case list for chaptegadgr 3

7/29/2019 Case List for Chaptegadgr 3

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1. G.R. No. L-24190 July 13, 1926

GEORGE L. PARKS, plaintiff-appellant,vs.PROVINCE OF TARLAC, MUNICIPALITY OF TARLAC, CONCEPCION CIRER, and

JAMES HILL, her husband, defendants-appellees.

Jos. N. Wolfson for appellant.

Provincial Fiscal Lopez de Jesus for the Province and Municipality of Tarlac.

No appearance for the other appellees.

AVANCEA, C. J.:

On October 18, 1910, Concepcion Cirer and James Hill, the owners of parcel of land No. 2referred to in the complaint, donated it perpetually to the municipality of Tarlac, Province ofTarlac, under certain conditions specified in the public document in which they made this

donation. The donation was accepted by Mr. Santiago de Jesus in the same document on behalfof the municipal council of Tarlac of which he was the municipal president. The parcel thusdonated was later registered in the name of the donee, the municipality of Tarlac. On January 15,1921, Concepcion Cirer and James Hill sold this parcel to the herein plaintiff George L. Parks.On August 24, 1923, the municipality of Tarlac transferred the parcel to the Province of Tarlacwhich, by reason of this transfer, applied for and obtained the registration thereof in its name, thecorresponding certificate of title having been issued to it.

The plaintiff, George L. Parks, alleging that the conditions of the donation had not beencomplied with and invoking the sale of this parcel of land made by Concepcion Cirer and JamesHill in his favor, brought this action against the Province of Tarlac, the municipality of Tarlac,

Concepcion Cirer and James Hill and prayed that he be declared the absolute owner entitled tothe possession of this parcel, that the transfer of the same by the municipality of Tarlac to theProvince of Tarlac be annulled, and the transfer certificate issued to the Province of Tarlaccancelled.

The lower court dismissed the complaint.

The plaintiff has no right of action. If he has any, it is only by virtue of the sale of this parcelmade by Concepcion Cirer and James Hill in his favor on January 15, 1921, but that sale cannothave any effect. This parcel having been donated by Concepcion Cirer and James Hill to themunicipality of Tarlac, which donation was accepted by the latter, the title to the property was

transferred to the municipality of Tarlac. It is true that the donation might have been revoked forthe causes, if any, provided by the law, but the fact is that it was not revoked when ConcepcionCirer and James Hill made the sale of this parcel to the plaintiff. Even supposing that causesexisted for the revocation of this donation, still, it was necessary, in order to consider it revoked,either that the revocation had been consented to by the donee, the municipality of Tarlac, or thatit had been judicially decreed. None of these circumstances existed when Concepcion Cirer andJames Hill sold this parcel to the plaintiff. Consequently, when the sale was made Concepcion


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Cirer and James Hill were no longer the owners of this parcel and could not have sold it to theplaintiff, nor could the latter have acquired it from them.

But the appellant contends that a condition precedent having been imposed in the donation andthe same not having been complied with, the donation never became effective. We find no merit

in this contention. The appellant refers to the condition imposed that one of the parcels donatedwas to be used absolutely and exclusively for the erection of a central school and the other for apublic park, the work to commence in both cases within the period of six months from the dateof the ratification by the partes of the document evidencing the donation. It is true that thiscondition has not been complied with. The allegation, however, that it is a condition precedent iserroneous. The characteristic of a condition precedent is that the acquisition of the right is noteffected while said condition is not complied with or is not deemed complied with. Meanwhilenothing is acquired and there is only an expectancy of right. Consequently, when a condition isimposed, the compliance of which cannot be effected except when the right is deemed acquired,such condition cannot be a condition precedent. In the present case the condition that a publicschool be erected and a public park made of the donated land, work on the same to commence

within six months from the date of the ratification of the donation by the parties, could not becomplied with except after giving effect to the donation. The donee could not do any work on thedonated land if the donation had not really been effected, because it would be an invasion ofanother's title, for the land would have continued to belong to the donor so long as the conditionimposed was not complied with.

The appellant also contends that, in any event, the condition not having been complied with,even supposing that it was not a condition precedent but subsequent, the non-compliance thereofis sufficient cause for the revocation of the donation. This is correct. But the period for bringingan action for the revocation of the donation has prescribed. That this action is prescriptible, thereis no doubt. There is no legal provision which excludes this class of action from the statute oflimitations. And not only this, the law itself recognizes the prescriptibility of the action for therevocation of a donation, providing a special period of five years for the revocation by thesubsequent birth of children (art. 646, Civil Code), and one year for the revocation by reason ofingratitude. If no special period is provided for the prescription of the action for revocation fornoncompliance of the conditions of the donation (art. 647, Civil Code), it is because in thisrespect the donation is considered onerous and is governed by the law of contracts and thegeneral rules of prescription. Under the law in force (sec. 43, Code of Civ. Proc.) the period ofprescription of this class of action is ten years. The action for the revocation of the donation forthis cause arose on April 19, 1911, that is six months after the ratification of the instrument ofdonation of October 18, 1910. The complaint in this action was presented July 5, 1924, morethan ten years after this cause accrued.

By virtue of the foregoing, the judgment appealed from is affirmed, with the costs against theappellant. So ordered.

Street, Villamor, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur.


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2.G.R. No. L-44428 September 30, 1977

AVELINO BALURAN, petitioner,vs.HON. RICARDO Y. NAVARRO, Presiding Judge, Court of First Instance of Ilocos

Norte, Branch I and ANTONIO OBEDENCIO, respondents.Alipio V. Flores for petitioner.

Rafael B. Ruiz for private respondent.

MUOZ PALMA, J.:

Spouses Domingo Paraiso and Fidela Q. Paraiso were the owners of a residential lot of

around 480 square meters located in Sarrat, Ilocos Norte. On or about February 2,1964, the Paraisos executed an agreement entitled "BARTER" whereby as party of thefirst part they agreed to "barter and exchange" with spouses Avelino and BenildaBaluran their residential lot with the latter's unirrigated riceland situated in Sarrat, IlocosNorte, of approximately 223 square meters without any permanent improvements,under the following conditions:

1. That both the Party of the First Part and the Party of the Second Part shall enjoy thematerial possession of their respective properties; the Party of the First Part shall reapthe fruits of the unirrigated riceland and the Party of the Second Part shall have a right tobuild his own house in the residential lot.

2. Nevertheless, in the event any of the children of Natividad P. Obencio, daughter of theFirst Part, shall choose to reside in this municipality and build his own house in theresidential lot, the Party of the Second Part shall be obliged to return the lot such childrenwith damages to be incurred.

3. That neither the Party of the First Part nor the Party of the Second Part shallencumber, alienate or dispose of in any manner their respective properties as barteredwithout the consent of the other.

4. That inasmuch as the bartered properties are not yet accordance with Act No. 496 orunder the Spanish Mortgage Law, they finally agreed and covenant that this deed beregistered in the Office of the Register of Deeds of Ilocos Norte pursuant to the provisionsof Act No. 3344 as amended. (p. 28, rollo)

On May 6, 1975 Antonio Obendencio filed with the Court of First Instance of IlocosNorte the present complaint to recover the above-mentioned residential lot from AvelinoBaluran claiming that he is the rightful owner of said residential lot having acquired thesame from his mother, Natividad Paraiso Obedencio, and that he needed the propertyfor Purposes Of constructing his house thereon inasmuch as he had taken residence inhis native town, Sarrat. Obedencio accordingly prayed that he be declared owner of the


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residential lot and that defendant Baluran be ordered to vacate the same forfeiting his(Obedencio) favor the improvements defendant Baluran had built in bad faith.1

Answering the complaint, Avelino Baluran alleged inter alia (1) that the "barteragreement" transferred to him the ownership of the residential lot in exchange for the

unirrigated riceland conveyed to plaintiff's Predecessor-in-interest, NatividadObedencio, who in fact is still in On thereof, and (2) that the plaintiff's cause of action ifany had prescribed. 2

At the pre-trial, the parties agreed to submit the case for decision on the basis of theirstipulation of facts. It was likewise admitted that the aforementioned residential lot wasdonated on October 4, 1974 by Natividad Obedencio to her son Antonio Obedencio,and that since the execution of the agreement of February 2, 1964 Avelino Baluran wasin possession of the residential lot, paid the taxes of the property, and constructed ahouse thereon with an value of P250.00. 3 On November 8, 1975, the trial JudgeRicardo Y. Navarro rendered a decision the dispositive portion of which reads as

follows:

Consequently, the plaintiff is hereby declared owner of the question, the defendant ishereby ordered to vacate the same with costs against defendant.

Avelino Baluran to whom We shall refer as petitioner, now seeks a review of thatdecision under the following assignment of errors:

I The lower Court erred in holding that the barter agreement did not transfer ownershipof the lot in suit to the petitioner.

II The lower Court erred in not holding that the right to re-barter or re- exchange of

respondent Antonio Obedencio had been barred by the statute of limitation. (p. 14, Ibid.)

The resolution of this appeal revolves on the nature of the undertaking contract ofFebruary 2, 1964 which is entitled "Barter Agreement."

It is a settled rule that to determine the nature of a contract courts are not bound by thename or title given to it by the contracting parties. 4This Court has held that contractsare not what the parties may see fit to call them but what they really are as determinedby the principles of law. 5Thus, in the instant case, the use of the, term "barter" indescribing the agreement of February 2, 1964, is not controlling. The stipulations in saiddocument are clear enough to indicate that there was no intention at all on the part of

the signatories thereto to convey the ownership of their respective properties; all thatwas intended, and it was so provided in the agreement, was to transfer the materialpossession thereof. (condition No. 1, see page I of this Decision) In fact, under conditionNo. 3 of the agreement, the parties retained the right to alienate their respectiveproperties which right is an element of ownership.

With the material ion being the only one transferred, all that the parties acquired was theright of usufruct which in essence is the right to enjoy the Property of another. 6 Under


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the document in question, spouses Paraiso would harvest the crop of the unirrigatedriceland while the other party, Avelino Baluran, could build a house on the residentiallot, subject, however, to the condition, that when any of the children of NatividadParaiso Obedencio, daughter of spouses Paraiso, shall choose to reside in themunicipality and build his house on the residential lot, Avelino Baluran shall be obliged

to return the lot to said children "With damages to be incurred." (Condition No. 2 of theAgreement) Thus, the mutual agreement each party enjoying "material possession"of the other's property was subject to a resolutory condition the happening of whichwould terminate the right of possession and use.

A resolutory condition is one which extinguishes rights and obligations already existing.7 The right of "material possession" granted in the agreement of February 2, 1964, endsif and when any of the children of Natividad Paraiso, Obedencio (daughter of spousesParaiso, Party of the First Part) would reside in the municipality and build his house onthe property. Inasmuch as the condition opposed is not dependent solely on the will ofone of the parties to the contract the spouses Paraiso but is Part dependent on

the will of third persons

Natividad Obedencio and any of her children

the same isvalid. 8

When there is nothing contrary to law, morals, and good customs Or Public Policy in thestipulations of a contract, the agreement constitutes the law between the parties and thelatter are bound by the terms thereof. 9

Art. 1306 of the Civil Code states:

Art. 1306. The contracting parties may establish such stipulations, clauses, terms andconditions as they may deem convenient, provided they are not contrary to law, Morals,good customs, public order, or public policy.

Contracts which are the private laws of the contracting parties, should be fulfilledaccording to the literal sense of their stipulations, if their terms are clear and leave noroom for doubt as to the intention of the contracting parties, for contracts are obligatory,no matter what their form may be, whenever the essential requisites for their validity arepresent. (Philippine American General Insurance Co., Inc. vs. Mutuc, 61 SCRA 22)

The trial court therefore correctly adjudged that Antonio Obedencio is entitled to recoverthe possession of the residential lot Pursuant to the agreement of February 2, 1964.

Petitioner submits under the second assigned error that the causa, of action if any ofrespondent Obedencio had Prescribed after the lapse of four years from the date of

execution of the document of February 2, 1964. It is argued that the remedy of plaintiff,now respondent, Was to ask for re-barter or re-exchange of the properties subject of theagreement which could be exercised only within four years from the date of the contractunder Art. 1606 of the Civil Code.

The submission of petitioner is untenable. Art. 1606 of the Civil Code refers toconventional redemption which petitioner would want to apply to the present situation.However, as We stated above, the agreement of the parties of February 2, 1964, is not


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one of barter, exchange or even sale with right to repurchase, but is one of or akin theother is the use or material ion or enjoyment of each other's real property.

Usufruct may be constituted by the parties for any period of time and under suchconditions as they may deem convenient and beneficial subject to the provisions of the

Civil Code, Book II, Title VI on Usufruct. The manner of terminating or extinguishing theright of usufruct is primarily determined by the stipulations of the parties which in thiscase now before Us is the happening of the event agreed upon. Necessarily, the plaintiffor respondent Obedencio could not demand for the recovery of possession of theresidential lot in question, not until he acquired that right from his mother, NatividadObedencio, and which he did acquire when his mother donated to him the residential loton October 4, 1974. Even if We were to go along with petitioner in his argument that thefulfillment of the condition cannot be left to an indefinite, uncertain period, nonetheless,in the case at bar, the respondent, in whose favor the resolutory condition wasconstituted, took immediate steps to terminate the right of petitioner herein to the use ofthe lot. Obedencio's present complaint was filed in May of 1975, barely several months

after the property was donated to him.

One last point raised by petitioner is his alleged right to recover damages under theagreement of February 2, 1964. In the absence of evidence, considering that the partiesagreed to submit the case for decision on a stipulation of facts, We have no basis forawarding damages to petitioner.

However, We apply Art. 579 of the Civil Code and hold that petitioner will not forfeit theimprovement he built on the lot but may remove the same without causing damage tothe property.

Art. 579. The usufructuary may make on the property held in usufruct such usefulimprovements or expenses for mere pleasure as he may deem proper, provided he doesnot alter its form or substance; but he shall have no right to be indemnified therefor. Hemay, however. He may, however, removed such improvements, should it be possible todo so without damage to the property. (Emphasis supplied)

Finally, We cannot close this case without touching on the unirrigated riceland whichadmittedly is in the possession of Natividad Obedencio.

In view of our ruling that the "barter agreement" of February 2, 1964, did not transfer theownership of the respective properties mentioned therein, it follows that petitionerBaluran remains the owner of the unirrigated riceland and is now entitled to its

Possession. With the happening of the resolutory condition provided for in theagreement, the right of usufruct of the parties is extinguished and each is entitled to areturn of his property. it is true that Natividad Obedencio who is now in possession ofthe property and who has been made a party to this case cannot be ordered in thisproceeding to surrender the riceland. But inasmuch as reciprocal rights and obligationshave arisen between the parties to the so-called "barter agreement", We hold that theparties and for their successors-in-interest are duty bound to effect a simultaneoustransfer of the respective properties if substance at justice is to be effected.


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WHEREFORE, Judgment is hereby rendered: 1) declaring the petitioner AvelinoBaluran and respondent Antonio Obedencio the respective owners the unirrigatedriceland and residential lot mentioned in the "Barter Agreement" of February 2, 1964; 2)ordering Avelino Baluran to vacate the residential lot and removed improvements builtby thereon, provided, howeverthat he shall not be compelled to do so unless the

unirrigated riceland shall five been restored to his possession either on volition of theparty concerned or through judicial proceedings which he may institute for the purpose.

Without pronouncement as to costs. So Ordered.

Teehankee (Chairman), Makasiar, Martin, Fernandez and Guerrero, JJ., concur.

Footnotes

1 pp. 21-22, rollo

2 p. 23, Ibid.

3 pp. 26-27, Ibid.

4 Shell Co. of the Philippines Ltd. vs. Firemen's Insurance Co. of Newark, N. J., et al., 100 Phil. 757,764 (1957)

5 Borromeo vs. Court of Appeals, et al., 47 SCRA 65 (1972)

6 Art. 562 of the Civil Code provides:

"ART. 562 Usufruct gives a right to enjoy the property of another with the obligation of preserving its form andsubstance, unless the title constituting it or the law otherwise provides."

7 Tolentino, Commentaries on the Civil Code of the Philippines, Vol. IV, pp. 140, 143 19-13 ed.

8 Ibid., pp. 148-149

9 Iigo vs. National Abaca & Other Fibers Corp., 95 Phil. 875; Ramos vs. Central Bank of the Phil. 41 SCRA 565;Rodrigo Enriquez et al., vs. Socorro A. Ramos, L-23616, September 30, 1976, 73 SCRA 116.


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3. G.R. No. 4437 September 9, 1909

TOMAS OSMEA, plaintiff-appellee,vs.CENONA RAMA, defendant-appellant.

Filemon Sotto for appellant.

J. H. Junquera for appellee.

JOHNSON,J.:

It appears from the record that upon the 15th day of November, 1890, the defendant hereinexecuted and delivered to Victoriano Osmea the following contract:

EXHIBIT A.

P200.00.

CEBU,November 15, 1890.

I, Doa Cenona Rama, a resident of this city, and of legal age, have received from DonVictoriano Osmea the sum oftwo hundred pesos in cash which I will pay in sugar in themonth of January or February of the coming year, at the price ruling on the day ofdelivering the sugar into his warehouse, and I will pay him interest at the rate of half acuartillo per month on each peso, beginning on this date until the day of the settlement;and if I can not pay in full, a balance shall be struck, showing the amount outstanding atthe end of each June, including interest, and such as may be outstanding against me shall

be considered as capital which I will always pay in sugar, together with the interestmentioned above. I further promise that I will sell to the said Seor Osmea all the sugarthat I may harvest, and as a guarantee, pledge as security all of my present and futureproperty, and as special security the house with tile roof and ground floor of stone inwhich I live in Pagina; in proof whereof, I sign this document, and he shall be entitled tomake claim against me at the expiration of the term stated in this document.

(Signed) CENON RAMA.

Witnesses:

FAUSTO PEALOSA.FRANCISCO MEDALLE.

On the 27th day of October, 1891, the defendant executed and delivered to the said VictorianoOsmea the following contract:


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EXHIBIT B.

CEBU, October 27, 1891.

On this date I have asked for further loan and have received from Don Victoriano

Osmea the sum of seventy pesos in cash, fifty pesos of which I have loaned to DonEvaristo Peares, which we will pay in sugar in the month of January of the coming yearaccording to the former conditions.

(Signed) CENONA RAMA.

From Don EvaristoPeares

P50

Doa Cenona Rama 20

P70

ReceivedEvaristo Peares.

Some time after the execution and delivery of the above contracts, the said Victoriano Osmeadied. In the settlement and division of the property of his estate the above contracts became theproperty of one of his estate the above contracts became the property of one of his heirs,Agustina Rafols. Later, the date does not appear, the said Agustina Rafols ceded to the presentplaintiff all of her right and interest in said contracts.

On the 15th day of March, 1902 the plaintiff presented the contracts to the defendant for

payment and she acknowledged her responsibility upon said contracts by an indorsement uponthem in the following language:

EXHIBIT C.

CEBU,March 15, 1902.

On this date I hereby promise, in the presence of two witness, that if the house of strongmaterials in which I live in Pagina is sold, I will pay my indebtedness to Don TomasOsmea as set forth in this document.

(Signed) CENONA RAMA.

The defendant not having paid the amount due on said contracts; the plaintiff, upon the 26th dayof June, 1906, commenced the present action in the Court of First Instance of the Province ofCebu. The complaint filed in said cause alleged the execution and delivery of the abovecontracts, the demand for payment, and the failure to pay on the part of the defendant, and theprayer for a judgment for the amount due on the said contracts. The defendant answered by filinga general denial and setting up the special defense of prescription.


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The case was finally brought on to trial in the Court of First Instance, and the only witnessproduced during the trial was the plaintiff himself. The defendant did not offer any proofwhatever in the lower court.

After hearing the evidence adduced during the trial, the lower court rendered a judgment in favor

of the plaintiff and against the defendant for the sum of P200 with interest at the rate of 18 3/4per cent per annum, from the 15th day of November, 1890, and for the sum of P20 with interestat the rate of 18 3/4 per cent per annum, from the 27th day of October, 1891, until the said sumswere paid. From this judgment the defendant appealed.

The lower court found that P50 of the P70 mentioned in Exhibit B had been borrowed by thedefendant, but by one Evaristo Peares; therefore the defendant had no responsibility for thepayment of the said P50.

The only questions raised by the appellant were questions of fact. The appellant alleges that theproof adduced during the trial of the cause was not sufficient to support the findings of the lower

court. It was suggested during the discussion of the case in this court that, in theacknowledgment above quoted of the indebtedness made by the defendant, she imposed thecondition that she would pay the obligation if she sold her house. If that statement found in heracknowledgment of the indebtedness should be regarded as a condition, it was a condition whichdepended upon her exclusive will, and is therefore, void. (Art. 1115, Civil Code.) Theacknowledgment, therefore, was an absolute acknowledgment of the obligation and wassufficient to prevent the statute of limitation from barring the action upon the original contract.

We are satisfied, from all of the evidence adduced during the trial, that the judgment of the lowercourt should be affirmed. So ordered.

Arellano, C. J., Torres, Carson, and Moreland, JJ., concur.


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4. G.R. No. L-16570 March 9, 1922

SMITH, BELL & CO., LTD., plaintiff-appellant,vs.VICENTE SOTELO MATTI, defendant-appellant.

Ross and Lawrence and Ewald E. Selph for plaintiff-appellant.

Ramon Sotelo for defendant-appellant.

ROMUALDEZ,J.:

In August, 1918, the plaintiff corporation and the defendant, Mr. Vicente Sotelo, entered intocontracts whereby the former obligated itself to sell, and the latter to purchase from it, two steeltanks, for the total price of twenty-one thousand pesos (P21,000), the same to be shipped fromNew York and delivered at Manila "within three or four months;" two expellers at the price oftwenty five thousand pesos (P25,000) each, which were to be shipped from San Francisco in the

month of September, 1918, or as soon as possible; and two electric motors at the price of twothousand pesos (P2,000) each, as to the delivery of which stipulation was made, couched in thesewords: "Approximate delivery within ninety days. This is not guaranteed."

The tanks arrived at Manila on the 27th of April, 1919: the expellers on the 26th of October,1918; and the motors on the 27th of February, 1919.

The plaintiff corporation notified the defendant, Mr. Sotelo, of the arrival of these goods, but Mr.Sotelo refused to receive them and to pay the prices stipulated.

The plaintiff brought suit against the defendant, based on four separate causes of action, alleging,

among other facts, that it immediately notified the defendant of the arrival of the goods, andasked instructions from him as to the delivery thereof, and that the defendant refused to receiveany of them and to pay their price. The plaintiff, further, alleged that the expellers and the motorswere in good condition. (Amended complaint, pages 16-30, Bill of Exceptions.)

In their answer, the defendant, Mr. Sotelo, and the intervenor, the Manila Oil Refining and By-Products Co., Inc., denied the plaintiff's allegations as to the shipment of these goods and theirarrival at Manila, the notification to the defendant, Mr. Sotelo, the latter's refusal to receive themand pay their price, and the good condition of the expellers and the motors, alleging as specialdefense that Mr. Sotelo had made the contracts in question as manager of the intervenor, theManila Oil Refining and By-Products Co., Inc which fact was known to the plaintiff, and that "it

was only in May, 1919, that it notified the intervenor that said tanks had arrived, the motors andthe expellers having arrived incomplete and long after the date stipulated." As a counterclaim orset-off, they also allege that, as a consequence of the plaintiff's delay in making delivery of thegoods, which the intervenor intended to use in the manufacture of cocoanut oil, the intervenorsuffered damages in the sums of one hundred sixteen thousand seven hundred eighty-three pesosand ninety-one centavos (P116,783.91) for the nondelivery of the tanks, and twenty-onethousand two hundred and fifty pesos (P21,250) on account of the expellers and the motors nothaving arrived in due time.


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The case having been tried, the court below absolved the defendants from the complaint insofaras the tanks and the electric motors were concerned, but rendered judgment against them,ordering them to "receive the aforesaid expellers and pay the plaintiff the sum of fifty thousandpesos (P50,00), the price of the said goods, with legal interest thereon from July 26, 1919, andcosts."

Both parties appeal from this judgment, each assigning several errors in the findings of the lowercourt.

The principal point at issue in this case is whether or not, under the contracts entered into and thecircumstances established in the record, the plaintiff has fulfilled, in due time, its obligation tobring the goods in question to Manila. If it has, then it is entitled to the relief prayed for;otherwise, it must be held guilty of delay and liable for the consequences thereof.

To solve this question, it is necessary to determine what period was fixed for the delivery of thegoods.

As regards the tanks, the contracts A and B (pages 61 and 62 of the record) are similar, and inboth of them we find this clause:

To be delivered within 3 or 4 monthsThe promise or indication of shipment carrieswith it absolutely no obligation on our part Government regulations, railroadembargoes, lack of vessel space, the exigencies of the requirement of the United StatesGovernment, or a number of causes may act to entirely vitiate the indication of shipmentas stated. In other words, the order is accepted on the basis of shipment at Mill'sconvenience, time of shipment being merely an indication of what we hope toaccomplish.

In the contract Exhibit C (page 63 of the record), with reference to the expellers, the followingstipulation appears:

The following articles, hereinbelow more particularly described, to be shipped at SanFrancisco within the month of September /18, or as soon as possible. Two Andersonoil expellers . . . .

And in the contract relative to the motors (Exhibit D, page 64, rec.) the following appears:

Approximate delivery within ninety days. This is not guaranteed. This sale is

subject to our being able to obtain Priority Certificate, subject to the United StatesGovernment requirements and also subject to confirmation of manufactures.

In all these contracts, there is a final clause as follows:

The sellers are not responsible for delays caused by fires, riots on land or on the sea,strikes or other causes known as "Force Majeure" entirely beyond the control of thesellers or their representatives.


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Under these stipulations, it cannot be said that any definite date was fixed for the delivery of thegoods. As to the tanks, the agreement was that the delivery was to be made "within 3 or 4months," but that period was subject to the contingencies referred to in a subsequent clause. Withregard to the expellers, the contract says "within the month of September, 1918," but to this isadded "or as soon as possible." And with reference to the motors, the contract contains this

expression, "Approximate delivery within ninety days," but right after this, it is noted that "this isnot guaranteed."

The oral evidence falls short of fixing such period.

From the record it appears that these contracts were executed at the time of the world war whenthere existed rigid restrictions on the export from the United States of articles like the machineryin question, and maritime, as well as railroad, transportation was difficult, which fact was knownto the parties; hence clauses were inserted in the contracts, regarding "Government regulations,railroad embargoes, lack of vessel space, the exigencies of the requirements of the United StatesGovernment," in connection with the tanks and "Priority Certificate, subject to the United State

Government requirements," with respect to the motors. At the time of the execution of thecontracts, the parties were not unmindful of the contingency of the United States Governmentnot allowing the export of the goods, nor of the fact that the other foreseen circumstances thereinstated might prevent it.

Considering these contracts in the light of the civil law, we cannot but conclude that the termwhich the parties attempted to fix is so uncertain that one cannot tell just whether, as a matter offact, those articles could be brought to Manila or not. If that is the case, as we think it is, theobligations must be regarded as conditional.

Obligations for the performance of which a day certain has been fixed shall be

demandable only when the day arrives.A day certain is understood to be one which must necessarily arrive, even though its datebe unknown.

If the uncertainty should consist in the arrival or non-arrival of the day, the obligation is

conditional and shall be governed by the rules of the next preceding section. (referring topure and conditional obligations). (Art. 1125, Civ. Code.)

And as the export of the machinery in question was, as stated in the contract, contingent upon thesellers obtaining certificate of priority and permission of the United States Government, subjectto the rules and regulations, as well as to railroad embargoes, then the delivery was subject to acondition the fulfillment of which depended not only upon the effort of the herein plaintiff, butupon the will of third persons who could in no way be compelled to fulfill the condition. In caseslike this, which are not expressly provided for, but impliedly covered, by the Civil Code, theobligor will be deemed to have sufficiently performed his part of the obligation, if he has doneall that was in his power, even if the condition has not been fulfilled in reality.


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In such cases, the decisions prior to the Civil Code have held that the obligee having doneall that was in his power, was entitled to enforce performance of the obligation. Thisperformance, which is fictitious not realis not expressly authorized by the Code,which limits itself only to declare valid those conditions and the obligation therebyaffected; but it is neither disallowed, and the Code being thus silent, the old view can be

maintained as a doctrine. (Manresa's commentaries on the Civil Code [1907], vol. 8, page132.)

The decisions referred to by Mr. Manresa are those rendered by the supreme court of Spain onNovember 19, 1896, and February 23, 1871.

In the former it is held:

First. That when the fulfillment of the conditions does not depend on the will of theobligor, but on that of a third person who can in no way be compelled to carry it out, andit is found by the lower court that the obligor has done all in his power to comply with the

obligation, the judgment of the said court, ordering the other party to comply with hispart of the contract, is not contrary to the law of contracts, or to Law 1, Tit. I, Book 10, ofthe "Novsima Recopilacin," or Law 12, Tit. 11, of Partida 5, when in the said finding ofthe lower court, no law or precedent is alleged to have been violated. (JurisprudenciaCivil published by the directors of theRevista General de Legislacion y Jurisprudencia[1866], vol. 14, page 656.)

In the second decision, the following doctrine is laid down:

Second. That when the fulfillment of the condition does not depend on the will of theobligor, but on that of a third person, who can in no way be compelled to carry it out, the

obligor's part of the contract is complied withalf Belisario not having exercised his rightof repurchase reserved in the sale of Basilio Borja mentioned in paragraph (13) hereof,the affidavit of Basilio Borja for the consolidacion de dominio was presented for recordin the registry of deeds and recorded in the registry on the same date.

(32) The Maximo Belisario left a widow, the opponent Adelina Ferrer and three minorchildren, Vitaliana, Eugenio, and Aureno Belisario as his only heirs.

(33) That in the execution and sales thereunder, in which C. H. McClure appears as thejudgment creditor, he was represented by the opponent Peter W. Addison, who preparedand had charge of publication of the notices of the various sales and that in none of thesales was the notice published more than twice in a newspaper.

The claims of the opponent-appellant Addison have been very fully and ably argued byhis counsel but may, we think, be disposed of in comparatively few words. As will beseen from the foregoing statement of facts, he rest his title (1) on the sales under theexecutions issued in cases Nos. 435, 450, 454, and 499 of the court of the justice of thepeace of Dagupan with the priority of inscription of the last two sales in the registry of


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deeds, and (2) on a purchase from the Director of Lands after the land in question hadbeen forfeited to the Government for non-payment of taxes under Act No. 1791.

The sheriff's sales under the execution mentioned are fatally defective for what ofsufficient publication of the notice of sale. Section 454 of the Code of civil Procedure

reads in part as follows:

SEC. 454. Before the sale of property on execution, notice thereof must be given, asfollows:

1. In case of perishable property, by posing written notice of the time and place of thesale in three public places of the municipality or city where the sale is to take place, forsuch time as may be reasonable, considering the character and condition of the property;

2. * * * * * * *

3. In cases of real property, by posting a similar notice particularly describing theproperty, for twenty days in three public places of the municipality or city where theproperty is situated, and also where the property is to be sold, and publishing a copythereof once a week, for the same period, in some newspaper published or having generalcirculation in the province, if there be one. If there are newspaper published in theprovince in both the Spanish and English languages, then a like publication for a likeperiod shall be made in one newspaper published in the Spanish language, and in onepublished in the English language: Provided, however, That such publication in anewspaper will not be required when the assessed valuation of the property does notexceed four hundred pesos;

4. * * * * * * *Examining the record, we find that in cases Nos. 435 and 450 the sales took place on October 14,1916; the notice first published gave the date of the sale as October 15th, but upon discoveringthat October 15th was a Sunday, the date was changed to October 14th. The correct notice waspublished twice in a local newspaper, the first publication was made on October 7th and thesecond and last on October 14th, the date of the sale itself. The newspaper is a weekly periodicalpublished every Saturday afternoon.

In case No. 454 there were only two publications of the notice in a newspaper, the firstpublication being made only fourteen days before the date of the sale. In case No. 499, there

were also only two publications, the first of which was made thirteen days before the sale. In thelast case the sale was advertised for the hours of from 8:30 in the morning until 4:30 in theafternoon, in violation of section 457 of the Code of Civil Procedure. In cases Nos. 435 and 450the hours advertised were from 9:00 in the morning until 4.30 in the afternoon. In all of the casesthe notices of the sale were prepared by the judgment creditor or his agent, who also tookcharged of the publication of such notices.


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In the case ofCampomanes vs. Bartolome and Germann & Co. (38 Phil., 808), this court heldthat if a sheriff sells without the notice prescribe by the Code of Civil Procedure induced theretoby the judgment creditor and the purchaser at the sale is the judgment creditor, the sale isabsolutely void and not title passes. This must now be regarded as the settled doctrine in thisjurisdiction whatever the rule may be elsewhere.

It appears affirmatively from the evidence in the present case that there is a newspaper publishedin the province where the sale in question took place and that the assessed valuation of theproperty disposed of at each sale exceeded P400. Comparing the requirements of section 454,supra, with what was actually done, it is self-evident that notices of the sales mentioned were notgiven as prescribed by the statute and taking into consideration that in connection with thesesales the appellant Addison was either the judgment creditor or else occupied a positionanalogous to that of a judgment creditor, the sales must be held invalid.

The conveyance or reconveyance of the land from the Director of Lands is equally invalid. Theprovisions of Act No. 1791 pertinent to the purchase or repurchase of land confiscated for non-

payment of taxes are found in section 19 of the Act and read:. . . In case such redemption be not made within the time above specified the Governmentof the Philippine Islands shall have an absolute, indefeasible title to said real property.Upon the expiration of the said ninety days, if redemption be not made, the provincialtreasurer shall immediately notify the Director of Lands of the forfeiture and furnish himwith a description of the property, and said Director of Lands shall have full control andcustody thereof to lease or sell the same or any portion thereof in the same manner asother public lands are leased or sold: Provided, That the original owner, or his legalrepresentative, shall have the right to repurchase the entire amount of his said realproperty, at any time before a sale or contract of sale has been made by the director of

Lands to a third party, by paying therefore the whole sum due thereon at the time ofejectment together with a penalty of ten per centum . . . .

The appellant Addison repurchased under the final proviso of the section quoted and wasallowed to do so as the successor in interest of the original owner under the execution sale abovediscussed. As we have seen, he acquired no rights under these sales, was therefore not thesuccessor of the original owner and could only have obtained a valid conveyance of such titles asthe Government might have by following the procedure prescribed by the Public Land Act forthe sale of public lands. he is entitled to reimbursement for the money paid for the redemption ofthe land, with interest, but has acquired no title through the redemption.

The question of the priority of the record of the sheriff's sales over that of the sale from Belisarioto Borja is extensively argued in the briefs, but from our point of view is of no importance; voidsheriff's or execution sales cannot be validated through inscription in the Mortgage Law registry.

The opposition of Adelina Ferrer must also be overruled. She maintained that the land inquestion was community property of the marriage of Eulalio Belisario and Paula Ira: that uponthe death of Paula Ira inealed from is modified, and the defendant Mr. Vicente Sotelo Matti,sentenced to accept and receive from the plaintiff the tanks, the expellers and the motors in


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question, and to pay the plaintiff the sum of ninety-six thousand pesos (P96,000), with legalinterest thereon from July 17, 1919, the date of the filing of the complaint, until fully paid, andthe costs of both instances. So ordered.

Araullo, C.J., Johnson, Street, Malcolm, Avancea, Villamor, Ostrand, and Johns, JJ., concur.


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5. G.R. No. L-5003 June 27, 1953

NAZARIO TRILLANA, administrator-appellee,vs.QUEZON COLLEGE, INC., claimant-appellant.

Singson, Barnes, Yap and Blanco for appellant.

Delgado, Flores & Macapagal for appellee.

PARAS,J.:

Damasa Crisostomo sent the following letter to the Board of Trustees of the Quezon College:

June 1, 1948

The BOARD OF TRUSTEESQuezon CollegeManila

Gentlemen:

Please enter my subscription to dalawang daan (200) shares of your capital stock with apar value of P100 each. Enclosed you will find (Babayaran kong lahat pagkatapos na akoay makapag-pahuli ng isda) pesos as my initial payment and the balance payable inaccordance with law and the rules and regulations of the Quezon College. I hereby agreeto shoulder the expenses connected with said shares of stock. I further submit myself toall lawful demands, decisions or directives of the Board of Trustees of the QuezonCollege and all its duly constituted officers or authorities (ang nasa itaas ay binasa atipinaliwanag sa akin sa wikang tagalog na aking nalalaman).

Very respectfully,

(Sgd.) DAMASA CRISOSTOMOSignature of subscriber

Nilagdaan sa aming harapan:

JOSE CRISOSTOMOEDUARDO CRISOSTOMO

Damasa Crisostomo died on October 26, 1948. As no payment appears to have been made on thesubscription mentioned in the foregoing letter, the Quezon College, Inc. presented a claim before theCourt of First Instance of Bulacan in her testate proceeding, for the collection of the sum of P20,000,representing the value of the subscription to the capital stock of the Quezon College, Inc. This claimwas opposed by the administrator of the estate, and the Court of First Instance of Bulacan, after


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hearing issued an order dismissing the claim of the Quezon College, Inc. on the ground that thesubscription in question was neither registered in nor authorized by the Securities and ExchangeCommission. From this order the Quezon College, Inc. has appealed.

It is not necessary for us to discuss at length appellant's various assignments of error relating to thepropriety of the ground relief upon by the trial court, since, as pointed out in the brief for theadministrator and appellee, there are other decisive considerations which, though not touched by thelower court, amply sustained the appealed order.

It appears that the application sent by Damasa Crisostomo to the Quezon College, Inc. was written ona general form indicating that an applicant will enclose an amount as initial payment and will pay thebalance in accordance with law and the regulations of the College. On the other hand, in the letteractually sent by Damasa Crisostomo, the latter (who requested that her subscription for 200 shares beentered) not only did not enclose any initial payment but stated that "babayaran kong lahatpagkatapos na ako ay makapagpahuli ng isda." There is nothing in the record to show that theQuezon College, Inc. accepted the term of payment suggested by Damasa Crisostomo, or that if therewas any acceptance the same came to her knowledge during her lifetime. As the application of

Damasa Crisostomo is obviously at variance with the terms evidenced in the form letter issued by theQuezon College, Inc., there was absolute necessity on the part of the College to express its agreementto Damasa's offer in order to bind the latter. Conversely, said acceptance was essential, because itwould be unfair to immediately obligate the Quezon College, Inc. under Damasa's promise to pay theprice of the subscription after she had caused fish to be caught. In other words, the relation betweenDamasa Crisostomo and the Quezon College, Inc. had only thus reached the preliminary stagewhereby the latter offered its stock for subscription on the terms stated in the form letter, and Damasaapplied for subscription fixing her own plan of payment,a relation, in the absence as in thepresent case of acceptance by the Quezon College, Inc. of the counter offer of Damasa Crisostomo,that had not ripened into an enforceable contract.

Indeed, the need for express acceptance on the part of the Quezon College, Inc. becomes the moreimperative, in view of the proposal of Damasa Crisostomo to pay the value of the subscription aftershe has harvested fish, a condition obviously dependent upon her sole will and, therefore, facultativein nature, rendering the obligation void, under article 1115 of the old Civil Code which provides asfollows: "If the fulfillment of the condition should depend upon the exclusive will of the debtor, theconditional obligation shall be void. If it should depend upon chance, or upon the will of a thirdperson, the obligation shall produce all its effects in accordance with the provisions of this code." Itcannot be argued that the condition solely is void, because it would have served to create theobligation to pay, unlike a case, exemplified by Osmea vs. Rama (14 Phil., 99), wherein only thepotestative condition was held void because it referred merely to the fulfillment of an alreadyexisting indebtedness.

In the case ofTaylor vs. Uy Tieng Piao, et al. (43 Phil., 873, 879), this Court already held that "acondition, facultative as to the debtor, is obnoxious to the first sentence contained in article 1115 andrenders the whole obligation void."

Wherefore, the appealed order is affirmed, and it is so ordered with costs against appellant.

Tuason, Padilla and Reyes, JJ., concur in the result.


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6. G.R. No. L-33493 March 6, 1931

ENRIQUE MARTIN, plaintiff-appellant,vs.FRANCISCO BOYERO, defendant-appellee.

William E. Greenbaum, Antonio M. Opisso and Luis G. Hofilena for appellant.

Tirol and Segovia for appellee.

ROMUALDEZ,J.:

Setting up rights derived from Pedro Zorrilla, of whom he is successor-in-interest, the plaintiffhas brought this suit upon the ground that the sale price of the undivided two-fifths of the EspaaEstate has become demandable because the defendant has violated the terms of said contract ofsale, praying judgment for said price which amounts to P20,000, plus interest, costs, and anyother proper, legal, and equitable remedy, including the rendering of an account of said estate.

The defendant answered with a general denial of the allegations in the complaint, and a specialdefense that the action is premature and contrary to law, for the defendant had not violated thesaid contract of sale. The complaint is also alleged to be vague and ambiguous.

On March 13, 1929, during the pendency of the case in the Court of First Instance, the courtordered the defendant to render an accounting of the products of said estate received by him fromDecember 21, 1925, when the sale took place, as well as of the obligations then attached to theestate, how they were met, and, lastly, of the loans obtained by the defendant upon the estate,together with their application.

The account was rendered, objections thereto taken by the plaintiff, and the defendant answeredsaid objections; and on October 22, 1929, the court issued an order requiring the defendant tofurnish certain data, and a summary of the state of the accounts. This was done and the plaintiffagain filed objections thereto, after which the case was tried on January 17, 1930, and judgmententered on February 26, 1030, absolving the defendant upon the following grounds:

(a) That the conditional obligation stated in the contract Exhibit A is void, being subjectto a condition which is void under article 1115 of the Civil Code, the fulfillmentdepending upon the exclusive will of the debtor, that is, lying wholly with him;

(b) That even if the condition were valid, the defendant has not violated the terms of the

contract Exhibit A, and the lease Exhibit B is not an infringement of the agreementcontained in Exhibit A;

(c) That even supposing that the condition were valid, it could not be complied withinasmuch as the obligor has never voluntarily prevented its fulfillment, but, on thecontrary, has endeavored to comply therewith, reducing as much as possible the debts ofthe Espaa Estate within the narrow margin allowed by the price of sugar within the lastfew years:


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(d) That since the plaintiff has failed to show that the debts of the Espaa Estate havebeen fully satisfied, he has no right at present to demand the fulfillment of the conditionalobligation, supposing the latter to be valid, and therefore his alleged grounds of action arenot well taken. (Pp. 95 and 96, Bill of Exceptions.)

The plaintiff has appealed from this judgment, assigning the following alleged errors ascommitted by the lower court:

1. In holding that inasmuch as the plaintiff has not shown that all the debts appertainingto the estate have been fully satisfied, he is not entitled to demand the fulfillment of theobligation contracted in Exhibit A.

2. In holding that Exhibit A leaves the plaintiff such a wide and open field that under it heis permitted to do what he has done and even more; for it is equivalent to authorizing himto impose further obligations upon the estate so as, in effect, to delay the fulfillment ofthe obligation at will.

3. In holding that the contract of lease, Exhibit B, does not violate the conditionsstipulated in Exhibit A.

4. In failing to hold that article 1119 of the Civil Code is not applicable to the case at bar.

5. In dismissing the complaint.

In the deed of sale conveying two-fifths (2/5) of the Espaa Estate to the plaintiff's predecessor-in-interest, the following stipulation appears regarding the payment of the price of P20,000:

(a) As soon as Francisco Boyero has paid the amounts of his debt to Hogar Filipino andMessrs. Hijos de I. de la Rama, or to any other person or entity to whom Mr. Boyero is indebt at present, or shall in future become indebted on account of the exploitation of theEspaa Estate, Francisco Boyero shall pay to Pedro Zorilla the amount of P20,000according to the following terms:

Ten thousand pesos upon the date when the aforesaid estate becomes free of allincumbrances, and the remaining P10,000 within the following year: Provided, That thelatter sum shall earn interest at ten per centum per annum computed from the date whenthe estate becomes free of all encumbrances until it is fully paid;

(b) Should the circumstances be such that Mr. Boyero deems it best to sell the EspaaEstate or should the same be sold under a judgment, and after the payment of the debtswhich encumber said estate, there should be a balance less than P50,000, Pedro Zorillashall only be entitled to receive from Mr. Boyero a sum equal to 2/5 of said balance,deducting therefrom, however, such sums as Mr. Boyero may have paid to Mr. Zorrillafrom this date until the voluntary or involuntary sale mentioned above;


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(c) It is hereby agreed and stipulated by and between the parties that if on account ofsome mishap in exploiting the Espaa Estate or for any other reason whatever Mr.Boyero should lose the estate, whether by attachment and judicial auction or otherwise,Mr. Zorrilla shall not be entitled to claim of Mr. Boyero either the total or any portion ofthe P20,000 mentioned heretofore, or any other amount. (Pp. 8 and 9, Bill of Exceptions.)

Counsel for the appellant contends that these conditions of the sale are void unless a term is fixedfor the payment of the P20,000, which according to said conditions is left entirely with thedefendant, and that, at any rate, even supposing said conditions are valid, the obligation hasbecome demandable under the provisions of article 1119 of the Civil Code from the time thecontract of lease, Exhibit B, was executed and the defendant prevented the fulfillment of thecondition.

Considering the circumstances of the estate at the time said deed of sale was executed, we do notthink the stipulation void which makes the payment of the P20,000 to the vendor Zorrilla dependupon the full satisfaction of the debts encumbering the estate. We must not lose sight of the fact

that these debts were then so numerous and pressing that all of them almost exceeded the valueof the property itself with all its improvements, making it for the moment practically worthless.Of course, the stipulation implied that the defendant herein was under the obligation to liquidatethose debts as soon as possible, applying all the products from the estate which could bedisposed of to such payment.

Taking the stipulation in this sense, it cannot be said that the duty of paying the P20,000depended exclusively upon the defendant's will. With these obligations upon him, and his owngood intentions and earnest desire to meet them, which must be presumed in the absence ofevidence to the contrary, there are still other factors determining the payment of theaforementioned debts, factors as essential as they are independent of the defendant's will, and

subject to those difficulties and hindrances which attend the exploitation of a sugar plantation inthe circumstances as shown by the record. Therefore, article 1117 of the Civil Code is notapplicable to this case.

Whether or not the stipulation in the contract, Exhibit A, authorizing the defendant to sell theestate, either voluntarily or by judicial process, has any bearing on the resolutions of thequestions raised in this case, is immaterial, because the defendant has not sold the estatevoluntarily or by judicial process, and it has neither been alleged nor proved that he intended todo so. Furthermore, in view of the circumstances of the estate at the time of the execution of saidcontract, the stipulation in question is perfectly clear and an adequate measure of protection forthe interests of the contracting parties.

With reference to the period for the payment of P20,000 which the court must fix, according tothe appellant, such a period has already been fixed in the contract, which, according to thejudgment appealed from, is after the debts of the estate are paid. This period, as we haveindicated above, does not depend exclusively upon the defendant's will. Therefore, article 1128of the Civil Code is not applicable to this case.


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In executing the contract of lease, Exhibit B, the defendant has not, in our opinion, violated thecontract of sale, Exhibit A. By virtue of said lease, Claudio Aldecoa assumed the obligation tothe Hijos de I. de la Rama, paying them P11,000 on account of said debt, and giving promissorynotes for the balance, thereby securing a reduction of the obligation and a postponement of itsmaturity. Furthermore, Claudio Aldecoa, according to the contract of lease, agreed to pay the

rents to El Hogar Filipino, which held a first mortgage on the land in question. Claudio Aldecoaalso took charge, under the terms of the lease, of paying the debt to the Philippine National Banksubrogating the latter in its rights to the crop then existing on the plantation. Not one of theseterms nor any other in the lease violates the contract Exhibit A.

As to the agreement of delivering to the defendant Francisco Boyero P2,000 each year during thefirst three years, there is no prohibition against it in the contract Exhibit A, and the defendant, asowner of the plantation, had a right to reserve that amount for his own personal necessities. At allevents, the P6,000 which the defendant would or may have received by virtue of that agreementwould not have been sufficient to satisfy the debts of the estate, and much less fulfill the terms ofthe obligation of the defendant in delivering to the predecessor-in-interest of the plaintiff, or to

the latter his share in the Espaa Estate.The plaintiff alleges that it would have been more advantageous for the estate if the defendanthad continued to till it personally instead of leasing it out. As a matter of fact, had the estate notbeen leased, it would not have been free from the attachment by the creditors Hijos de I. de laRama, whose credit, amounting to P40,000, was already due. The contract of lease, no doubt,brought about a substantial reduction in the original amount of the obligations encumbering theestate.

We are convinced from an examination of the record that the defendant has made efforts tosatisfy the debts of the estate in question as soon as the circumstances have permitted; and

consequently, as the lower court rightly declared, there is no reason for holding him responsiblefor the fact that the debts are not yet entirely paid.

Inasmuch as the record does not show that all the debts of the Espaa Estate have been paid, orthat the defendant is responsible for their not being paid, the plaintiff has no cause of action toask for the relief prayed for in his complaint.

Wherefore, the judgment appealed from is affirmed in so far as it holds that the complaint iswithout a cause of action, and absolves the defendant therefrom.

The plaintiff shall pay the costs of this instance.

Avancea, C.J., Johnson, Street, Malcolm, Villamor, Ostrand and Johns, JJ., concur.


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7. REYNALDO LABAYEN, ET AL., plaintiffs. REYNALDO LABAYEN, appellant,

vs.

TALISAY-SILAY MILLING CO., INC., defendant-appellee.

Angel S. Gamboa for appellant.

R. Nolan for appellee.

MALCOLM,J.:

This is an action for damage in the amount of P28,620 for the alleged breach of a contract to

grind sugar cane in 1920-1921. After a rehearing, the defendant was absolved from the

complaint, andthe plaintiff was condemned, on the cross-complaint, to pay the defendant the

sum of P12,114, without special pronouncement as to costs.

An examination of the record on appeal discloses that the exhibits are missing. Still this is not in

this instance of great importance. The facts as found by the trial judge are not seriously

disputed from the facts which worry the parties.

The plaintiff, along with another, possesses the hacienda known as Dos Hermanos of Talisay,

Occidental Negros. The defendant is a corporation dedicated to the milling of sugar cane. On

August 27, 1919, the plaintiff and the defendant entered into a contract similar to contracts

entered into by the defendant and other planters. It is this contract which is the basis of

plaintiffs cause of action. Among the clauses in the contract are the following:

COVENANTS OF LA CENTRAL

Third: That it shall build and after building it shall do or cause to be done all that is necessary for

its preservation in good condition, and shall, during the period of this agreement, without

charge to the Procedure or Procedures, operate a permanent railroad run by steam or motor,

or both, for the use of the plantation or plantations in the transportation of sugar cane, sugar,

fertilizer, and all such articles as the procedure may need for his estate, his use and that of his

family and employees, and shall cause the main line or a branch thereof, as the case may be, to

reach the point of the plantation to be hereafter described not farther than one mile from ay of

the boundaries of said plantation, whenever the contour of the land, the curves, and elevations

permit the same; it shall provide said railroad with locomotives or motors and wagons in a

number sufficient to make the transportation of sugar cane, sugar, fertilizer, and the above

mentioned articles, and shall likewise build a branch of said railroad in such a way that from the

main line, mill and warehouses, it shall reach the wharf above mentioned, and it shall also

cause the yard of the factory near the sugar mill to be available for use with switches or

otherwise. All the steam locomotives shall be provided with safety spark devices. The railroad

shall consist of a road or path conveniently and duly designated so that, so far as possible, all

the producers may derive equal benefit from said railroad. The right-of way for the main line of

the railroad shall be three and a half (3-?) meters wide measured from the center of the road to

each side, and the branches, switches, or curves shall have more if necessary.


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OBLIGATIONS OF THE PRODUCER

Fifth: That he shall accept the provisions of clauses 7, 8, and 9 of the covenants of La Central

and shall deliver the cane as therein provided; hereby binding himself to plant each year

according to the usage and custom of a good agriculturist not less than one-half of his own

lands devoted to sugar cane subject to the approval of the Committee of Producers leaving theremainder uncultivated.

MUTUAL OBLIGATIONS

10. In case of . . . inability to secure, under reasonable conditions such rights-of-way as La

Central may require, . . . La Central shall notify the Committee of Producers and without

incurring any liability for the non-fulfillment of the terms of this contract, its effects shall be

suspended in part or in whole during such period of incapacity. . . . (Emphasis inserted.)

With particular reference to the third paragraph of the clauses obligating the central, it is

admitted that the central has not continued its railroad through to the Hacienda DosHermanos. The railroad comes to the Hacienda Esmeralda No. 2 and there stops. For the

railroad to extend to the HaciendaDos Hermanos, a distance of four kilometers would require a

gradual elevation of 4.84 per cent to 7 per cent, would make necessary the providing of twenty-

six curves, and would cost about P80,000. The witness H. W. Corp, a civil engeneer employed in

the construction work of the Manila Railroad Company, the Pampanga Sugar Milling Co., and

the Binalbagan Central, testified that it was possible to construct a railroad to the Hacienda Dos

Hermanos but that to do so would be very dangerous.

Recalling that the contract provided for the construction of a railroad whenever the contour of

the land, the curves, and elevations permit the same, and that such construction is possible

but very dangerous, the question then arises if the defendant can excuse itself on this ground,

or if the plaintiff can recover from the defendant for damages for breach of contract, through

inability to mill cane.

It is elemental that the law requires parties to do what they have agreed to do. If a party

charges himself with an obligation possible to be performed, he must abide by it unless

performance is rendered impossible by the act of God, the law, or the other party. A showing of

mere inconvenience, unexpected impediments, or increased expenses is not enough. Equity

cannot relieve from bad bargains simply because they are such. So one must answer in

damages where the impossibility is only so in fact. (Thornborow vs. Whitacre, 2 Ld. Raym.

[1164], 92 E. R., 270; Reid vs. Alaska Packing Co. [1903], 43 Or., 429; Columbus Ry. & Power Co.vs. Columbus [1919], 249 U.S. 399.)

The foregoing are familiar principles to be found in the American and English law of contracts.

The civil law on the subject of obligations is not essentially different. Article 1272 of the Civil

Code provides: Impossible things of services cannot be the subject-matter of contracts. And

article 1184 of the same Code provides: The debtor shall also be relieved from obligations


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which consist in the performance of a act if fulfillment of the undertaking becomes legally or

physically impossible.

May one obligate himself to do something which, when accomplished, will prove to be

dangerous to life and property? We doubt it. Take the contract in question as an example. It

was a general contract of the form used by the central and various proprietors of sugar-canefields. It was intended to be limited in particular application to haciendas where not impeded

by physical impossibility. The contract was qualified by an implied condition which, if given

practical effect, results in absolving the central from its promise. Not to sanction an exception

to the general rule would run counter to public policy and the law by forcing the performance

of a contract undesirable and harmful. (8 Manresas Codigo Civil Espanol, p. 355.)

There is another aspect to the case which has to do with the tenth paragraph of the mutual

obligations of the contract and which concerned the securing of the rightof-way for the

proposed railroad. To get from the Hacienda Esmeralda No. 2 to the Hacienda Dos Hermanos,

the railroad would have to pass through the haciendas of Esteban de la Rama. But he would notgrant permission to use his land for this purpose in 1920, and only consented to do so in 1924.

Here then was a clear case of such a condition of affairs as was contemplated by the contract.

The foregoing points being admitted, it logically follows that the defendant can recover on its

cross-complaint. The defense to the cross-complaint is identical with the theory of the

complaint. For the same reasons that the plaintiff cannot recover must be make good for his

debt to the defendant.

Accepting, therefore, the facts as found by the trial judge, and nothing no reversible error on

any legal question, the judgment appealed from must be as it is hereby affirmed, with the costs

of this instance against the appellant.

Avancea, C.J. Johnson, Street, Villamor, Ostrand, Johns and Romualdez, JJ., concur.


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8. Generoso V. Villanueva et al vs Estate of Gerardo L. Gonzaga

D E C I S I O N

PUNO,J.:

Before us is a petition for review on certiorariassailing the Decision dated January 16,

2003[1]

of the Court of Appeals in CA-G.R. CV No. 46865 which affirmed with modification the

Decision dated December 29, 1993[2]

of the Regional Trial Court (RTC) of Bacolod City in Civil

Case No. 6552. The RTC-Bacolod City declared the Memorandum of Agreement (MOA) between

petitioners and respondents as rescinded, and ordered petitioners to pay moral damages and

attorneys fees to respondents. The Court of Appeals deleted the award for moral damages.

The antecedent facts are as follows:

On January 15, 1990, petitioners Generoso Villanueva and Raul Villanueva, Jr., business

entrepreneurs engaged in the operation of transloading stations and sugar trading, and

respondent Estate of Gerardo L. Gonzaga, represented by its JudicialAdministratrix, respondent

Ma. Villa J. Gonzaga, executed a MOA[3]

which reads:

KNOW ALL MEN BY THESE PRESENTS:

This Memorandum made and entered into by and between:

THE ESTATE OF GERARDO L. GONZAGA represented in the act by

its Administratrix, MA. VILLA J. GONZAGA, Filipino, of legal age, widow and

resident of Bacolod City, hereinafter referred to as the FIRST PARTY,

- a n d -

RAUL VILLANUEVA, JR. and GENEROSO V. VILLANUEVA, Filipinos, of legal

age, married and residents of Bacolod City, hereinafter jointly referred to as the

SECOND PARTY.

W I T N E S S E T H:

1. WHEREAS, the FIRST PARTY is the true and lawful owner of a parcel

of land, Lot No. 1362, covered by TCT No. T-131872 situatedat Brgy. Granada, Bacolod City and known as Hda. San Dionisio Norte;

2. WHEREAS, the aforesaid property is presently mortgaged with the

Philippine National Bank (PNB) as collateral for a loan;

3. WHEREAS, the aforesaid property is already subdivided into sub-lots

although separate titles for each lot is not yet issued;
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4. WHEREAS, the herein SECOND PARTY agrees to purchase portions of

the aforesaid property equivalent to 3,240 sq. meters which portions are

designated as Lots Nos. 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38 & 39 in phase 11

of the subdivision plan;

5. WHEREAS, the SECOND PARTY agrees to purchase the

aforesaid lots at the price of ONE HUNDRED FIFTY (P150.00) PESOS per sq.meter or for a total price of FOUR HUNDRED EIGHTY SIX THOUSAND

(P486,000.00) PESOS subject to the following conditions:

A.) That the FIRST PARTY shall cause the release of the

aforementioned lots from the Philippine National Bank (PNB) at the

earliest possible time.

B.) That the SECOND PARTY agrees to pay the

amount of P486,000.00 as follows:

P100,000.00 - upon the signing of this

agreement.

P191,600.00 - on or before January 10,

1990.

P194,400.00 - upon the approval by the

PNB of the release of the

lots.

C.) That it is hereby agreed that the ONE HUNDRED

THOUSAND (P100,000.00) PESOS down payment shall at the same time

be considered as earnest money which shall be forfeited in the event

the SECOND PARTY withdraws from this agreement.

D.) That upon payment of 60% of the purchase price, the

SECOND PARTY may start to introduce improvements in the area if

they so desire.E.) That upon the release by the Philippine National Bank

(PNB) of the lots subject of this agreement, the FIRST PARTY shall

immediately execute a Deed of Sale in favor of the SECOND PARTY. All

expenses for documentation and capital gains shall be borne by the

FIRST PARTY, while expenses for transfer of title to the SECOND PARTY

shall be borne by the latter.

IN WITNESS WHEREOF, the parties have hereunto set their hands this

15th

day of January, 1990 in this City of Bacolod, Philippines. [emphases added]

As stipulated in the agreement, petitioners introduced improvements after

paying P291,600.00 constituting sixty (60%) percent of the total purchase price of the lots.

Petitioners then requested permission from respondent Administratrix to use the premises for

the next milling season. Respondent refused on the ground that petitioners cannot use the

premises until full payment of the purchase price. Petitioners informed respondent that their

immediate use of the premises was absolutely necessary and that any delay will cause them


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substantial damages. Respondent remained firm in her refusal, and demanded that petitioners

stop using the lots as atransloading station to service the Victorias Milling Company unless they

pay the full purchase price. In a letter-reply dated April 5, 1991, petitioners assured respondent

of their readiness to pay the balance but reminded respondent ofherobligation to redeem thelots from mortgage with the Philippine National Bank (PNB).

[4]Petitioners gave respondent ten

(10) days within which to do so.[5]

On April 10, 1991, respondent Administratrix wrote petitioners informing them that the

PNB had agreed to release the lots from mortgage. She demanded payment of the balance of

the purchase price. Enclosed with the demand letter was the PNBs letter of approval

dated April 8, 1991,[6]

marked as Exhibit 3-B, which reads -

Mrs. Ma. Villa J. GonzagaJudicial Administratrix

Int. Est. of Gerardo L. Gonzaga

La Salle Subdivision

Bacolod City

Dear Mrs. Gonzaga:

We are pleased to inform you that your request for the partial release of

securities, particularly the 3,240 sq. m. agricultural land x x xcovered by TCT No.

T-31113 has been approved by our Senior Management Credit Committee I

on April 1, 1991 subject to the following conditions:

1. The sale be approved by the Court insofar as the interest of the

estate is concerned;

2. Payment of two (2) annual amortizations of the restructured

accounts in addition to P50,000.00 to be derived from sale of lot

sought to be released;

3. Such terms and conditions that our Legal Dept. may impose to

protect the interest of the Bank.

Please see us for the preparation of the covering documents.

[emphases added]

Very truly yours,

(signed)

CECILIA S. GAYENALOAsst.

Manager

In their letter-reply dated April 18, 1991,[7]

petitioners demanded that respondent show

the clean titles to the lots first before they pay the balance of the purchase price. Respondent

merely reiterated the demand for payment. Petitioners stood pat on their demand.
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On May 28, 1991, respondent Administratrix executed a Deed of Rescission rescinding

the MOA on two grounds: (1) petitioners failed to pay the balance of the purchase price despite

notice of the lots release from mortgage, and (2) petitioners violated the MOA by using the lots

as a transloading station without permission from the respondents.In their Letter dated June 13, 1991, petitioners, through counsel, formally demanded the

production of the titles to the lots before they pay the balance of the purchase price. The

demand was ignored. Consequently, on June 19, 1991, petitioners filed a complaint against

respondents for breach of contract, specific performance and damages before the RTC-

Bacolod City, docketed as Civil Case No. 6552. Petitioners alleged that respondents delayed

performance oftheirobligation by unreasonably failing to secure the release of the lots from

mortgage with the PNB within the earliest possible time, as stipulated in the MOA. Petitioners

prayed that respondents be ordered to produce the clean titles to the lots before they pay the

balance of the purchase price.

The trial court decided the case in favor of respondents. The dispositive portion of the

decision reads

(1) Declaring the Memorandum of Agreement, Exh. C rescinded;

consequently ownership and possession of Lots 28 to 39, inclusive, of Phase II of

the subdivision plan covered by TCT No. T-31113 are hereby restored to

defendants, and defendants (sic) are thereby ordered to vacate the premises of

said lots;

(2) Ordering plaintiffs to jointly and severally pay

defendants: P20,000.00 as moral damages; and P15,000.00 as attorneys fees;

(3) Ordering defendants to solidarily pay or refund plaintiffs: the sum

of P100,000.00 paid by the latter as down payment on the aforesaid

Memorandum of Agreement on December 18, 1989, with legal interest at 6%

per annum from said date up to and until the amount is fully paid or refunded;

and another sum of P191,600.00 paid by the latter to the former in connection

with the said Memorandum of Agreement on January 10, 1990, with the same

rate of interest at 6% per annum from said date up to and until the amount is

fully paid or refunded; and(4) Condemning plaintiffs to pay the cost of suit.

[8]

Petitioners filed a petition for review before the Court of Appeals. On January 16, 2003,

the Court of Appeals affirmed the trial courts decision but deleted the award for moral

damages on the ground that petitioners were not guilty of bad faith in refusing to pay the

balance of the purchase price.[9]

Hence, this petition.
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Petitioners raise the following issues:

1. Whether x x x respondents failed to comply with their reciprocal obligation

of securing the release of the subject lots from mortgage indebtedness with

the Philippine National Bank.

2. Whether x x x the delivery of the titles corresponding to the twelve (12)lots subject of the Memorandum of Agreement is a precondition to the

payment by the petitioners of the balance of the consideration.

3. Whether x x x petitioners did incur (sic) delay in the performance of their

reciprocal obligation under the Memorandum of Agreement.

4. Whether x x x there is legal, or even a factual, ground for the rescission of

the Memorandum of Agreement.[10]

We will resolve first the procedural objections raised by the respondents.

Respondents contend that the petition should be dismissed for late filing, and irregular

execution of the affidavit of service attached to the petition. Respondents allege that the

petition was filed late as there was no evidence to show that petitioners motion for extension

of time to file the petition has been granted by the Court. Petitioners allegedly received a copy

of the assailed Court of Appeals decision on January 28, 2003 but filed the petition for review

on March 12, 2003 only, contrary to Section 2, Rule 45 of the1997 Rules of Civil

Procedure.[11]

In addition, the Affidavit of Service attached to the petition was irregularly

executed on March 13, 2003, a day after the petition has been filed in Court.

Respondents contentions are not meritorious. The records show that petitioners

motion for 30 days extension of time to file the petition for review has been granted in our

Resolution dated March 26, 2003. Petitioners were given thirty (30) days from the expiration of

the original period, or until March 13, 2003, within which to file the petition for review.

Although our resolution is dated after the extension prayed for has already expired, we

specifically conditioned the grant of extension upon the timeliness of the filing of the petition

and payment by petitioners of the correct docket and other filing fees. Petitioners did so. The

petition for review was posted by registered mail on March 13, 2003, as shown by the date

appearing on the first page of the original copy of the petition filed with the Court.[12]The

Affidavit of Service was thus regularly executed on March 13, 2003, the same day that the

petition was posted by registered mail. No reason exists therefore for the dismissal of the

petition on technical grounds, as respondents erroneously contend.
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On the merits of the case, we agree with the petitioners that the Court of Appeals erred

in ruling that respondents had already fulfilled their obligation to cause the release of the lots

from mortgage with the PNB at the time they demanded payment of the balance of the

purchase price. The finding of the appellate court is refuted by Exh. 3-B and by thetestimonial evidence on record.

A reading of Exhibit 3-B,[13]

which is the PNBs letter of approval dated April 8, 1991,

clearly shows that the approval was conditional. Three (3) conditions were laid down by the

bank before the lots could be finally released from mortgage. The three conditions were: (1)

that respondents secure approval of the sale from the intestate court i

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