G.R. No. L-11827 July 31, 1961FERNANDO A. GAITE,plaintiff-appellee,vs.ISABELO FONACIER, GEORGE KRAKOWER, LARAP MINES & SMELTING CO., INC., SEGUNDINA VIVAS, FRNACISCO DANTE, PACIFICO ESCANDOR and FERNANDO TY,defendants-appellants.Alejo Mabanag for plaintiff-appellee.Simplicio U. Tapia, Antonio Barredo and Pedro Guevarra for defendants-appellants.REYES, J.B.L.,J.:This appeal comes to us directly from the Court of First Instance because the claims involved aggregate more than P200,000.00.Defendant-appellant Isabelo Fonacier was the owner and/or holder, either by himself or in a representative capacity, of 11 iron lode mineral claims, known as the Dawahan Group, situated in the municipality of Jose Panganiban, province of Camarines Norte.By a "Deed of Assignment" dated September 29, 1952(Exhibit "3"), Fonacier constituted and appointed plaintiff-appellee Fernando A. Gaite as his true and lawful attorney-in-fact to enter into a contract with any individual or juridical person for the exploration and development of the mining claims aforementioned on a royalty basis of not less than P0.50 per ton of ore that might be extracted therefrom. On March 19, 1954, Gaite in turn executed a general assignment (Record on Appeal, pp. 17-19) conveying the development and exploitation of said mining claims into the Larap Iron Mines, a single proprietorship owned solely by and belonging to him, on the same royalty basis provided for in Exhibit "3". Thereafter, Gaite embarked upon the development and exploitation of the mining claims in question, opening and paving roads within and outside their boundaries, making other improvements and installing facilities therein for use in the development of the mines, and in time extracted therefrom what he claim and estimated to be approximately 24,000 metric tons of iron ore.For some reason or another, Isabelo Fonacier decided to revoke the authority granted by him to Gaite to exploit and develop the mining claims in question, and Gaite assented thereto subject to certain conditions. As a result, a document entitled "Revocation of Power of Attorney and Contract" was executed on December 8, 1954 (Exhibit "A"),wherein Gaite transferred to Fonacier, for the consideration of P20,000.00, plus 10% of the royalties that Fonacier would receive from the mining claims, all his rights and interests on all the roads, improvements, and facilities in or outside said claims, the right to use the business name "Larap Iron Mines" and its goodwill, and all the records and documents relative to the mines. In the same document, 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, in consideration of the sum of P75,000.00, P10,000.00 of which was paid upon the signing of the agreement, andb. The balance of SIXTY-FIVE THOUSAND PESOS (P65,000.00) 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., its assigns, administrators, or successors in interests.To secure the payment of the said balance of P65,000.00, Fonacier promised to execute in favor of Gaite a surety bond, and pursuant to the promise, Fonacier delivered to Gaite a surety bond dated December 8, 1954 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"). Gaite testified, however, that when this bond was presented to him by Fonacier together with the "Revocation of Power of Attorney and Contract", Exhibit "A", on December 8, 1954, he refused to sign said Exhibit "A" unless another bond under written by a bonding company was put up by defendants to secure the payment of the P65,000.00 balance of their price of the iron ore in the stockpiles in the mining claims. Hence, a second bond, also dated December 8, 1954 (Exhibit "B"),was executed by the same parties to the first bond Exhibit "A-1", with the Far Eastern Surety and Insurance Co. as additional surety, but it provided that the 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, and that, furthermore, the liability of said surety company would automatically expire on December 8, 1955. Both bonds were attached to the "Revocation of Power of Attorney and Contract", Exhibit "A", and made integral parts thereof.On the same day that Fonacier revoked the power of attorney he gave to Gaite and the two executed and signed the "Revocation of Power of Attorney and Contract", Exhibit "A", Fonacier 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 in question, together with the improvements therein and the use of the name "Larap Iron Mines" and its good will, in consideration of certain royalties. Fonacier likewise transferred, in the same document, the complete title to the approximately 24,000 tons of iron ore which he acquired from Gaite, to the Larap & Smelting Co., in consideration for the signing by the company and its stockholders of the surety bonds delivered by Fonacier to Gaite (Record on Appeal, pp. 82-94).Up to December 8, 1955, when the bond Exhibit "B" expired with respect to the Far Eastern Surety and Insurance Company, 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 and his sureties payment of said amount, on the theory that they had lost right to make use of the period given them when their bond, Exhibit "B" automatically expired (Exhibits "C" to "C-24"). And when Fonacier and his sureties failed to pay as demanded by Gaite, the latter filed the present complaint against them in the Court of First Instance of Manila (Civil Case No. 29310) for the payment of the P65,000.00 balance of the price of the ore, consequential damages, and attorney's fees.All the defendants except Francisco Dante set up the uniform defense that the obligation sued upon by Gaite was subject to a condition that the amount of P65,000.00 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.; that up to the time of the filing of the complaint, no sale of the iron ore had been made, hence the condition had not yet been fulfilled; and that consequently, the obligation was not yet due and demandable. Defendant Fonacier also contended that only 7,573 tons of the estimated 24,000 tons of iron ore sold to him by Gaite was actually delivered, and counterclaimed for more than P200,000.00 damages.At the trial of the case, the parties agreed to limit the presentation of evidence to two issues:(1) Whether or not the obligation of Fonacier and his sureties to pay Gaite P65,000.00 become due and demandable when the defendants failed to renew the surety bond underwritten by the Far Eastern Surety and Insurance Co., Inc. (Exhibit "B"), which expired on December 8, 1955; and(2) Whether the estimated 24,000 tons of iron ore sold by plaintiff Gaite to defendant Fonacier were actually in existence in the mining claims when these parties executed the "Revocation of Power of Attorney and Contract", Exhibit "A."On the first question, the lower court held that the obligation of the defendants to pay plaintiff the P65,000.00 balance of the price of the approximately 24,000 tons of iron ore was one with a term: i.e., that it would be paid upon the sale of sufficient iron ore by defendants, such sale to be effected within one year or before December 8, 1955; that the giving of security was a condition precedent to Gait's giving of credit to defendants; and that as the latter failed to put up a good and sufficient security in lieu of the Far Eastern Surety bond (Exhibit "B") which expired on December 8, 1955, the obligation became due and demandable under Article 1198 of the New Civil Code.As to the second question, the lower court found that plaintiff Gaite did have approximately 24,000 tons of iron ore at the mining claims in question at the time of the execution of the contract Exhibit "A."Judgment was, accordingly, rendered in favor of plaintiff Gaite ordering defendants to pay him, jointly and severally, P65,000.00 with interest at 6% per annum from December 9, 1955 until payment, plus costs. From this judgment, defendants jointly appealed to this Court.During the pendency of this appeal, several incidental motions were presented for resolution: a motion to declare the appellants Larap Mines & Smelting Co., Inc. and George Krakower in contempt, filed by appellant Fonacier, and two motions to dismiss the appeal as having become academic and a motion for new trial and/or to take judicial notice of certain documents, filed by appellee Gaite. The motion for contempt is unmeritorious because the main allegation therein that the appellants Larap Mines & Smelting Co., Inc. and Krakower had sold the iron ore here in question, which allegedly is "property in litigation", has not been substantiated; and even if true, does not make these appellants guilty of contempt, because what is under litigation in this appeal is appellee Gaite's right to the payment of the balance of the price of the ore, and not the iron ore itself. As for the several motions presented by appellee Gaite, it is unnecessary to resolve these motions in view of the results that we have reached in this case, which we shall hereafter discuss.The main issues presented by appellants in this appeal are:(1) that the lower court erred in holding that the obligation of appellant Fonacier to pay appellee Gaite the P65,000.00 (balance of the price of the iron ore in question)is one with a period or term and not one with a suspensive condition, and that the term expired on December 8, 1955; and(2) that the 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.The first issue involves an interpretation of the following provision in the contract Exhibit "A":7. That Fernando Gaite or Larap Iron Mines hereby transfers to Isabelo F. Fonacier all his rights and interests over the 24,000 tons of iron ore, more or less, above-referred to together with all his rights and interests to operate the mine in consideration of the sum of SEVENTY-FIVE THOUSAND PESOS (P75,000.00) which the latter binds to pay as follows:a. TEN THOUSAND PESOS (P10,000.00) will be paid upon the signing of this agreement.b. The balance of SIXTY-FIVE THOUSAND PESOS (P65,000.00)will be paid from and out of the first letter of credit covering the first shipment of iron ore made by the Larap Mines & Smelting Co., Inc., its assigns, administrators, or successors in interest.We find the court below to be legally correct in holding that the shipment or local sale of the iron ore is not a condition precedent (or suspensive) to the payment of the balance of P65,000.00, but was only a suspensive period or term. What characterizes a conditional obligation is the fact that its efficacy or obligatory force (as distinguished from its demandability) is subordinated to the happening of a future and uncertain event; so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. That the parties to the contract Exhibit "A" did not intend any such state of things to prevail is supported by several circumstances:1) The words of the contract express no contingency in the buyer's obligation to pay: "The balance of Sixty-Five Thousand Pesos (P65,000.00)will be paidout of the first letter of credit covering the first shipment of iron ores . . ." etc. There is no uncertainty that the payment will have to be made sooner or later; what is undetermined is merely theexact dateat which it will be made. By the very terms of the contract, therefore, the existence of the obligation to pay is recognized; only itsmaturityordemandabilityis deferred.2) A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price),but each party anticipates performance by the other from the very start. While in a sale the obligation of one party can be lawfully subordinated to an uncertain event, so that the other understands that he assumes the risk of receiving nothing for what he gives (as in the case of a sale of hopes or expectations,emptio spei), it is not in the usual course of business to do so; hence, the contingent character of the obligation must clearly appear. Nothing is found in the record to evidence that Gaite desired or assumed to run the risk of losing his right over the ore without getting paid for it, or that Fonacier understood that Gaite assumed any such risk. This is proved by the fact that Gaite insisted on a bond a to guarantee payment of the P65,000.00, an not only upon a bond by Fonacier, the Larap Mines & Smelting Co., and the company's stockholders, but also on one by a surety company; and the fact that appellants did put up such bonds indicates that they admitted the definite existence of their obligation to pay the balance of P65,000.00.3) To subordinate the obligation to pay the remaining P65,000.00 to the sale or shipment of the ore as a condition precedent, would be tantamount to 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. Appellants would thus be able to postpone payment indefinitely. The desireability of avoiding such a construction of the contract Exhibit "A" needs no stressing.4) Assuming that there could be doubt whether by the wording of the contract the parties indented a suspensive condition or a suspensive period (dies ad quem) for the payment of the P65,000.00, the rules of interpretation would incline the scales in favor of "the greater reciprocity of interests", since sale is essentially onerous. The Civil Code of the Philippines, Article 1378, paragraph 1, in fine, provides:If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of interests.and there can be no question that greater reciprocity obtains if the buyer' obligation is deemed to be actually existing, with only its maturity (due date) postponed or deferred, that if such obligation were viewed as non-existent or not binding until the ore was sold.The only rational view that can be taken is that 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.This issue settled, the next point of inquiry is whether appellants, 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; or, in other words, whether or not they are entitled to take full advantage of the period granted them for making the payment.We agree with the court below that the appellant have forfeited the right court below that the appellants have forfeited the right to compel Gaite to wait for the sale of the ore before receiving payment of the balance of P65,000.00, because of their failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent guarantee. The expiration of the bonding company's undertaking on December 8, 1955 substantially reduced the security of the vendor's rights as creditor for the unpaid P65,000.00, a security that Gaite considered essential and upon which he had insisted when he executed the deed of sale of the ore to Fonacier (Exhibit "A"). The case squarely comes 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.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 Exhibit "A.".All the alternatives, therefore, lead to the same result: that Gaite acted within his rights in demanding payment and instituting this action one year from and after the contract (Exhibit "A") 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 P65,000.00 became due and payable thereafter.Coming now to the second issue in this appeal, which is whether 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, we must, at the outset, stress two things:first, that this is a 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 Exhibit "A," being a mere estimate by the parties of the total tonnage weight of the mass; andsecond, that the 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.The sale between the parties is a sale of a specific mass or iron ore because no provision was made in their contract for the measuring or weighing of the ore sold in order to complete or perfect the sale, nor was the price of P75,000,00 agreed upon by the parties based upon any such measurement.(see Art. 1480, second par., New Civil Code). The subject matter of the sale is, therefore, a determinate object, the mass, and not the actual number of units or tons contained therein, so that all that was required of the seller Gaite was to deliver in good faith to his buyer all of the ore found in the mass, notwithstanding that the quantity delivered is less than the amount estimated by them (Mobile Machinery & Supply Co., Inc. vs. York Oilfield Salvage Co., Inc. 171 So. 872, applying art. 2459 of the Louisiana Civil Code). There is no charge in this case that Gaite did not deliver to appellants all the ore found in the stockpiles in the mining claims in questions; Gaite had, therefore, complied with his promise to deliver, and appellants in turn are bound to pay the lump price.But assuming that plaintiff Gaite undertook to sell and appellants undertook to buy, not a definite mass, but approximately 24,000 tons of ore, so that any substantial difference in this quantity delivered would entitle the buyers to recover damages for the short-delivery, was there really a short-delivery in this case?We think not. As already stated, neither of the parties had actually measured or weighed the whole mass of ore cubic meter by cubic meter, or ton by ton. Both parties predicate their respective claims only upon an estimated number of cubic meters of ore multiplied by the average tonnage factor per cubic meter.Now, appellee Gaite asserts that there was a total of 7,375 cubic meters in the stockpiles of ore that he sold to Fonacier, while appellants contend that by actual measurement, their witness Cirpriano Manlagit found the total volume of ore in the stockpiles to be only 6.609 cubic meters. As to the average weight in tons per cubic meter, the parties are again in disagreement, with appellants claiming the correct tonnage factor to be 2.18 tons to a cubic meter, while appellee Gaite claims that the correct tonnage factor is about 3.7.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, a government pensionado to the States and a mining engineering graduate of the Universities of Nevada and California, with almost 22 years of experience in the Bureau of Mines. 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 make an official estimate of the amount of iron ore in Gaite's stockpiles after the dispute arose.Even granting, then, that the estimate of 6,609 cubic meters of ore in the stockpiles made by appellant's witness Cipriano Manlagit is correct, if we multiply it by the average tonnage factor of 3.3 tons to a cubic meter, the product is 21,809.7 tons, which is not very far from the estimate of 24,000 tons made by appellee Gaite, considering that actual weighing of each unit of the mass was practically impossible, so that a reasonable percentage of error should be allowed anyone making an estimate of the exact quantity in tons found in the mass. It must not be forgotten that the contract Exhibit "A" expressly stated the amount to be 24,000 tons,more or less. (ch. Pine River Logging & Improvement Co. vs U.S., 279, 46 L. Ed. 1164).There was, consequently, no short-delivery in this case as would entitle appellants to the payment of damages, nor could Gaite have been guilty of any fraud in making any misrepresentation to appellants as to the total quantity of ore in the stockpiles of the mining claims in question, as charged by appellants, since Gaite's estimate appears to be substantially correct.WHEREFORE, finding no error in the decision appealed from, we hereby affirm the same, with costs against appellants.G.R. No. L-25885 August 18, 1972LUZON BROKERAGE CO., INC.,plaintiff-appellee,vs.MARITIME BUILDING CO., INC. and MYERS BUILDING CO., INC., defendants, MARITIME BUILDING CO., INC.,defendant-appellant.R E S O L U T I O NREYES J.B.L.,J.:pAppellant Maritime Building Co., Inc. moves to reconsider this Court's decision of 31 January 1972,aon several grounds that will be taken upseriatim.IMaritime contends that it was error for this Court to hold that its action in "suspending payments to Myers corporation of the installments for March to May, 1961, was a breach of the contract tainted with fraud or malice (dolo) as distinguished from mere negligence (culpa) ... and therefore incompatible with good faith."(a) It is argued that Maritime's bad faith was not alleged nor put in issue in the pleadings.This pretense is incorrect: movant Maritime, in its answer to the cross-claim Myers Building Co., Inc., specifically pleaded good faith as an affirmative defense in paragraphs 4, 11, 13 and 14 of its answer to the cross-claim of Myers (Record on Appeal, pages 118, 120, 121, 122), and hence, placed its good or bad faith in issue. Anyway, whether a party acted in good faith or bad faith, in admittedly non-performing its part of a bargain, is a conclusion of law drawn by the Court from the circumstances proved in the case.b) The facts as narrated in the decision and revealed by the proof clearly show that as early as 24 March 1961, Maritime had requested a "suspension" or "moratorium" in its monthly payments until the close of 1961, allegedly because "we are encountering some unusual expenses with the warehouses" (Exhibit "A-Myers"), but this request was turned down on 29 March 1961 by the Myers Corporation advising George Schedler, the son of Edmund Schedler, main stockholder of Maritime, that his request "can not be granted as I have specific instructions from the Board (of Myers Co.) not to agree to any suspension of payments under any condition" (Exhibit "5-Myers"). This refusal is referred to in Edmund Schedler's letter of 7 April 1961 (Exhibit "11-Maritime"). Notwithstanding Myers Corporation's categorical refusal to agree to a suspension or moratorium, and after Myers had called its attention to the violation of the contract (Exhibit "11-A"), Schedler, on behalf of Maritime, insisted on suspending its payments allegingfor the first timethat the late F. H. Myers had "agreed to indemnify and hold me harmless from the Luzon Labor Union claims which are in litigation" and giving notice that "my wife and Iintend to withhold any further paymentsto the Myers Building Co. or Estate ...". This intention was reiterated in the letter Exhibit 12-Maritime, wherein it was added that "if the Myers people will deposit in trustwith Mr. C. Parsons25,000 pesosto cover my costs to date, I will then deposit with Mr. Parsonsin trust15,000 pesos for March, April and May ...".c) We can not see how it can now be claimed that Maritime's obligation had been substantially performed in good faith. Maritime was obligated to make monthly payments to Myers Building Co. under its contract, until the price of the building was paid in full and yet it repeatedly refused to do so, on the pretext that the late F. H. Myers had obligated himself to indemnify Edmund Schedler from the labor claims against the Luzon Stevedoring Co., that Myers had sold to Schedler in a totally separate contract. As noted in the main decision, F. H. Myers was not the vendor Myers Building corporation; moreover, he had already died and his estate had been closed without Schedler or Maritime having filed any contingent claim before closure of the estate proceedings, as required by Revised Rule 88, The claims of Schedler or Maritime were, therefore, already barred, even assuming that there was any truth to the alleged promise of the late Myers, which is not supported by any reliable evidence. And even then, the claim was at the most payable by the heirs of F. H. Myers, but not by the Myers corporation, which had no duty to assume the guarantee. Plainly, the non-payment for March, April and May, 1961, due to the corporation, was intentional and deliberate non-performance, designed to extrajudicially force Myers corporation to grant the moratorium originally solicited and rejected, thus constituting, as held in the main decision,dolo(in the performance,in solvendo) and not mereculpaor negligence.xCasta'n Der. Civil, Vol. 3, 7th Ed., page 129, quotes with approval Pairo'sTeoria de Obligacioneson this point:Aunque nuestro Codigo civil no de la nocion del dolo como causa de incumplimiento de la obligacion se ajusta en realidad a ese criterio doctrinal, que puede encontrar un apoyo en el texto del art. 1.107. Como observa Diaz Pairo, en dicho preceptose contrapone el deudor de buena fe y el deudor por dolo, a resultando asi queeste ultimoes eldeudor de mala fe, y para la existencia de esta no hace falta la intencion de perjudicar o de daar, bastando infringir de modo voluntario el deber juridico que pesa sobre el deudor a sabiendas, es decir, conscientemente. Esa voluntariedad y conciencia tornan doloso el incomplimiento, aunque, como es posible, el deudor no haya tenido intencion de perjudicar o de daar al acreedor, contando, lo que no es raro, con que sobrevengan hechos que le permitan satisfacer mas tarde su obligacion. (Teoria, t. 1, pag. 116). (Emphasis supplied )d) Nor is it admissible, as movant contends, that there had been substantial performance by it or that the offer to deposit in trust the missing amounts were equivalent to payment. When Maritime suspended its payments for March-May, 1961, there was a balance of P319,300.65 on the principal of its obligation, plus interest, i.e., nearly 1/3 of the original indebtedness. And as to the offer to deposit the payments due in trust or in escrow, it can not be considered payment since it was a conditional tender, and would have left the creditor (Myers corporation) unable to make use of the money rightfully due to it. This Court, inPhilippine National Bank vs. Relativo, et al., 92 Phil. 203, has ruled that a tender to be valid must be unconditional; and even then, a tender alone is not a mode of extinguishing obligations, unless followed by consignation.Furthermore, for Myers to accept the proposed deposit of the monthly paymentsin trustorescrowwould be equivalent to an admission on its part of the validity or truthfullness of Maritime's claim and of Myers Corporation's liability for an obligation of an individual stockholder. Nor is there any justification on record to warrant the disregard of the corporate personality of Myers Building Corporation inthe present case.IIMovant Maritime's insistence upon the application to the present case of Art. 1191 of the Civil Code of the Philippines (tacit resolutory condition in reciprocal obligations) studiously ignores the fact that Myers obligation to convey the property was expressly made subject to asuspensive(precedent) condition of the punctual and full payment of the balance of the purchase price.1This is apparent from clauses (d) and (i) of the contract of sale (Record on Appeal, pages 64, 67).(d) It is hereby agreed, covenanted and stipulated by the between the parties hereto that the Vendor will execute and deliver to the Vendeea definite or absolute deed of sale upon the full paymentby the Vendee of theunpaid balance of the purchase pricehereinabove stipulated; that should the Vendeefail to pay any of the monthly installments, when due, or otherwise fail to comply with any of the terms and conditions herein stipulated, then thisdeed of Condition Sale shall automaticallyand without any further formality,become null and void, and all sums so paid by the Vendee by reason thereof, shall be considered as rentals and the Vendor shall then and there be free to enter into the premises, take possession thereof or sell the properties to any other party.xxx xxx xxx( i ) Title to the properties subject of this contract remains with the Vendorand shall pass to, and be transferred in the name of the Vendeeonly upon complete payment of the full priceabove agreed upon. (Emphasis supplied)It is well to emphasize here the express stipulations (paragraph d) that ... the Vendor (Myers)will execute and deliverto the Vendeea definiteandabsolute deed of sale upon full paymentby the Vendee of the unpaid balance of the purchase price ...as well as that (paragraph i of the deed of sale) Titleto the properties subject to this contractremains with the Vendorand shallpass to and be transferred in the nameof the Vendeeonlyupon thecomplete payment of the full priceabove agreed upon.make it crystal clear that the full payment of the price (through the punctual performance of the monthly payments) was a conditionprecedentto the execution of the final sale and to the transfer of the property from Myers to Maritime; so that there was to be no actual sale until and unless full payment was made.2It is uncontroverted that none was here made. The upshot of all these stipulations is that in seeking the ouster of Maritime for failure to pay the price as agreed upon, Myers wasnot rescinding(or more properly,resolving) the contract, but preciselyenforcingit according to its express terms. In its suit Myers was not seeking restitution to it of the ownership of the thing sold (since it was never disposed of), such restoration being the logical consequence of the fulfillment of aresolutorycondition, express or implied (article 1190); neither was it seeking a declaration that its obligation to sell was extinguished. What it sought was a judicial declaration that because thesuspensivecondition (full and punctual payment) hadnotbeen fulfilled, its obligation to sell to Maritimenever aroseor never became effective and, therefore, it (Myers) was entitled to repossess the property object of the contract, possession being a mere incident to its right of ownership. It is elementary that, as stated, by Castan, b) Si lacondicion suspensivaIlega a faltar, la obligacionse tiene por no existente, y el acreedorpierde todo derecho, incluso el de utilizar las medidas conservativas. (3 Castan, Derecho Civil, 7a Ed., p. 107). (Also Puig Pea, Der. Civ., T. IV (1), p. 113)Movant Maritime's failure to take into account the fact that Myers' promise to sell was subject to a suspensive condition (not to a suspensive period) renders all its discussion about bilateral or reciprocal contracts and the application of Articles 1198 and 1592 of the Civil Code of the Philippines (both of which deal with rescission or resolution of contractual obligation), with consequent mutual restitution,1a pure academic exercise without applicability to the case at bar.Similarly, there is no point in discussing whether or not Maritime's breach of contract was casual or serious, since the issue here is whether the suspensive condition (of paying P5,000.00 monthly until full price is paid) was or was not fulfilled, and it is not open to dispute that the stipulated suspensive condition was left unaccomplished through the deliberate actions of movant Maritime. The stubborn fact is that there can be no rescission or resolution of an obligation as yet non-existence because the suspensive condition did not happen.Resolving identical arguments, as those of Maritime, this Court ruled inManuel vs. Rodriguez, 109 Phil. 9-10, as follows:... Plaintiff-appellant, however, argues (Errors I-IV; VI; VIII) that the Payatas Subdivision had no right to cancel the contract, as there was no demand by suit or notarial act, as provided by Article 1504 of the Old Code (Art. 1592, N. C. C.). This is without merit, because Article 1504 requiring demand by suit or notarial act in case the vendor or realty wants to rescind, does not apply to a contract to sell or promise to sell, where title remains with the vendor until fulfillment to a positive suspensive condition, such as full payment of the price (Caridad Estates vs. Santero, 71 Phil. 114, 121; Albea vs. Inquimboy, 86 Phil. 476; 47 Off. Gaz. Supp. 12, p. 131; Jocson vs. Capitol Subdivision Inc., et al., L-6573, February 28, 1955; Miranda vs. Caridad Estates, L-2077 and Aspuria vs. Caridad Estates, L-2121, October 3, 1950).The contention of plaintiff-appellant that Payatas Subdivision Inc. had no right to cancel the contract as there was only a "casual breach" is likewise untenable. In contracts to sell, where ownership is retained by the seller and is not to pass until the full payment of the price, such payment, as we said, is a positive suspensive condition, the failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force, in accordance with Article 1177 of the Old Civil Code. To argue that there was only a casual breach is to proceed from the assumption that the contract is one of absolute sale, where non-payment is a resolutory condition, which is not the case.The foregoing quotation is the best refutation of Maritime's contention that the ruling isobiterwhen in fact it passed on issues tendered on appeal.The stipulations of the contract being the law between the parties, Courts have no alternative but to enforce them as they were agreed and written, there being no law or public policy against the stipulated forfeiture of payments already made (Manila Racing Club vs. Manila Jockey Club, 69 Phil. 57).IIIMaritime also pleads that as the stipulated forfeiture of the monthly payments already made is in fact a penalty, and the same should be equitably reduced. We find no justification for such reduction for the following reasons:a) Maritime intentionally risked the penalty by deliberately refusing to make the monthly payments for March to May 1961, and trying to inject into its contract with Myers corporation the totally unconnected personal promise of F. H. Myers to indemnify it for eventual liability to the Luzon Labor Union, allegedly made on the occasion of the sale of the Luzon Brokerage to E. Schedler by F. H. Myers, and trying toextrajudiciallyforce Myers corporation to assume responsibility for such liability;b) Under Article 1234 of the present Civil Code, an obligation must besubstantiallyperformedin good faith, for such performance to stand in lieu of payment; Maritime, on the contrary, acted withdoloor bad faith, and is not in a position to invoke the benefits of the article.c) Maritime's loss of the forfeited payments was more than balanced by the rentals it received from the Luzon Brokerage as lessee of the building for the corresponding periods, at a rate double the monthly payments required of Maritime under its contract with Myers.IVEven granting that the contract is a plain sale of real property with deferred payment of the price, as contended by movant Maritime, its position will not be imposed. By Article 1592 of the Civil Code of the Philippines,though it may have been stipulated that upon the 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 made upon him either judicially or by a notarial act. After the demand, the Court may not grant him a new term.It has been pointed out in the main decision that the answer filed by Myers in the court below to the Luzon Brokerage's complaint for interpleader constituted in effect a judicial demand for rescission of the contract of sale, and for repossession of the real estate sold. Hence, Maritime can not demand further time to pay, and must conform to the rescission of the contract and the surrender of the premises, with all the consequences stipulated in the original contract.Being an article specifically applicable to sales of real property, this Article 1592 controls the general principles expressed by Article 1198 on reciprocal obligations.The lack of merit of Maritime's procedural objections have been demonstrated in the main decision and there is no point in reiterating what was there stated.WHEREFORE, the motion for reconsideration is denied.

[G.R. No. 131784.September 16, 1999]FELIX L. GONZALES,petitioner, vs. THE HEIRS OF THOMAS and PAULA CRUZ, herein represented by ELENA C. TALENS,respondents.D E C I S I O NPANGANIBAN,J.:If a stipulation in a contract admits of several meanings, it shall be understood as bearing that import most adequate to render it effectual.An obligation cannot be enforced unless the plaintiff has fulfilled the condition upon which it is premised.Hence, an obligation to purchase cannot be implemented unless and until the sellers have shown their title to the specific portion of the property being sold.The CaseBeforeus is a Petition for Review onCertiorariassailing the August 13, 1997 Decision[1]of the Court of Appeals[2]in CA-GR CV No. 303754, which disposed as follows:WHEREFORE, the decision of the trial court dated November 16, 1990 is hereby REVERSED.The appellee FELIX GONZALES is hereby ordered to surrender possession of the property covered by the Contract of Lease/Purchase to the appellants, Heirs of Thomas and Paula Cruz, and to pay to the appellants the following amounts:1.P15,000.00 per annum as rentals counted from December 1, 1984 until the appellants shall have recovered possession of the property subject of the Contract of Lease/Purchase;2.P15,000.00 as attorneys fees; and3.Costs of suit.[3]On the other hand, the trial court[4]Decision,[5]which was reversed by the CA, ruled as follows:WHEREFORE, premises considered, this Court hereby renders judgment in favor of the defendant, Felix Gonzales, and against the plaintiffs, as follows:(1)Ordering the dismissal of the case;(2)Sentencing the plaintiffs, jointly and severally, the sum of P20,000.00 as moral damages and the other sum of P10,000.00 as and for attorneys fees; and(3)To pay the costs.[6]The FactsWe hereby reproduce, unedited, the Court of Appeals summary of the facts of this case as follows:On December 1, 1983, Paula Ao Cruz together with the plaintiffs heirs of Thomas and Paula Cruz, namely Ricardo A. Cruz, Carmelita M. Cruz, Salome A. Cruz, Irenea C. Victoria, Leticia C. Salvador and Elena C. Talens, entered into a Contract of Lease/Purchase with the defendant, Felix L. Gonzales, the sole proprietor and manager of Felgon Farms, of a half-portion of a parcel of land containing an area of 12 hectares, more or less, and an accretion of 2 hectares, more or less, situated in Rodriguez Town, Province of Rizal and covered by Transfer Certificate of Title No. 12111 (Exhibit A, p. 157, Records).The contract of Lease/Purchase contains the following provisions:1.The terms of this Contract is for a period of one year upon the signing thereof.After the period of this Contract, the LESSEE shall purchase the property on the agreeable price of One Million Pesos (P1,000,000.00) payable within Two (2) Years period with an interest of 12% per annum subject to the devalued amount of the Philippine Peso, according to the following schedule of payment:Upon the execution of the Deed of Sale 50% - and thereafter 25% every six (6) months thereafter, payable within the first ten (10) days of the beginning of each period of six (6) months.2.The LESSEE shall pay by way of annual rental an amount equivalent to Two Thousand Five Hundred (P2,500.00) Pesos per hectare, upon the signing of this contract on Dec. 1, 1983.x x xx x xx x x9.The LESSORS hereby commit themselves and shall undertake to obtain a separate and distinct T.C.T. over the herein leased portion to the LESSEE within a reasonable period of time which shall not in any case exceed four (4) years, after which a new Contract shall be executed by the herein parties which shall be the same in all respects with this Contract of Lease/Purchase insofar as the terms and conditions are concerned.x x xx x xx x x(Exhibits A, A-1; pp. 157-158. Records)The defendant Gonzales paid the P2,500.00 per hectare or P15,000.00 annual rental on the half-portion of the property covered by Transfer Certificate of Title No. 12111 in accordance with the second provision of the Contract of Lease/Purchase (p. 12, TSN, September 14, 1989) and thereafter took possession of the property, installing thereon the defendant Jesus Sambrano as his caretaker (pp. 16-17, 27, TSN, December 12, 1989).The defendant Gonzales did not, however, exercise his option to purchase the property immediately after the expiration of the one-year lease on November 30, 1984 (pp. 19-20, TSN, September 14, 1989).He remained in possession of the property without paying the purchase price provided for in the Contract of Lease/Purchase (Ibid.) and without paying any further rentals thereon (p. 36, TSN, November 7, 1989).A letter was sent by one of the plaintiffs-heirs Ricardo Cruz to the defendant Gonzales informing him of the lessors decision to rescind the Contract of Lease/Purchase due to a breach thereof committed by the defendant (Exhibit C; p. 162, Records).The letter also served as a demand on the defendant to vacate the premises within 10 days from receipt of said letter (Ibid.).The defendant Gonzales refused to vacate the property and continued possession thereof (p. 2, Record).The matter was therefore brought before the barangay captain of San Isidro, but owing to the defendants refusal to appear before the barangay, a certification allowing the case to be brought to Court was issued on March 18, 1987 (Exhibit E; p. 165, Records).The lessor, Paula Ao Cruz died the following day, March 19, 1987 (p. 9, TSN, September 14, 1989).A final demand letter to vacate the premises was sent by the remaining lessors who are also the heirs of the deceased lessor Paula Ao Cruz, through their counsel on August 24, 1987 which the defendant Gonzales received but did not heed (Exhibits D and D-1; pp. 163-164, Records).The property subject of the Contract of Lease/Purchase is currently the subject of an Extra-Judicial Partition (Exhibits G and G-1; pp. 168-169, Records).Title to the property remains in the name of the plaintiffs predecessors-in-interest, Bernardina Calixto and Severo Cruz (Exhibit B; p. 160, Records).Alleging breach of the provisions of the Contract of Lease/Purchase, the plaintiffs filed a complaint for recovery of possession of the property - subject of the contract with damages, both moral and compensatory and attorneys fees and litigation expenses (p. 3, Records).Alleging breach of paragraph nine of the Contract of Lease/Purchase, and payment of only P50,000.00 of the P500,000.00 agreed down payment on the purchase price of P1,000,000.00, the defendant Gonzales filed his answer on November 23, 1987 praying for a dismissal of the complaint filed against him and an award of moral, exemplary and actual damages, as well as litigation expenses (pp. 19-22, Records).The defendant Sambrano was, upon motion, declared in default for failure to file an answer despite valid service of summons (p. 30, Records).The parties limited the issues to be resolved to:(1)Whether or not paragraph 9 of the contract is a condition precedent before the defendant is to pay the down payment;(2)Whether or not plaintiffs can rescind the Contract of Lease/Purchase; and(3)Whether or not plaintiffs can terminate the Contract of Lease.(p. 4, Decision; p. 262, Records)After the termination of the pre-trial conference, the trial court proceeded to hear the case on the merits and arrived at its appealed decision based on the following findings and conclusions:Paragraph 9 of the contract clearly indicates that the lessors-plaintiffs shall obtain a Transfer Certificate of Title in the name of the lessee within 4 years before a new contract is to be entered into under the same terms and conditions as the original Contract of Lease/Purchase.Thus, before a deed of Sale can be entered into between the plaintiffs and the defendant, the plaintiffs have to obtain the Transfer Certificate of Title in favor of the defendant.Article 1181 of the New Civil Code states that:In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. When the obligation assumed by a party to a contract is expressly subjected to a condition, the obligation cannot be enforced against him unless the condition is complied with (Wise & Co. vs. Kelly, 37 Phil. 695; PNB vs. Philippine Trust Co., 68 Phil. 48).The failure of the plaintiffs to secure the Transfer Certificate of Title, as provided for in the contract, does not entitle them to rescind the contract[.]Article 1191 of the New Civil Code states that:The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.The injured party may choose between the fulfillment of the obligation, with the payment of damages in either case.He may seek rescission, even after he has chosen fulfillment, if the latter should become impossible x x x. The power to rescind is given to the injured party.Where the plaintiff is the party who did not perform, he is not entitled to insist upon the performance of the contract by the defendant or recover damages by reason of his own breach (Mateos vs. Lopez, 6 Phil. 206; Borque vs. Yu Chipco, 14 Phil. 95).An action for specific performance of a contract is an equitable proceeding, and he who seeks to enforce it must himself be fair and reasonable, and do equity (Seva vs. Berwin, 48 Phil. 581).In this case, plaintiffs failed to comply with the conditions precedent after 2-1/2 years from the execution of the contract so as to entitle them to rescind the contract.Although the contract stated that the same be done within 4 years from execution, still, the defendant has to be assured that the land subject of the case will be transferred in his name without any encumbrances, as the Extra-Judicial Partition dated July 17, 1989 was being processed, and continues to be in process to this date.The failure to secure the Transfer Certificate of Title in favor of the defendant entitles not the plaintiffs but, rather, the defendant to either rescind or to ask for specific performances.Are the plaintiffs entitled to terminate the Contract of Lease?Article 1670 of the New Civil Code states that:If at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with the acquies[c]ence of the lessor and unless a notice to the contrary by either party has previously been given, it is understood that there is an implied new lease, not for the period of the original contract, but for the time established in Articles 1682 and 1687.The other terms of the original contract shall be revived.Article 1682 of the New Civil Code states that:The lease of a piece of rural land, when its duration has not been fixed, is understood to have been made for all the time necessary for the gathering of the fruits which the whole estate leased may yield in one year, or which it may yield once, although two or more years may have to elapse for the purpose.The plaintiffs filed the complaint on October 12, 1987 after making an extra-judicial demand on July 2, 1986.The contract was entered into on December 1, 1983.The demand was thus made more than a year and a half from the expiry date of the original lease considering that there was no payment made for the second year of the lease.If one has to consider the fact that the defendant was given the option to purchase the property after two years, then, the lease would presumably run for at least two years.If that is so, then, the demand was made seven months after the expiration of the two-year lease.Still, this demand by the plaintiffs will come under the implied new lease of Articles 1682 and 1670 so that the plaintiffs are not entitled to terminate the Contract of Lease.In sum, the plaintiffs cannot terminate the Contract of Lease due to their failure to notify the defendant in due time of their intention to that effect.Nor can they rescind the Contract of Purchase in view of the fact that there is a condition precedent which the plaintiffs have not fulfilled.It is the defendant now who has the option to either rescind or demand the performance of the contract.Moreover, according to Article 1654 of the New Civil Code, the lessor is obliged to deliver the thing which is the object of the contract in such condition as to render it fit for the use intended.Considering that the lessors-plaintiffs have not delivered the property in whole over the protest of the defendant, the latter suffered damages therefor. (p. 4-6, Decision; pp. 262-264, Records)Their complaint thus dismissed, the plaintiffs, now appellants, assign the trial court of having committed the following errors:ITHE TRIAL COURT GRAVELY ERRED IN HOLDING THAT PLAINTIFFS-APPELLANTS COULD NOT VALIDLY RESCIND AND TERMINATE THE LEASE/PURCHASE CONTRACT (EXHIBIT A) AND THEREAFTER TO TAKE POSSESSION OF THE LAND IN QUESTION AND EJECT THEREFROM DEFENDANTS-APPELLEES.IITHE TRIAL COURT EQUALLY ERRED IN NOT GRANTING THE RELIEFS PLEADED AND PRAYED FOR BY PLAINTIFFS-APPELLANTS IN THEIR COMPLAINT.(p. 42,Rollo)The case was submitted for decision without the appellees brief as per the Courts resolution dated July 8, 1992 (p. 71,Rollo).Ruling of the Court of AppealsThe Court of Appeals reversed the trial court in this wise:The trial court, in its decision interpreted the ninth provision of the Contract of Lease/Purchase to mean that before the appellee exercises his option to purchase the property by paying the 50% plus interest on the P1,000,000.00 purchase price, the appellants must first transfer the title to the property in the appellees name.The Court finds this interpretation of the provision strained if not altogether absurd.The transfer of title to the property in the appellees name cannot be interpreted as a condition precedent to the payment of the agreed purchase price because such interpretation not only runs counter [to] the explicit provisions of the contract but also is contrary to the normal course of things anent the sale of real properties.The terms of the contract [are] explicit and require no interpretation.Upon the expiration of the lease, the lessee shall purchase the property.Besides, the normal course of things anent the sale of real properties dictates that there mustfirstbe payment of the agreed purchase pricebeforetransfer of title to the vendees name can be made.This was precisely what the appellants and Paula Ao Cruz had in mind when they had the ninth provision incorporated in the Contract of Lease/Purchase.They had asked for a period of 4 years from the time they receive the downpayment of 50% within which to have [the] title to the property transferred in the name of the appellee.The reason for this four (4) year period is [that] title to the property still remains in the name of the original owners, the predecessors-in-interest of the herein appellants and [transferring] the title to their names and eventually to the lessee-purchaser, appellee herein, would take quite some time.The appellee wanted to have the title to the property transferred in his namefirstbefore he exercises his option to purchase allegedly in accordance with the ninth provision of the contract.But the ninth provision does not give him this right.A reading of the contract in its entirety shows that the 4 year period asked for by the appellants within which to have title to the property transferred in the appellees name will only start to run when the appellee exercises his option to purchase.Since the appellee never exercised his option to purchase, then appellee is not entitled to have the title to the property transferred in his name.Attributing reversible errors to the appellate court, petitioner elevated the case to this Court.[7]The IssuesIn his Memorandum,[8]petitioner submits the following main issues:I.Whether or not the Court of Appeals has gravely erred and committed grave abuse of discretion in the interpretation of [the] law between the parties.II.Whether or not the Court of Appeals committed serious mistakes in the finding of facts which resulted [in] departing from the usual course of judicial proceedings.For these issues to be resolved, petitioner asks this Court to answer the following questions:1.Is there a conflict between the statement in paragraph 1 of the Lease/Purchase Contract and that [in] paragraph No. 9 thereof?2.Is paragraph 9 of the Lease/Purchase Contract a condition precedent before petitioner could exercise his option to buy the property?3.Can plaintiff rescind or terminate the Contract of Lease after the one-year period?In fine, the resolution of this case depends upon the proper interpretation of paragraph nine of the Contract.The Courts RulingThe Petition is meritorious.

Main Issue:Interpretation of Paragraph NineIn its first paragraph, the disputed agreement provides that petitioner shall lease the property for one year, after which he shall purchase it.Paragraph nine, on the other hand, requires herein respondents to obtain a separate and distinct Transfer Certificate of Title (TCT) over the property,viz.:9.The LESSORS hereby commit themselves and shall undertake to obtain a separate and distinct T.C.T. over the lease portion to the LESSEE within a reasonable period of time which shall not in any case exceed four (4) years, after which a new Contract shall be executed by the herein parties which shall be the same in all respects with this Contract of Lease/Purchase insofar as the terms and conditions are concerned.Alleging that petitioner has not purchased the property after the lapse of one year, respondents seek to rescind the Contract and to recover the property.Petitioner, on the other hand, argues that he could not be compelled to purchase the property, because respondents have not complied with paragraph nine, which obligates them to obtain a separate and distinct title intheirnames.He contends that paragraph nine was a condition precedent to the purchase of the property.To be sure, this paragraph and the entire agreement, for that matter --is not a model of how a contract should be worded.It is an invitation to a litigation, as in fact the parties had to go all to way up to this Court to plead for a resolution of their conflict which is rooted in their failure to express themselves clearly.Small wonder, even the two lower courts gave contradictory understanding of this provision, thereby necessitating the intervention of the highest court of the land.Both the trial court and the Court of Appeals (CA) interpreted this provision to mean that the respondents had obliged themselves to obtain a TCT in the name ofpetitioner-lessee.The trial court held that this obligation was a condition precedent to petitioners purchase of the property.Since respondents had not performed their obligation, they could not compel petitioner to buy the parcel of land.The CA took the opposite view, holding that the property should be purchased first before respondents may be obliged to obtain a TCT in the name of petitioner-lessee-buyer.As earlier noted, petitioner disagrees with the interpretation of the two courts and maintains that respondents were obligated to procure a TCT intheir namesbefore he could be obliged to purchase the property in question.Basic is the rule in the interpretation of contracts that if some stipulation therein should admit of several meanings, it shall be understood as bearing that import most adequate to render it effectual.[9]Considering the antecedents of the ownership of the disputed lot, it appears that petitioners interpretation renders clause nine most effectual.The record shows that at the time the contract was executed, the land in question was still registered in the name of Bernardina Calixto and Severo Cruz, respondents predecessors-in-interest.There is no showing whether respondents were the only heirs of Severo Cruz or whether the other half of the land in the name of Bernardina Calixto was adjudicated to them by any means.In fact, they admit that extrajudicial proceedings were still ongoing.Hence, when the Contract of Lease/Purchase was executed, there was no assurance that the respondents were indeed the owners of the specific portion of the lot that petitioner wanted to buy, and if so, in what concept and to what extent.Thus, the clear intent of the ninth paragraph was for respondents to obtain a separate and distinct TCTin their names.This was necessary to enable them to show their ownership of the stipulated portion of the land and their concomitant right to dispose of it.Absent any title in their names, they could not have sold the disputed parcel of land.It is a well-settled principle in law that no one can give what one does not have --nemo dat quod non habet.Accordingly, one can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can transfer legally.[10]Because the property remained registered in the names of their predecessors-in-interest, private respondents could validly sell only their undivided interest in the estate of Severo Cruz, the extent of which was however not shown in the records.There being no partition of the estate thus far, there was no guarantee as to how much and which portion would be adjudicated to respondents.In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold.[11]In this case, the respondent could not deliver ownership or title to aspecificportion of the yet undivided property.True, they could have intended to sell their hereditary interest, but in the context of the Contract of Lease/Purchase, the parties under paragraph nine wanted the specific portion of the land to be segregated, identified and specifically titled.Hence, by the said Contract, the respondents as sellers were given a maximum of four years within which to acquire a separate TCT in their names, preparatory to the execution of the deed of sale and the payment of the agreed price in the manner described in paragraph nine.This interpretation is bolstered by the P50,000 petitioner advanced to respondents in order to help them expedite the transfer of the TCT to their names.Ineluctably, the intention of the parties was to have the title transferred first to respondents names as a condition for the completion of the purchase.In holding that clause nine was not a condition precedent to the purchase of the property, the CA relied on a literal interpretation to the effect that the TCT should be obtainedin the name of the petitioner-vendee.It reasoned that the title could be transferred to the name of the buyer only after the completion of the purchase.Thus, petitioner should first purchase the property before respondents could be obliged to transfer the TCT to his name.We disagree.The literal interpretation not only ignores the factual backdrop of the case; it also utilizes a faulty parsing of paragraph nine, which should purportedly read as follows:The lessors x x x shall undertake to obtain aseparate and distinctTCT xxx to the LESSEEwithin a reasonable period of time which shall not in any case exceed four (4) years x x x. Read in its entirety, however, paragraph nine does not say that the TCT should be obtainedin the name of the lessee.In fact, paragraph nine requires respondents to obtain a TCT over the herein leased portion to the LESSEE, thereby showing that the crucial phrase to the LESSEE adverts to the leased portion and not to the name which should appear in the new TCT.Furthermore, the CA interpretation ignores the other part of paragraph nine, stating that after a separate TCT had been obtained, a new contract shall be executed by the herein parties which shall be the same in all respects with this Contract of Lease/Purchase insofar as the terms and conditions are concerned.If, as the CA held, petitioner should purchase the property first before the title can be transferred to his name, why should there be a waiting period of four years before the parties can execute the new contract evidencing the sale?Why should the petitioner still be required to pay rentals after it purchases and pays for the property?The Contract could not have envisioned this absurd scenario.Clearly, the appellate courts literal interpretation of the first portion of paragraph nine renders the latter portion thereof ineffectual.In other words, that portion can only mean that the respondents should first obtain a TCT in their names, after which petitioner is given time to purchase and pay for the property.Respondents insist that the obligation of petitioner to buy the disputed land immediately after the termination of the one year lease period is explicit.[12]However, it is more reasonable to state that the first paragraph was effectively modified by the ninth.To repeat, petitioner can be compelled to perform his obligation under the first paragraph, only after respondents have complied with the ninth.Unless and until respondents have done so, the first paragraph cannot be enforced against petitioner.In sum, we hold that the ninth provision was intended to ensure that respondents would have a valid title over the specific portion they were selling to petitioner.Only after the title is assured may the obligation to buy the land and to pay the sums stated in the Contract be enforced within the period stipulated.Verily, the petitioners obligation to purchase has not yet ripened and cannot be enforced until and unless respondents can prove their title to the property subject of the Contract.Secondary IssuesNinth Clause Was a Condition PrecedentBecause the ninth clause required respondents to obtain a separate and distinct TCT in their names and not in the name of petitioner, it logically follows that such undertaking was acondition precedentto the latters obligation to purchase and pay for the land.Put differently, petitioners obligation to purchase the land is a conditional one and is governed by Article 1181 of the Civil Code.[13]Conditionhas been defined as every future and uncertain event upon which an obligation or provision is made to depend.It is a future and uncertain event upon which the acquisition or resolution of rights is made to depend by those who execute the juridical act.[14]Without it, the sale of the property under the Contract cannot be perfected, and petitioner cannot be obliged to purchase the property.When the consent of a party to a contract is given subject to the fulfillment of a suspensive condition, the contract is not perfected unless that condition is first complied with.[15]The Court has held that [w]hen the obligation assumed by a party to a contract is expressly subjected to a condition, the obligation cannot be enforced against him unless the condition is complied with.[16]Furthermore, [t]he obligatory force of a conditional obligation is subordinated to the happening of a future and uncertain event, so that if that event does not take place, the parties would stand as if the conditional obligation had never existed.[17]In this case, the obligation of the petitioner to buy the land cannot be enforced unless respondents comply with the suspensive condition that they acquire first a separate and distinct TCT in their names.The suspensive condition not having been fulfilled, then the obligation of the petitioner to purchase the land has not arisen.Respondents Cannot Rescind theContractIn the same vein, respondents cannot rescind the contract, because they have not caused the transfer of the TCT to their names, which is a condition precedent to petitioners obligation.This Court has held that there can be no rescission (or more properly, resolution) of an obligation as yet non-existent, because the suspensive condition has not happened.[18]Since the reversal of the CA Decision is inevitable, the trial courts judgment should be reinstated.However, we find no sufficient factual or legal justifications for the award of moral damages and attorneys fees.WHEREFORE, the petition isGRANTEDand the appealed Decision isREVERSEDandSET ASIDE.The Decision of the trial court isREINSTATED, but the award of moral damages and attorneys fees isDELETEDfor lack of basis.No costs.SO ORDERED.

[G.R. No. 103577.October 7, 1996] 253 scra 15ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL, ANNABELLE C. GONZALES (for herself and on behalf of Floraida C. Tupper, as attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS MABANAG,petitioners,vs. THE COURT OF APPEALS, CONCEPCION D. ALCARAZ and RAMONA PATRICIA ALCARAZ, assisted by GLORIA F. NOEL as attorney-in-fact,respondents.D E C I S I O NMELO,J.:The petition before us has its roots in a complaint for specific performance to compel herein petitioners (except the last named, Catalina Balais Mabanag) to consummate the sale of a parcel of land with its improvements located along Roosevelt Avenue in Quezon City entered into by the parties sometime in January 1985 for the price ofP1,240,000.00.The undisputed facts of the case were summarized by respondent court in this wise:OnJanuary 19, 1985, defendants-appellants Romulo Coronel,et. al. (hereinafter referred to as Coronels) executed a document entitled Receipt of Down Payment (Exh. A) in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to as Ramona) which is reproduced hereunder:RECEIPT OF DOWN PAYMENTP1,240,000.00 - Total amount50,000.00 - Down payment------------------------------------------P1,190,000.00 - BalanceReceived from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos purchase price of our inherited house and lot, covered by TCT No. 119627 of the Registry of Deeds of Quezon City, in the total amount ofP1,240,000.00.We bind ourselves to effect the transfer in our names from our deceased father, Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the down payment above-stated.On our presentation of the TCT already in or name, We will immediately execute the deed of absolute sale of said property and Miss Ramona Patricia Alcaraz shall immediately pay the balance of theP1,190,000.00.Clearly, the conditions appurtenant to the sale are the following:1.Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upon execution of the document aforestated;2.The Coronels will cause the transfer in their names of the title of the property registered in the name of their deceased father upon receipt of the Fifty Thousand (P50,000.00) Pesos down payment;3.Upon the transfer in their names of the subject property, the Coronels will execute the deed of absolute sale in favor of Ramona and the latter will pay the former the whole balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos.On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz (hereinafter referred to as Concepcion), mother of Ramona, paid the down payment of Fifty Thousand (P50,000.00) Pesos (Exh. B, Exh. 2).OnFebruary 6, 1985, the property originally registered in the name of the Coronels father was transferred in their names under TCT No. 327043 (Exh. D; Exh 4)On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for One Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid Three Hundred Thousand (P300,000.00) Pesos (Exhs. F-3; Exh. 6-C)For this reason, Coronels canceled and rescinded the contract (Exh. A) with Ramona by depositing the down payment paid byConcepcionin the bankin trust for Ramona Patricia Alcaraz.OnFebruary 22, 1985, Concepcion,et. al., filed a complaint for a specific performance against the Coronels and caused the annotation of a notice oflis pendensat the back of TCT No. 327403 (Exh. E; Exh. 5).OnApril 2, 1985, Catalina caused the annotation of a notice of adverse claim covering the same property with the Registry of Deeds of Quezon City (Exh. F; Exh. 6).OnApril 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject property in favor of Catalina (Exh. G; Exh. 7).OnJune 5, 1985, a new title over the subject property was issued in the name of Catalina under TCT No. 351582 (Exh. H; Exh. 8).(Rollo, pp. 134-136)In the course of the proceedings before the trial court (Branch 83, RTC,Quezon City) the parties agreed to submit the case for decision solely on the basis of documentary exhibits.Thus, plaintiffs therein (now private respondents) proffered their documentary evidence accordingly marked as Exhibits A through J, inclusive of their corresponding submarkings.Adopting these same exhibits as their own, then defendants (now petitioners) accordingly offered and marked them as Exhibits 1 through 10, likewise inclusive of their corresponding submarkings.Upon motion of the parties, the trial court gave them thirty (30) days within which to simultaneously submit their respective memoranda, and an additional 15 days within which to submit their corresponding comment or reply thereto, after which, the case would be deemed submitted for resolution.OnApril 14, 1988, the case was submitted for resolution before Judge Reynaldo Roura, who was then temporarily detailed to preside over Branch 82 of the RTC of Quezon City.OnMarch 1, 1989, judgment was handed down by Judge Roura from his regular bench at Macabebe, Pampanga for theQuezon Citybranch, disposing as follows:WHEREFORE, judgment for specific performance is hereby rendered ordering defendant to execute in favor of plaintiffs a deed of absolute sale covering that parcel of land embraced in and covered by Transfer Certificate of Title No. 327403 (now TCT No. 331582) of the Registry of Deeds for Quezon City, together with all the improvements existing thereon free from all liens and encumbrances, and once accomplished, to immediately deliver the said document of sale to plaintiffs and upon receipt thereof, the plaintiffs are ordered to pay defendants the whole balance of the purchase price amounting toP1,190,000.00 in cash.Transfer Certificate of Title No. 331582 of the Registry of Deeds forQuezon Cityin the name of intervenor is hereby canceled and declared to be without force and effect.Defendants and intervenor and all other persons claiming under them are hereby ordered to vacate the subject property and deliver possession thereof to plaintiffs.Plaintiffs claim for damages and attorneys fees, as well as the counterclaims of defendants and intervenors are hereby dismissed.No pronouncement as to costs.So Ordered.Macabebe, Pampanga forQuezon City,March 1, 1989.(Rollo, p. 106)A motion for reconsideration was filed by petitioners before the new presiding judge of the Quezon City RTC but the same was denied by Judge Estrella T. Estrada, thusly:The prayer contained in the instant motion, i.e., to annul the decision and to render anew decision by the undersigned Presiding Judge should be denied for the following reasons:(1) The instant case became submitted for decision as of April 14, 1988 when the parties terminated the presentation of their respective documentary evidence and when the Presiding Judge at that time was Judge Reynaldo Roura.The fact that they were allowed to file memoranda at some future date did not change the fact that the hearing of the case was terminated before Judge Roura and therefore the same should be submitted to him for decision;(2) When the defendants and intervenor did not object to the authority of Judge Reynaldo Roura to decide the case prior to the rendition of the decision, when they met for the first time before the undersigned Presiding Judge at the hearing of a pending incident in Civil Case No. Q-46145 on November 11, 1988, they were deemed to have acquiesced thereto and they are now estopped from questioning said authority of Judge Roura after they received the decision in question which happens to be adverse to them;(3) While it is true that Judge Reynaldo Roura was merely a Judge-on-detail at this Branch of the Court, he was in all respects the Presiding Judge with full authority to act on any pending incident submitted before this Court during his incumbency.When he returned to his Official Station at Macabebe, Pampanga, he did not lose his authority to decide or resolve cases submitted to him for decision or resolution because he continued as Judge of the Regional Trial Court and is of co-equal rank with the undersigned Presiding Judge.The standing rule and supported by jurisprudence is that a Judge to whom a case is submitted for decision has the authority to decide the case notwithstanding his transfer to another branch or region of the same court (Sec. 9, Rule 135, Rule of Court).Coming now to the twin prayer for reconsideration of the Decision dated March 1, 1989 rendered in the instant case, resolution of which now pertains to the undersigned Presiding Judge, after a meticulous examination of the documentary evidence presented by the parties, she is convinced that the Decision of March 1, 1989 is supported by evidence and, therefore, should not be disturbed.IN VIEW OF THE FOREGOING, the Motion for Reconsideration and/or to Annul Decision and Render Anew Decision by the Incumbent Presiding Judge datedMarch 20, 1989is hereby DENIED.SO ORDERED.Quezon City,Philippines,July 12, 1989.(Rollo, pp. 108-109)Petitioners thereupon interposed an appeal, but onDecember 16, 1991, the Court of Appeals (Buena, Gonzaga-Reyes, Abad-Santos (P), JJ.) rendered its decision fully agreeing with the trial court.Hence, the instant petition which was filed onMarch 5, 1992.The last pleading, private respondents Reply Memorandum, was filed onSeptember 15, 1993.The case was, however, re-raffled to undersignedponenteonly onAugust 28, 1996, due to the voluntary inhibition of the Justice to whom the case was last assigned.While we deem it necessary to introduce certain refinements in the disquisition of respondent court in the affirmance of the trial courts decision, we definitely find the instant petition bereft of merit.The heart of the controversy which is the ultimate key in the resolution of the other issues in the case at bar is the precise determination of the legal significance of the document entitled Receipt of Down Payment which was offered in evidence by both parties.There is no dispute as to the fact that the said document embodied the binding contract between Ramona Patricia Alcaraz on the one hand, and the heirs of Constancio P. Coronel on the other, pertaining to a particular house and lot covered by TCT No. 119627, as defined in Article 1305 of the Civil Code of the Philippines which reads as follows:Art. 1305.A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.While, it is the position of private respondents that the Receipt of Down Payment embodied a perfected contract of sale, which perforce, they seek to enforce by means of an action for specific performance, petitioners on their part insist that what the document signified was a mere executory contract to sell, subject to certain suspensive conditions, and because of the absence of Ramona P. Alcaraz, who left for the United States of America, said contract could not possibly ripen into a contract of absolute sale.Plainly, such variance in the contending parties contention is brought about by the way each interprets the terms and/or conditions set forth in said private instrument.Withal, based on whatever relevant and admissible evidence may be available on record, this Court, as were the courts below, is now called upon to adjudge what the real intent of the parties was at the time the said document was executed.The Civil Code defines a contract of sale, thus:Art. 1458.By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.Sale, by its very nature, is a consensual contract because it is perfected by mere consent.The essential elements of a contract of sale are the following:a)Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;b)Determinate subject matter; andc)Price certain in money or its equivalent.Under this definition, a ContracttoSell may not be considered as a ContractofSalebecause the first essential element is lacking.In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes we shall take as the full payment of the purchase price.What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him.In other words the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer.InRoque vs. Lapuz (96 SCRA 741 [1980]), this Court had occasion to rule:Hence, We hold that the contract between the petitioner and the respondent was a contract to sell where the ownership or title is retained by the seller and is not to pass until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force.Stated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the prospective sellers obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable as provided in Article 1479 of the Civil Code which states:Art. 1479.A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor of the promise is supported by a consideration distinct from the price.A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.A contract to sell as defined hereinabove, may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur.If the suspensive condition is not fulfilled, the perfection of the contract of sale is completely abated (cf.Homesite and Housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]).However, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the seller.In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him.The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale.It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with, but to a third person, as in the case at bench.In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property.There is no double sale in such case.Title to the property will transfer to the buyer after registration because there is no defect in the owner-sellers titleper se, but the latter, of course, may be sued for damages by the intending buyer.In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will definitely affect the sellers title thereto.In fact, if there had been previous delivery of the subject property, the sellers ownership or title to the property is automatically transferred to the buyer such that, the seller will no longer have any title to transfer to any third person.Applying Article 1544 of the Civil Code, such second buyer of the property who may have had actual or constructive knowledge of such defect in the sellers title, or at least was charged with the obligation to discover such defect, cannot be a registrant in good faith.Such second buyer cannot defeat the first buyers title.In case a title is issued to the second buyer, the first buyer may seek reconveyance of the property subject of the sale.With the above postulates as guidelines, we now proceed to the task of deciphering the real nature of the contract entered into by petitioners and private respondents.It is a canon in the interpretation of contracts that the words used therein should be given their natural and ordinary meaning unless a technical meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586 [1992]).Thus, when petitioners declared in the said Receipt of Down Payment that they --Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesospurchase price of our inherited house and lot, covered by TCT No. 1199627 of the Registry of Deeds of Quezon City, in the total amount ofP1,240,000.00.without any reservation of title until full payment of the entire purchase price, the natural and ordinary idea conveyed is that they sold their property.When the Receipt of Down payment is considered in its entirety, it becomes more manifest that there was a clear intent on the part of petitioners to transfer title to the buyer, but since the transfer certificate of title was still in the name of petitioners father, they could not fully effect such transfer although the buyer was then willing and able to immediately pay the purchase price.Therefore, petitioners-sellers undertook upon receipt of the down payment from private respondent Ramona P. Alcaraz, to cause the issuance of a new certificate of title in their names from that of their father, after which, they promised to present said title, now in their names, to the latter and to execute the deed of absolute sale whereupon, the latter shall, in turn, pay the entire balance of the purchase price.The agreement could not have been a contract to sell because the sellers herein madeno express reservation of ownership or title to the subject parcel of land.Furthermore, the circumstance which prevented the parties from entering into an absolute contract of sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the purchase price.Under the established facts and circumstances of the case, the Court may safely presume that, had the certificate of title been in the names of petitioners-sellers at that time, there would have been no reason why an absolute contract of sale could not have been executed and consummated right there and then.Moreover, unlike in a contract to sell, petitioners in the case at bar did not merely promise to sell the property to private respondent upon the fulfillment of the suspensive condition.On the contrary, having already agreed to sell the subject property, they undertook to have the certificate of title change to their names and immediately thereafter, to execute the written deed of absolute sale.Thus, the parties did not merely enter into a contract to sell where the sellers, after compliance by the buyer with certain terms and conditions, promised to sell the property to the latter.What may be perceived from the respective undertakings of the parties to the contract is that petitioners had already agreed to sell the house and lot they inherited from their father, completely willing to transfer ownership of the subject house and lot to the buyer if the documents were then in order.It just so happened, however, that the transfer certificate of title was then still in the name of their father.It was more expedient to first effect the change in the certificate of title so as to bear their names.That is why they undertook to cause the issuance of a new transfer of the certificate of title in their names upon receipt of the down payment in the amount ofP50,000.00.As soon as the new certificate of title is issued in their names, petitioners were committed to immediately execute the deed of absolute sale.Only then will the obligation of the buyer to pay the remainder of the purchase price arise.There is no doubt that unlike in a contract to sell which is most commonly entered into so as to protect the seller against a buyer who intends to buy the property in installment by withholding ownership over the property until the buyer effects full payment therefor, in the contract entered into in the case at bar, the sellers were the ones who were unable to enter into a contract of absolute sale by reason of the fact that the certificate of title to the property was still in the name of their father.It was the sellers in this case who, as it were,