Tiglao vs. Manila Railroad 98 Phil 181 Art.

1180, Setting of Period Issue W/N a company may be excused for payment of salary diff of its retired employees when the agreement is subject to condition that salary differentials from date of exhaustion will be paid when funds for the purpose are available, if the company is losing its business? Facts Petitioners are 35 retired employees of defendant company who sought to recover salary diff due to them under MOA with defendant Under the MOA, employed affected by the standardized plan will receive standardized salaries provided that any salary diff from date of exhaustion will be paid when funds for the purpose are available Held Art. 1180. When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period, subject to the provisions of Article 1197. MOA does not stipulate that salary diff shall be paid only from surplus profits It is not appearing that defendant was bankcrupt the obligation to pay said salary diff may be considered as one with term whose duration has been left to the will of the debtor, so that pursuant to art. 1197, the duration of the term may be fixed by courts Javier vs. CA and Leonardo Tiro 183 SCRA 171 Art. 1181, Suspensive Condition Issue W/N an agreement may be nullified for non-performance of the conditions stipulated therein Facts Petitioner and private respondent entered into an agreement into which Petitioner bound himself to transfer hisrights(shares of stocks) on Timberlwealth Corp to private respondent

That for and in consideration of the transfer of rights, Petitioner undertake to pay Private Respondent subject to the condition that the application of Private Respondent for an additional area for forest concession be approved by Bureau of Forestry Private Respondent did not obtain the approval Held When a contract is subject to a suspensive condition, its birth and effectivity can take place only if and when the event which constitutes the condition happens or is fulfilled. If the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. Art. 1461 of the Civil Code, the efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence

HEIRS OF PAULINO ATIENZA versus DOMINGO P. ESPIDOL G.R. No. 180665, Aug. 11,2010 Facts: This case is about the legal consequences when a buyer in a contract to sell on installment fails to make the next payments that he promised. On August 12, 2002 the Atienzas and respondent Domingo P. Espidol entered into a contract called Kasunduan sa Pagbibili ng Lupa na may PaunangBayad(contract to sell land with a down payment) covering the property. They agreed on a price, payable in three installments. When the Atienzas demanded payment of the second installment of P1,750,000.00 in December 2002, however, respondent Espidol could not pay it.Claiming that Espidol breached his obligation, on February 21, 2003 the Atienzas filed a complaint for the annulment of their agreement with damages before the Regional TrialCourt (RTC)of Cabanatuan City in a Civil Case. Issue: Whether or not the Atienzas were entitled to the cancellation of the contract to sellthey entered into with respondent Espidol on the ground of the latters failure to pay the second installment when it fell due. Held: The Court declares the Kasunduan sa Pagbibili ng Lupa na may Paunang-Bayad between petitioner Heirs of Paulino Atienza and respondent Domingo P. Espidol dated August 12, 2002 cancelled and the Heirs

obligation under it non-existent. Regarding the right to cancel the contract for non-payment of an installment, there is need to initially determine if what the parties had was a contract of sale or a contract to sell. In a contract of sale, the title to the property passes to the buyer upon the delivery of the thing sold. In a contract to sell, on the other hand, the ownership is, by agreement, retained by the seller and is not to pass to the vendee until full payment of the purchase price. In the first place, since Espidol failed to pay the installment on a day certain fixed intheir agreement, the Atienzas can afterwards validly cancel and ignore the contract to sell because their obligation to sell under it did not arise. Since the suspensive condition did not arise, the parties stood as if the conditional obligation had never existed. CENTRAL PHIL 246 SCRA 511 UNIV. vs Court of Appeals

rights which the donee may have acquired shall be deemed lost & extinguished. More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the opportunity to comply with the condition even if it be burdensome, to make the donation in its favor forever valid. But, unfortunately, it failed to do so. Hence, there is no more need to fix the duration of a term of the obligation when such procedure would be a mere technicality and formality and would serve no purpose than to delay or lead to an unnecessary and expensive multiplication of suits. Records are clear and facts are undisputed that since the execution of the deed of donation up to the time of filing of the instant action, petitioner has failed to comply with its obligation as donee. Petitioner has slept on its obligation for an unreasonable length of time. Hence, it is only just and equitable now to declare the subject donation already ineffective and, for all purposes, revoked so that petitioner as donee should now return the donated property to the heirs of the donor, private respondents herein, by means of reconveyance. 2) Under Art. 1197, when the obligation does not fix a period but from its nature & circumstance it can be inferred that the period was intended, the court may fix the duration thereof because the fulfillment of the obligation itself cannot be demanded until after the court has fixed the period for compliance therewith & such period has arrived. However, this general rule cannot be applied in this case considering the different set of circumstances existing more than a reasonable period of 50yrs has already been allowed to petitioner to avail of the opportunity to comply but unfortunately, it failed to do so. Hence, there is no need to fix a period when such procedure would be a mere technicality & formality & would serve no purpose than to delay or load to unnecessary and expensive multiplication of suits. Under Art. 1191, when one of the obligors cannot comply with what is incumbent upon him, the obligee may seek rescission before the court unless there is just cause authorizing the fixing of a period. In the absence of any just cause for the court to determine the period of compliance there is no more obstacles for the court to decree rescission. Parks vs. Province of Tarlac Art. 1181, Suspensive vs. Resolutory Condition Facts Plaintiff bought the land from Concepcon Ciper and James Hill Prior to the sale, Ciper and Hill donated the land to province of Tarlac subject to the condition that it will be absolutely used for erection of a central school and a

FACTS: In 1939, Don Ramon Lopez Sr. executed a deed of donation in favor of CPU together with the following conditions: a) The land should be utilized by CPU exclusively for the establishment & use of medical college; b) The said college shall not sell transfer or convey to any 3rd party; c) The said land shall be called Ramon Lopez Campus and any income from that land shall be put in the fund to be known as Ramon Lopez Campus Fund. However, on May 31, 1989, PR, who are the heirs of Don Ramon filed an action for annulment of donation, reconveyance & damages against CPU for not complying with the conditions. The heirs also argued that CPU had negotiated with the NHA to exchange the donated property with another land owned by the latter. Petitioner alleged that the right of private respondents to file the action had prescribed. ISSUE: 1) WON petitioner failed to comply the resolutely conditions annotated at the back of petitioners certificate of title without a fixed period when to comply with such conditions? YES 2) WON there is a need to fix the period for compliance of the condition? NO HELD: 1) Under Art. 1181, on conditional obligations, the acquisition of rights as well the extinguishment or loss of those already acquired shall depend upon the happening of the event which constitutes the condition. Thus, when a person donates land to another on the condition that the latter would build upon the land a school is such a resolutory one. The donation had to be valid before the fulfillment of the condition. If there was no fulfillment with the condition such as what obtains in the instant case, the donation may be revoked & all

public park and the work shall commence within six months from the ratification for the donation Issue W/N Parks has the right of action to recover the land from municipality of Tarlac on the condition that the condition is suspensive and therefore the said municipality had never acquired a right thereto since the condition was never performed Ruling The Condition is not suspensive it is resolutory In the present case, the condition that a public school be erected and a public park made on the donated land, work on the same to commence within 6months from date of ratification of the donation by parties, could not be complied with except after giving effect to the donation The done could not do any work on the donated land if the donation had not really been effected, because it would be an invasion if anothers title for the land would have continued to belong to the donor so long as the condition was imposed was not complied with. The condition was a condition subsequent (resolutory) VDA. DE MISTICA vs. NAGUIAT G.R. No. 137909. December 11, 2003 Facts: Eulalio Mistica is the owner of a parcel of land located at Malhacan, Meycauayan, Bulacan. A portion thereof was leased to respondent Naguiat. Consequently, Mistica entered into a contract to sell with respondent over a portion of lot containing an area of 200 sq. mtrs. The agreement was reduced to writing in a document entitled Kasulatan sa Pagbibilihan P 20k as the total purchase: P 2k upon signing; P 18k to be paid within 10yrs; In case non payment, vendee shall pay an interest of 12% per annum. Pursuant to said agreement, respondent gave a downpayment of P2K & made another partial payment of P1K & thereafter failed to make any payments. Eulalio Mistica died sometime in Oct. 1986. Petitioner claims that she is entitled to rescind the Contract under Article 1191 of the Civil Code, because respondents committed a substantial breach when they

did not pay the balance of the purchase price within the ten-year period. Issue: 1. WON the Kasulatan was a contract to sell? NO 2. WON petitioner is entitled to rescind the contract? NO 3. WON the contract is in the nature of a potestative obligation? NO Held: 1. The Kasulatan was clearly a Contract of Sale. A deed of sale is considered absolute in nature when there is neither a stipulation in the deed that title to the property sold is reserved to the seller until the full payment of the price; nor a stipulation giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. 2. In a contract of sale, the remedy of an unpaid seller is either specific performance or rescission. Under Article 1191 of the Civil Code, the right to rescind an obligation is predicated on the violation of the reciprocity between parties, brought about by a breach of faith by one of them. Rescission, however, is allowed only where the breach is substantial and fundamental to the fulfillment of the obligation. In the present case, the failure of respondents to pay the balance of the purchase price within ten years from the execution of the Deed did not amount to a substantial breach. In the Kasulatan, it was stipulated that payment could be made even after ten years from the execution of the Contract, provided the vendee paid 12 percent interest. The stipulations of the contract constitute the law between the parties; thus, courts have no alternative but to enforce them as agreed upon and written. Petitioner never made any demand for the balance of the purchase price. Petitioner even refused the payment tendered by respondents during her husbands funeral, thus showing that she was not exactly blameless for the lapse of the ten-year period. Had she accepted the tender, payment would have been made well within the agreed period. 3. The Kasulatan does not allow the it to be converted to a potestative obligation. First, nowhere is it stated in the Deed that payment of the purchase price is dependent upon whether respondents want to pay it or not. Second, the fact that they already made partial payment thereof only shows that the parties intended to be bound by the Kasulatan. Trillana vs. Quezon College, Inc 93 Phil. 383 Art. 1182, Potestative Condition

Issue/Scope Example of Potestative/Facultative which depend solely in the will of debtor Facts Deceased Damasa Crisostomo sent a letter to defendant regarding to her subscription to shares of capital stock in QC, Inc. When Damasa died, QC, Inc. presented a claim in her testate proceeding for collection of sum, representing the value of subscription to capital stock Damasa, in her letter: 1. did not enclose initial payment, 2. stated babayaran kong lahat pagkatapos manghuli ng isda Held In view of proposal of Damasa to pay value of subscription after he has harvested fish is a condition obviously dependent upon her sole will and therefore void Art. 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. Romero v. CA Facts: Private respondent entered into a Conditional Deed of Sale with petitioner over a parcel of land in Paranaque, the latter advancing P50,000 for the eviction of squatters therein. An ejectment suit was then filed by the private respondent against the squatters. Although successful, private respondent sought the return of thedownpayment she received because she could not get rid of the squatters. Issue: May the vendor demand the rescission of a contract for the sale of a parcel of land for a cause traceable to his own failure to have the squatters on the subject property evicted within the contractually-stipulated period? Held: A perfected contract of sale may either be absolute or conditionaldepending on whether the agreement is devoid of, or subject to, any condition imposed on the passing of title of the thing to be conveyed or on the obligation of a party thereto. When ownership is retained until the fulfillment of a positive condition the breach of the condition will simply prevent the duty to

convey title from acquiring an obligatory force. If the condition is imposed on an obligation of a party which is not complied with, the other party may either refuse to proceed or waive said condition. Where, of course, the condition is imposed upon the perfection of the contract itself, the failure of such condition would prevent the juridical relation itself from coming into existence. In determining the real character of the contract, the title given to it by the parties is not as much significant as its substance. For example, a deed of sale, although denominated as a deed of conditional sale, may be treated as absolute in nature, if title to the property sold is not reserved in the vendor or if the vendor is not granted the right to unilaterally rescind the contract predicated on the fulfillment or non-fulfillment, as the case may be, of the prescribed condition. The term "condition" in the context of aperfected contract of sale pertains, in reality, to the compliance by one party of an undertaking the fulfillment of which would beckon, in turn, the demandability of the reciprocal prestation of the other party. The reciprocal obligations referred to would normally be, in the case of vendee, the payment of the agreed purchase price and, in the case of the vendor, the fulfillment of certain express warranties (which, in the case at bench is the timely eviction of the squatters on the property). It would be futile to challenge the agreement here in question as not being a duly perfected contract. A sale is at once perfected when a person (the seller) obligates himself, for a price certain, to deliver and to transfer ownership of a specified thing or right to another (the buyer) over which the latter agrees. From the moment the contract is perfected, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. Under the agreement, private respondent is obligated to evict the squatters on the property. Private respondent's failure "to remove the squatters from the property" within the stipulated period gives petitioner the right to either refuse to proceed with the agreement or waive that condition in consonance with Article 1545 of the Civil Code. This option clearly belongs to petitioner and not to private respondent. In contracts of sale particularly, Article 1545 of the Civil Code allows the obligee to choose between proceeding with the agreement or waiving the performance of the condition. Here, evidently, petitioner has waived the performance of the condition imposed on private respondent to free the property from squatters. The right of resolution of a party to an obligation is predicated on a breach of faith by the other party that violates the reciprocity between them. It is private respondent who has failed in her obligation under the contract. Petitioner did not breach the agreement. He has agreed, in fact, to shoulder the expenses of the execution of the judgment in the ejectment case and to

make arrangements with the sheriff to effect such execution. SANTOS vs. COURT OF G.R. No. 120820. August 1, 2000 Facts: Spouses Santos owned the house and lot in Better Living Subdivision, Paranaque, Metro Manila. The land together with the house, was mortgaged with the Rural Bank of Salinas, Inc., to secure a loan of P150K. The bank sent Rosalinda Santos a letter demanding payment of P16K in unpaid interest and other charges. Since the Santos couple had no funds, Rosalinda offered to sell the house and lot to Carmen Caseda. After inspecting the real property, Carmen and her husband agreed. Carmen and Rosalinda signed a document, involving the sale of the house P350K as full amount, P54K as downpayment. Among other condition set is that Caseda will pay the balance of the mortgage in the bank, real estate taxes and the electric and water bills. The Casedas complied with the bank mortgage and the bills. The Santoses, seeing that the Casedas lacked the means to pay the remaining installments and/or amortization of the loan, repossessed the property. The Santoses then collected the rentals from the tenants. Carmen approached petitioners and offered to pay the balance of the purchase price for the house and lot. The parties, however, could not agree, and the deal could not push through because the Santoses wanted a higher price. Carmen is now praying that the Santoses execute the final deed of conveyance over the property. Issue: WON there was a perfected contract of sale? NO Held: A contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting parties call it. Article 1458 expressly obliges the vendor to transfer ownership of the thing sold as an essential element of a contract of sale. This is because the transfer of ownership in exchange for a price paid or promised is the very essence of a contract of sale. There was no transfer of ownership simultaneously with the delivery of the property purportedly sold. The records clearly show that, notwithstanding the fact that the Casedas first took then lost possession of the disputed house and lot, the title to the property has remained always in the name of Rosalinda Santos. Although the parties had agreed that the Casedas would assume the mortgage , allamortization payments made by Carmen Caseda to the bank were in the name of Rosalinda Santos. The foregoing circumstances APPEALS

categorically and clearly show that no valid transfer of ownership was made by the Santoses to the Casedas. Absent this essential element, their agreement cannot be deemed a contract of sale. It was a contract to sell. Ownership is reserved by the vendor and is not to pass until full payment of the purchase price. This we find fully applicable and understandable in this case, given that the property involved is a titled realty under mortgage to a bank and would require notarial and other formalities of law before transfer thereof could be validly effected. The CA cannot order rescission. If the vendor should eject the vendee for failure to meet the condition precedent, he is enforcing the contract and not rescinding it. When the petitioners in the instant caserepossessed the disputed house and lot for failure of private respondents to pay the purchase price in full, they were merely enforcing the contract and not rescinding it. Osmena III vs. SSS Extinguishment of Determinate Thing Facts Osmena III and 4 other members of the Senate and SSS members seek for nullification of the following issuances ofSocial Security Commission 1. Res. No. 428, July 124, 2004- Swiss Challenge Method approved the sale of the entire equity share of SSS to Equitable PCI bank 2. Res. 485, August 11, 2004 pertains to the timetable and instruction to bidders SSS in order to liquefy its long term investments and diversify them into higher yielding and less volatile investments which includes its shareholdings in EPCIB (Reason: shares in question substantially declined in value and SSS could no longer afford to continue holding on them)In a purchase agreement it was agreed in that SSS will sell all its EPCIB shares to BDO COA and DOJ (in its opinion) approved the agreement Bidding was made subject to the right of BDO Capital to match the highest bid BDO turned out t be the highest bidder Petitioner alleged that BDO to buy EPCIB shares is inconsistent with the idea of public bidding BDO and EPCIB had a merger, all EPCIB shares were transferred to BDO

Issue: W/N in questioning the alleged resolution can still recover the shares and subject it to a proper bidding process Ruling No, petitioners can no longer recover the shares The obligation to give a determinate thing is extinguished if the object is lost without the fault of the debtor Under the Civil Code, a thing is considered lost when it perishes or disappears on such a way that it cannot be recovered. In the very real sense, the interplay of the ensuing factor: a) the BDO-EPCIB merger and b) the cancellation of subject shares and their replacement by totally new common shares of BDO had rendered the erstwhile 187.84 M EPCIB shares of SSS unrecoverable in the contemplation of Civil Code provision