation", ceding, transferring, and
conveying unto the Larap Mines and Smelting
Co., Inc. the right to develop, exploit, and
explore the mining claims, together with
"Larap Iron Mines"
i. Also transferred 24,000
tons of iron ore from Gaite, to the Larap & Smelting Co
4. 2
nd
BOND EXPIRED, no sale of the approximately
24,000 tons of iron ore had been made by the Larap
Mines & Smelting Co., Inc., nor had the P65,000.00
balance of the price of said ore been paid to Gaite by
Fonacier.
1. GAITE filed the present complaint.
2. DEFENSE: obligation sued upon by Gaite was
subject to condition that P65,000 would be
payable out of the first letter of credit
covering the first shipment of iron ore and/or
the first amount derived from the local sale of
the iron ore by the Larap Mines & Smelting
Co., Inc.;
i. No sale of the iron ore
had been made
1. Hence the condition had not yet been fulfilled
2. Obligation was not yet due and demandable.
ii. FONACIER: only 7,573 of
24,000 tons of iron ore sold to him by Gaite was actually
delivered

5. ISSUES WITH LOWER COURT:
1. WON obligation of P65,000 is due and
demandable.
i. LOWER COURT HELD
obligation was held WITH TERM: It would be paid upon sale of
sufficient iron ore by defendants within one year, obligation
became due and demandable under Article 1198 of the New
Civil Code.
2. WON 24,000 metric tons is existing.
3. LOWER COURT SIDED WITH GAITE.

ISSUES:
WON lower court erred in holding that the obligation of
appellant Fonacier to pay appellee Gaite the P65,000.00 IS
ONE WITH PERIOD/TERM OR A SUSPENSIVE CONDITION
(term expired on December 8, 1955)
WON lower court erred in not holding that there were only
10,954.5 tons in the stockpiles of iron ore sold by appellee
Gaite to appellant Fonacier.

HELD:
NO ERROR in the decision appealed from, we hereby affirm
the same, with costs against appellants.

1. WON lower court erred in holding that the obligation
of appellant Fonacier to pay appellee Gaite the
P65,000.00 IS ONE WITH PERIOD/TERM OR A
SUSPENSIVE CONDITION (term expired on December
8, 1955)LOWER COURT CORRECT THAT LOCAL
SALE OF IRON IS NOT A SUSPENSIVE CONDITION TO
PAYMENT OF P65,000 BUT ONLY A SUSPENSIVE
PERIOD OR TERM.
1. CONDITIONAL OBLIGATION: obligatory force
(as distinguished from its demandability) is
subordinated to the happening of a future
and uncertain event
i. If the suspensive
condition does not take place, the parties would stand as if the
conditional obligation had never existed.
ii. NO UNCERTAINTY THAT
PAYMENT WILL BE MADE, ONLY THING UNCERTAIN IS THE
EXACT DATE.
1. THEREFORE existence of the obligation to pay is
recognized; only its maturity or demandability is deferred.
2. CONTRACT OF SALE: 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)
i. But each party anticipates
performance by the other from the very start.
ii. 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)
iii. Not in the usual course of
business to do so; h
1. ence, the contingent character of the obligation must
clearly appear.
iv. Nothing is found in t
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.
3. To subordinate the obligation to pay
tremaining P65,000.00 TO SALE OR
SHIPMENT OF ORE AS A CONDITION
PRECENDENT = Leaving the payment at the
discretion of the debtor, for the sale or
shipment could not be made unless the
appellants took steps to sell the ore.
4. ONLY RATIONAL VIEW IS SALE OR ORE TO
FONACIER WAS A SALE ON CREDIT AND NOT
an aleatory (random) contract where the
transferor, Gaite, would assume the risk of
not being paid at all

2. WON Fonacier and his sureties, still have the right to
insist that Gaite should wait for the sale or shipment
of the ore before receiving payment; ARE THEY
ENTITLED TO MAKE FULL ADVANTAGE OF PERIOD
GRANTED FOR MAKING PAYMENT?FORFEITED
RIGHT COURT THE RIGHT TO COMPEL GAITE TO
WAIT FOR THE SALE BEFORE RECEIVING PAYMENT,
BECAUSE THEY WERE NOT ABLE TO RENEW BOND
WITH FAR EASTERN SURETY COMPANY
1. ART. 1198:
i. When he does not
furnish to the creditor the guaranties or securities which he
has promised.
ii. When by his own acts he
has impaired said guaranties or securities after their
establishment
iii. AND When through
fortuitous event they disappear, unless he immediately gives
new ones equally satisfactory.
3. WON there were really 24,000 tons of iron ore in the
stockpiles sold by appellee Gaite to appellant Fonacier
and whether, if there had been a short-delivery as
claimed by appellants, they are entitled to the
payment of damages.
1. This is case of a sale of a specific mass of
fungible goods for a single price or a lump
sum, the quantity of "24,000 tons of iron ore,
more or less," stated in the contract being a
mere estimate by the parties of the total
tonnage weight of the mass
2. Evidence shows that neither of the parties
had actually measured of weighed the mass,
so that they both tried to arrive at the total
quantity by making an estimate of the
volume thereof in cubic meters and then
multiplying it by the estimated weight per ton
of each cubic meter.
3. 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,
i. Gaite had, therefore,
complied with his promise to deliver, and appellants in turn
are bound to pay the lump price.
4. In the face of the conflict of evidence, we take as the
most reliable estimate of the tonnage factor of iron
ore in this case to be that made by Leopoldo F. Abad,
chief of the Mines and Metallurgical Division of the
Bureau of Mines
1. This witness placed the tonnage factor of
every cubic meter of iron ore at between 3
metric tons as minimum to 5 metric tons as
maximum. This estimate, in turn, closely
corresponds to the average tonnage factor of
3.3 adopted in his corrected report (Exhibits
"FF" and FF-1") by engineer Nemesio
Gamatero, who was sent by the Bureau of
Mines to the mining claims involved at the
request of appellant Krakower, precisely to m


Delpher v. IAC
Facts:
Delfin Pacheco and sister Pelagia were the owners of a parcel
of land in Polo (now Valenzuela). On April 3, 1974, they leased
to Construction Components International Inc. the property
and providing for a right of first refusal should it decide to buy
the said property.

Construction Components International, Inc. assigned its
rights and obligations under the contract of lease in favor of
Hydro Pipes Philippines, Inc. with the signed conformity and
consent of Delfin and Pelagia. In 1976, a deed of exchange
was executed between lessors Delfin and Pelagia Pacheco and
defendant Delpher Trades Corporation whereby the Pachecos
conveyed to the latter the leased property together with
another parcel of land also located in Malinta Estate,
Valenzuela for 2,500 shares of stock of defendant corporation
with a total value of P1.5M.

On the ground that it was not given the first option to buy the
leased property pursuant to the proviso in the lease
agreement, respondent Hydro Pipes Philippines, Inc., filed an
amended complaint for reconveyance of the lot.

Trivia lang: Delpher Trades Corp is owned by the Pacheco
Family, managed by the sons and daughters of Delfin and
Pelagia. Their primary defense is that there is no transfer of
ownership because the Pachecos remained in control of the
original co-owners. The transfer of ownership, if anything, was
merely in form but not in substance.

Issue:
WON the Deed of Exchange of the properties executed by the
Pachecos and the Delpher Trades Corporation on the other
was meant to be a contract of sale which, in effect, prejudiced
the Hydro Phils right of first refusal over the leased property
included in the deed of exchange? NO

Held:
By their ownership of the 2,500 no par shares of stock, the
Pachecos have control of the corporation. Their equity capital
is 55% as against 45% of the other stockholders, who also
belong to the same family group. In effect, the Delpher Trades
Corporation is a business conduit of the Pachecos. What they
really did was to invest their properties and change the nature
of their ownership from unincorporated to incorporated form
by organizing Delpher Trades Corporation to take control of
their properties and at the same time save on inheritance
taxes.

The Deed of Exchange of property between the Pachecos
and Delpher Trades Corporation cannot be considered a
contract of sale. There was no transfer of actual ownership
interests by the Pachecos to a third party. The Pacheco family
merely changed their ownership from one form to another.
The ownership remained in the same hands. Hence, the
private respondent has no basis for its claim of a light of first
refusal under the lease contract.

CAVEAT: The case has not fully explained the difference
between sale and barter. So here is a foreign decision.

State vs. Gillam, 47 Arkansas 555
Where one commodity is exchanged for another of the same
kind or a different kind, without agreement as to price, or
reference to money payment, the transaction is not a sale, but
a barter or exchange.
A sale may be deemed as an agreement for the transfer of the
whole ownership in a given article for a consideration, called a
price in money, or measured in money value. Stated in other
words, it is a transaction by which the one person, the seller,
agrees to part with his ownership in given property to another
who agrees to receive that ownership and make payment
therefor. Now a barter is quite different. It is a transaction
whereby one person agrees to exchange his ownership in one
article of property for the ownership of another article of
property; it is a mere exchange of personal property.
In this case, an exchange in ownership was made
between the shares of stocks and the land in dispite,
but it was an exchange merely, not a sale. No price in
money was paid; there was merely an exchange in
ownership of two articles.


ENGINEERING AND MACHINERY CORP. VS. COURT OF
APPEALS

Facts:
Almeda and Engineering signed a contract, wherein
Engineering undertook to fabricate, furnish and install the air-
conditioning system in the latters building along Buendia
Avenue, Makati in consideration of P210,000.00. Petitioner
was to furnish the materials, labor, tools and all services
required in order to so fabricate and install said system. The
system was completed in 1963 and accepted by private
respondent, who paid in full the contract price.

Almeda learned from the employees of NIDC of the defects of
the air-conditioning system of the building. Almeda spent for
the repair of the airconditioning system. He now sues
Engineering for the refund of the repair. Engineering contends
that the contract was of sale and the claim is barred by
prescription since the responsibility of a vendor for any hidden
faults or defects in the thing sold runs only for 6 months (Arts
1566, 1567, 1571). Almeda contends that since it was a
contract for a piece of work, hence the prescription period was
ten years (Hence Art 1144 should apply on written contracts).

RTC found that Engineering failed to install certain parts and
accessories called for by the contract, and deviated from the
plans of the system, thus reducing its operational
effectiveness to achieve a fairly desirable room temperature.

Issue:
1) WON the contract for the fabrication and installation of a
central air-conditioning system in a building, one of sale or
for a piece of work? CONTRACT FOR PIECE OF WORK.
2) Corrollarily WON the claim for refund was extinguished by
prescription? NO.

Held:
1) A contract for a piece of work, labor and materials may be
distinguished from a contract of sale by the inquiry as to
whether the thing transferred is one not in existence and
which would never have existed but for the order, of the
person desiring it. In such case, the contract is one for a piece
of work, not a sale. On the other hand, if the thing subject of
the contract would have existed and been the subject of a sale
to some other person even if the order had not been given,
then the contract is one of sale.

A contract for the delivery at a certain price of an article which
the vendor in the ordinary course of his business
manufactures or procures for the general market, whether the
same is on hand at the time or not is a contract of sale, but if
the goods are to be manufactured specially for the customer
and upon his special order, and not for the general market, it
is a contract for a piece of work .

The contract in question is one for a piece of work. It is not
petitioners line of business to manufacture air-conditioning
systems to be sold off-the-shelf. Its business and particular
field of expertise is the fabrication and installation of such
systems as ordered by customers and in accordance with the
particular plans and specifications provided by the customers.
Naturally, the price or compensation for the system
manufactured and installed will depend greatly on the
particular plans and specifications agreed upon with the
customers.
2)
The original complaint is one for damages arising from breach
of a written contract and not a suit to enforce warranties
against hidden defects we here with declare that the
governing law is Article 1715 (supra). However, inasmuch as
this provision does not contain a specific prescriptive period,
the general law on prescription, which is Article 1144 of the
Civil Code, will apply. Said provision states, inter alia, that
actions upon a written contract prescribe in ten (10) years.
Since the governing contract was executed on September 10,
1962 and the complaint was filed on May 8, 1971, it is clear
that the action has not prescribed.

Victorias Milling Co, Inc. v. CA
Facts: St. Therese Merchandising (hereafter STM) regularly
bought sugar from petitioner Victorias Milling Co., Inc. In the
course of their dealings, petitioner issued several Shipping
List/Delivery Receipts to STM as proof of purchases. Among
these was SLDR No. 1214M, which gave rise to the instant
case. SLDR No. 1214M covers 25,000 bags of sugar. The
transaction it covered was a "direct sale."

Thereafter, STM sold to private respondent Consolidated
Sugar Corporation (CSC) its rights in SLDR No. 1214M. That
same day, CSC wrote petitioner that it had been authorized by
STM to withdraw the sugar covered by the SLDR. However,
after 2,000 bags had been released, petitioner refused to
allow further withdrawals of sugar. CSC thus inquired when it
would be allowed to withdraw the remaining 23,000 bags. In
its reply, petitioner said that it could not allow any further
withdrawals of sugar because STM had already withdrawn all
the sugar covered by the cleared checks. Petitioner also noted
that CSC had represented itself to be STM's agent as it had
withdrawn the 2,000 bags "for and in behalf" of STM.

As a result, CSC filed a complaint for specific performance.
Petitioner's primary defense a quo was that it was an unpaid
seller for the 23,000 bags. Since STM had already drawn in
full all the sugar corresponding to the amount of its cleared
checks, it could no longer authorize further delivery of sugar
to CSC. Petitioner also contended that it had no privity of
contract with CSC. Furthermore, the SLDRs prescribed
delivery of the sugar to the party specified therein and did not
authorize the transfer of said party's rights and interests.

The Trial Court rendered its judgment favoring the private
respondent CSC. The appellate court affirmed said decision
but modified the costs against petitioner.

Issue: Whether or not the Court of Appeals erred in not ruling
that CSC was an agent of STM and hence, estopped to sue
upon SLDR No. 1214M as an assignee.

Held: No. It is clear from Article 1868 that the basis of agency
is representation. One factor which most clearly distinguishes
agency from other legal concepts is control; one person - the
agent - agrees to act under the control or direction of another
- the principal

That the authorization given to CSC contained the phrase "for
and in our (STM's) behalf" did not establish an agency.
Ultimately, what is decisive is the intention of the parties. That
no agency was meant to be established by the CSC and STM is
clearly shown by CSC's communication to petitioner that SLDR
No. 1214M had been "sold and endorsed" to it. The use of the
words "sold and endorsed" means that STM and CSC intended
a contract of sale, and not an agency. Hence, on this score, no
error was committed by the respondent appellate court when
it held that CSC was not STM's agent and could independently
sue petitioner.

PHILIPPINE NATIONAL BANK vs. PINEDA
G.R. No. L-46658 May 13, 1991
Facts:
The Arroyo Spouses obtained a loan of P580K from PNB to
purchase 60% of the subscribed capital stock, and thereby
acquire the controlling interest of Tayabas Cement Company,
Inc. (TCC). As security for said loan, the spouses executed a
real estate mortgage over a parcel of land known as the La
Vista property.

TCC filed with petitioner bank an application and agreement
for the establishment of an 8 year deferred letter of credit
(L/C) for $7M in favor of Toyo Menka Kaisha to cover the
importation of a cement plant machinery and equipment.
Upon approval of the application and opening of an L/C by
PNB in favor of Toyo Menka Kaisha for the account of TCC, the
Arroyo spouses executed a surety agreement. The imported
cement plant machinery and equipment arrived from Japan
and were released to TCC under a trust receipt agreement.
Subsequently, Toyo Menka Kaisha made the corresponding
drawings against the L/C as scheduled.

TCC, however, failed to remit and/or pay the corresponding
amount covered by the drawings. Thus, pursuant to the trust
receipt agreement, PNB notified TCC of its intention to
repossess the imported machinery and equipment for failure
of TCC to settle its obligations under the L/C. PNB foreclosed
the real estate mortgages executed by the spouses Arroyo in
TCCs favor. PNB contends that the sale of La Vista was made
to satisfy not only the amount owed by the spouses on their
personal loan but also the amount of expenses owed by said
spouses as sureties of TCC. The Arroyos oppose the
foreclosure, contending primarily that repossession of the
imported machinery and equipment by PNB amounted to
dacion en pago that extinguished their obligation as surety to
TCC.

Issue:
WON the repossession of the machinery was tantamount to a
dacion en pago that absolved Arroyo spouses as surety? NO.

Held:
There was no dacion en pago. Dation in payment takes place
when property is alienated to the creditor in satisfaction of a
debt in money and the same is governed by sales. Dation in
payment is the delivery and transmission of ownership of a
thing by the debtor to the creditor as an accepted equivalent
of the performance of the obligation. The repossession of the
machinery and equipment in question was merely to secure
the payment of TCCs loan obligation and not for the purpose
of transferring ownership thereof to PNB in satisfaction of said
loan. Thus, no dacion en pago was ever accomplished.

PNB took possession of the imported cement plant machinery
and equipment pursuant to the trust receipt agreement
executed by and between PNB and TCC giving the former the
unqualified right to the possession and disposal of all property
shipped under the Letter of Credit until such time as all the
liabilities and obligations under said letter had been
discharged. PNBs possession of the subject machinery and
equipment being precisely as a form of security for the
advances given to TCC under the Letter of Credit, said
possession by itself cannot be considered payment of the loan
secured thereby. Payment would legally result only after PNB
had foreclosed on said securities, sold the same and applied
the proceeds thereof to TCCs loan obligation. Mere possession
does not amount to foreclosure for foreclosure denotes the
procedure adopted by the mortgagee to terminate the rights
of the mortgagor on the property and includes the sale itself.

The transfer of ownership to extinguish a pre-existing
obligation is the essence in dation in payment, therefore it is
not a consensual contract, but a real contract and novates the
original debt relationship into a consummated sale.


Philippine Lawin Bus Co. (Lawin) vs CADoctrine:Nature:
RTC- Suit to claim for a sum of money against Lawin, case
was dismissedCA- Reversed RTC and ruled that Lawin has to
pay ACCSC- Affirmed CAs decision and ordered

Facts:
Lawin initially loaned from Advance Capital Corp. (ACC) Php
8M payable w/in1 yr and guaranteed by a chattel mortgage of
Lawins 9 buses. Lawin was indefault in its payments and was
able to pay only Php 1.8M.
Lawin obtained its second loan of 2M payable in one month
under apromissory note. Lawin was in default again hence it
asked ACC for arestructuring of the loan despite this
Lawin was still not able to pay. Thebuses for foreclosed and it
was sold for 2M.
ACC sent Lawin demand letters to settle its indebtedness
amounting to hp16,484,992.42 then subsequently filed a suit
for sum of money againstLawin. Lawin in its defense said that
there was already an arrangement tosettle the obligation
A. Sale of 9 buses and its proceeds will cover for the full
payment; OR
B. ACC will shoulder the rehabilitation of the buses and the
earnings of the operation will be then applied to the loan

Issue/Held:
W/N there was a dacion en pago bet. the parties? NO

Ratio:
Dacion en Pago is a special mode of payment, the debtor
offers another thingto the creditor who accepts it as
equivalent of payment of the outstandingobligation. It
partakes the nature of a sale whose essential elements
are a)consent b)object certain and c) cause and the contract
is perfected at themoment of the meeting of the minds of the
parties.
In this case there was no meeting of the minds between
Lawin and ACC thatthe obligation would be extinguished by
dacion en pago. The receipts showsthat the delivery of the 2
buses to ACC didnt transfer the ownership of thebus to ACC
rather they were deemed to be only as Lawins agent in the
saleof the bus whereby the proceeds are then to be applied as
payment for theloan.


Gomez v. CA
Judgment Confirms Title Sec 30 & 32 PD 1529
A court ruling (Philippine Islands vs Abran) settled that 12
parcels of land belonged to one Consolacion Gomez.
Consolacion later died and the 12 parcels of land were
inherited by Gomez et al her heirs. The heirs agreed to
divide the property among them.

After notice and publication, and there being no opposition to
the application, the trial court issued an order of general
default. On 5 August 1981, the court rendered its decision
adjudicating the subject lots in Gomez et als favor. The
decision became final and executory hence the court directed
the Chief of the General Land Registration Office to issue the
corresponding decrees of registration over the lots
adjudicated.

GLRO Chief Silverio Perez opposed the adjudication and
petitioned for its setting aside. He discovered that the 12
parcels of land were formerly part of a titled land which was
already granted by homestead patent in 1929. Under the law,
land already granted by homestead patent can no longer be
the subject of another registration. The lower court granted
Silverios recommendation.

Gomez et al invoked Sec. 30 and 32 of PD 1529 (Land
Registration Act) which provides that after judgment has
become final and executory, the court shall forthwith issue an
order to the Commissioner of Land Registration for the
issuance of the decree of registration and certificate of title.
That once the judgment becomes final and executory under
Sec 30, the decree of registration must issue as a matter of
course.

ISSUE: Whether or not to set aside the lower courts initial
ruling on approving the adjudication even after it had became
final and executory.

HELD: Yes. Unlike ordinary civil actions, the adjudication of
land in a cadastral or land registration proceeding does not
become final, in the sense of incontrovertibility until after the
expiration of one (1) year after the entry of the final decree of
registration. The Supreme Court has held that as long as a
final decree has not been entered by the Land Registration
Commission (now NLTDRA) and the period of one (1) year has
not elapsed from date of entry of such decree, the title is not
finally adjudicated and the decision in the registration
proceeding continues to be under the control and sound
discretion of the court rendering it.

BABASA vs. Court of Appeals

Facts:
The Babasa spouses (vendor) entered into a contract of
conditiona sale of registered lands with Tabangao Realty
(vendee) over 3 parcels of land in Batangas City for P2M,
P300K as downpayment.

It was agreed that the balance of the purchase price shall be
paid by Tabangao upon presentation by the Babasas of
transfer certificates of titles in their name in favor of Tabangao
within twenty (20) months from the signing of the contract.

Consequently, Tabangao leased the parcels of land to Shell.
Shell immediately started the construction thereon of a
Liquefied Petroleum Gas Terminal Project, an approved zone
export enterprise of the Export Processing Zone.

Two days prior to the expiration of the 20-month period,
specifically on 31 December 1982, the Babasas asked
Tabangao for an indefinite extension within which to deliver
clean titles over the lots. Because Tabangao did not want to
pay the montly interests.

The Babasa spouses executed a notarized unilateral rescission
dated 28 February 1983 to which TABANGAO responded by
reminding the BABASAS that they were the ones who did not
comply with their contractual obligation to deliver clean titles
within the stipulated 20-month period, hence, had no right to
rescind their contract. The BABASAS insisted on the unilateral
rescission and demanded that SHELL vacate the lots. The
Babasas put up structures to to impede the movements of
persons and vehicles in the lot.

Babasas contention:
Their contract with Tabangao became null and void with the
expiration of the 20-month period given them within which to
deliver clean certificates of title. The contract was a lease
contract, not of sale. Even assuming that it was indeed a sale,
its nature was conditional only, the efficacy of which was
extinguished upon the non-happening of the condition (non-
delivery of clean certificates of title w/in 20 mos).

Issue:
1. WON the contract was a lease contract? NO, It was a
CONTRACT OF SALE.
2. WON the Babasas have the right to rescind the contract on
the premise that they have not complied with their obligation
to deliver the titles to Tabangao (thus making such contract
null and void)? NO

Held:
1.
The contract is laden with terms and stipulations clearly
indicative of a contract of sale. The parties desire and
mutually agreed on the sale and purchase of the three
parcels of land. There was a vendors and a vendee, not
lessor and lessee. In fact, Tabangao was granted absolute and
unconditional right to take immediate possession of the
premises. Even if there was no word ownership mentioned in
the contract, it does not mean that the contract was one of
lease. It is too late for petitioners to insist that the contract is
not what they intended it to be.

Even if it was titled as a contract of conditional sale, it is one
of absolute sale. There is absolutely no proviso reserving title
to the Babasas until full payment of the purchase price, nor
any stipulation giving them the right to unilaterally rescind the
contract in case of non-payment. A deed of sale is absolute in
nature although denominated a conditional sale absent such
stipulations. In such cases, ownership of the thing sold passes
to the vendee upon the constructive or actual delivery thereof.
Constructive delivery was accomplished upon the execution of
the contract without any reservation to the Babasas. Actual
delivery was made when Tabangao took unconditional
possession of the lots and leased them to Shell.
2.
Babasas act of unilaterally rescinding their contract with
Tabangao was improper. In fact, it should Tabangao who has
the right to rescind the contract on account of Babasas failure
to do its obligation to deliver clean certificates of title. Besides,
it would be the height of inequity to allow the BABASAS to
rescind their contract of sale with TABANGAO by invoking as a
ground therefor their own failure to deliver the titles over the
lots within the stipulated period.

A condition imposed to perfect a contract is different from a
condition imposed for the performance of an obligation. The
non-fulfillment of a condition to perfect a contract results in
the failure of a contract. The failure to comply with the
conditions imposed for a performance of a contract merely
gives the other party (Tabangao) the option to either refuse to
proceed with the sale or to waive the condition.


Virgilio v. Romero
Facts: Petitioner Virgilio R. Romero, a civil engineer, was
engaged in the business of production, manufacture and
exportation of perlite filter aids, permalite insulation and
processed perlite ore. In 1988, petitioner and his foreign
partners decided to put up a central warehouse in Metro
Manila on a land area of approximately 2,000 square meters.
Petitioner visited the property of private respondent Enriqueta
Chua vda. de Ongsiong and, except for the presence of
squatters in the area, he found the place suitable for a central
warehouse.

A contract, denominated Deed of Conditional Sale, was
executed between petitioner and private respondent with the
pertinent clause It is hereby agreed, covenanted and
stipulated by and between the parties hereto that if after 60
days from the date of the signing of this contract the VENDOR
shall not be able to remove the squatters from the property
being purchased, the downpayment made by the buyer shall
be returned/reimbursed by the VENDOR to the VENDEE.
Pursuant to the agreement, private respondent filed a
complaint for ejectment against Melchor Musa and 29 other
squatter families with the MTC. Judgment was rendered
ordering the defendants to vacate the premises. The decision
was handed down beyond the 60-day period. Private
respondent sought to return the P50,000.00 she 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, refused the tender and proposes that
his client will 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.

Meanwhile, the Presidential Commission for the Urban Poor
(PCUD), asked the MTC for a grace period of 45 days within
which to relocate and transfer the squatter families. This
request was granted. Atty. Joaquin Yuseco, Jr., counsel for
private respondent, advised Atty. Apostol that the Deed of
Conditional Sale had been rendered null and void by virtue of
his clients failure to evict the squatters from the premises
within the agreed 60-day period. He added that private
respondent had decided to retain the property.

Private respondent, prompted by petitioners continued refusal
to accept the return of the P50,000.00 advance payment, filed
with the RTC rescission of the deed of conditional sale, plus
damages, and for the consignation of P50,000.00 cash.

MTC held that respondent has no right to rescind since it was
she who violated her obligation to eject the squatters from
the subject property.

Issue: May the vendor 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 subject property evicted
within the contractually-stipulated period

Held: NO. A perfected contract of sale may either be absolute
or conditional depending on whether the agreement is devoid
of, or subject to, any condition imposed on the passing of title
of the thing to be conveyed or on the obligation of a party
thereto. When ownership is retained until the fulfillment of a
positive condition the breach of the condition will simply
prevent the duty to convey title from acquiring an obligatory
force. If the condition is imposed on an obligation of a party
which is not complied with, the other party may either refuse
to proceed or waive said condition (Art. 1545, Civil Code).
Where, of course, the condition is imposed upon the perfection
of the contract itself, the failure of such condition would
prevent the juridical relation itself from coming into existence.

In determining the real character of the contract, the title
given to it by the parties is not as much significant as its
substance. For example, a deed of sale, although denominated
as a deed of conditional sale, may be treated as absolute in
nature, if title to the property sold is not reserved in the
vendor or if the vendor is not granted the right to unilaterally
rescind the contract predicated on the fulfillment or non-
fulfillment, as the case may be, of the prescribed condition.

The term condition in the context of a perfected contract of
sale pertains, in reality, to the compliance by one party of an
undertaking the fulfillment of which would beckon, in turn, the
demandability of the reciprocal prestation of the other party.
The reciprocal obligations referred to would normally be, in
the case of vendee, the payment of the agreed purchase price
and, in the case of the vendor, the fulfillment of certain
express warranties (which, in the case at bench is the timely
eviction of the squatters on the property).

The object of the sale, in the case before us, was the lot.
Under the agreement, private respondent is obligated to evict
the squatters on the property. The ejectment of the squatters
is a condition the operative act of which sets into motion the
period of compliance by petitioner of his own obligation, i.e.,
to pay the balance of the purchase price. Private respondents
failure to remove the squatters from the property within the
stipulated period gives petitioner the right to either refuse to
proceed with the agreement or waive that condition in
consonance with Article 1545 of the Civil Code. This option
clearly belongs to petitioner and not to private respondent.
We share the opinion of the appellate court that the
undertaking required of private respondent does not constitute
a potestative condition dependent solely on his will that
might, otherwise, be void in accordance with Article 1182 of
the Civil Code 17 but a mixed condition dependent not on
the will of the vendor alone but also of third persons like the
squatters and government agencies and personnel
concerned. We must hasten to add, however, that where the
so-called potestative condition is imposed not on the birth of
the obligation but on its fulfillment, only the obligation is
avoided, leaving unaffected the obligation itself.


Laforteza v. machuca

PARTIES: HEIRS OF FRANCISCO LAFORTEZA
SELLER ALONZO MACHUCA BUYER SUBJECT: A house
and lot located at No. 7757 Sherwood Street, Marcelo
Green Village, Paraaque,Metro Manila worth P630
000.00.

FACTS:
In the exercise of the authority of Special Power Of Attorney,
on January 20, 1989, the heirs of the late Francisco Q.
Laforteza represented by Roberto Z. Laforteza and Gonzalo Z.
Laforteza, Jr. enteredinto a Memorandum of Agreement
(Contract to Sell) with the plaintiff over the subject property
for thesum of SIX HUNDRED THIRTY THOUSAND PESOS
(P630,000.00) payable as follows:

(a) P30,000.00 as earnest money, to be forfeited in favor of
the defendants if the sale is not effected due tothe fault of
the plaintiff;(b) P600,000.00 upon issuance of the new
certificate of title in the name of the late Francisco
Q. Lafortezaand upon execution of an extra-judicial settlement
of the decedent's estate with sale in favor of the plaintiff (Par.
2, Exh. "E", record, pp. 335-336).

Significantly, the fourth paragraph of the Memorandum of
Agreement (Contract to Sell) dated January 20,1989 (Exh.
"E", supra.) contained a provision as follows:

. . . . Upon issuance by the proper Court of the new title, the
BUYER-LESSEE shall be notified in writing and said BUYER-
LESSEE shall have thirty (30) days to produce the balance of
P600,000.00 which shall be paid to the SELLER-LESSORS
upon the execution of the Extrajudicial Settlement with sale.

On January 20, 1989, plaintiff paid the earnest money of
THIRTY THOUSAND PESOS (P30,000.00), plusrentals for the
subject property .On September 18, 1998 3, defendant heirs,
through their counsel wrote a letter to the plaintiff
furnishingthe latter a copy of the reconstituted title to the
subject property, advising him that he had thirty (3) days
to produce the balance of P600,000.00 under the
Memorandum of Agreement which plaintiff received on
thesame date.On October 18, 1989, plaintiff sent
the defendant heirs a letter requesting for an extension of the
THIRTY(30) DAYS deadline up to November 15, 1989 within
which to produce the balance of P600,000.00.Defendant
Roberto Z. Laforteza, assisted by his counsel Atty. Romeo
L. Gutierrez, signed his conformityto the plaintiff's letter
request. The extension, however, does not appear to have
been approved by GonzaloZ. Laforteza, the second attorney-
in-fact as his conformity does not appear to have been
secured.On November 15, 1989, plaintiff informed the
defendant heirs, through defendant Roberto Z. Laforteza,that
he already had the balance of P600,000.00 covered by United
Coconut Planters Bank Manager's Check dated November 15,
1989 . However, the defendants, refused to accept the
balance .Defendant Roberto Z.Laforteza had told him that
the subject property was no longer for sale .On November 20,
defendants informed plaintiff that they were canceling the
Memorandum of Agreement(Contract to Sell) in view of
the plaintiff's failure to comply with his contractual obligations

Thereafter, plaintiff reiterated his request to tender payment
of the balance of P600,000.00. Defendants,however, insisted
on the rescission of the Memorandum of Agreement.
Thereafter, plaintiff filed the instantaction for specific
performance.

LOWER COURT:
The lower court rendered judgment in favor of the Alonzo
Machuca and against thedefendant heirs of the late Francisco
Q. Laforteza,.Petitioners appealed to the Court of Appeals,

CA:
This affirmed with the decision of the lower court.Hence this
petition wherein the petitioners raise the issues:

ISSUE: Whether or not the MOA is an OPTION
CONTRACT, CONTRACT TO SELL or aCONTRACT OF SALE.

SC: In the case at bench, there was a perfected agreement
between the petitioners and the respondentwhereby the
petitioners obligated themselves to transfer the ownership of
and deliver the house and lotlocated at 7757 Sherwood St.,
Marcelo Green Village, Paraaque and the respondent to pay
the priceamounting to six hundred thousand
pesos (P600,000.00).

All the elements of a contract of sale were thuspresent.

The elements of a valid contract of sale under Article 1458 of
the Civil Code are (1) consent or meeting of the minds; (2)
determinate subject matter and (3) price certain money or its
equivalent.Even assuming for the sake of argument that the
petitioners were ready to comply with their obligation
(andMachuca cannot), we find that rescission of the contract
will still not prosper. The rescission of a sale of animmovable
property is specifically governed by Article 1592 of the New
Civil Code, which reads:

In the sale of immovable property, even though it may have
been stipulated that upon failure to pay the price at the time
agreed upon the rescission of the contract shall of right take
place, the vendee may pay,even after the expiration of the
period, as long as no demand for rescission of the contract has
been madeupon him either judicially or by a notarial act. After
the demand, the court may not grant him a new term. It is
not disputed that the petitioners did not make a judicial or
notarial demand for rescission.