balta:

199. Licaros v. Gatmaitan, GR 142838, 09 Aug 2001

200. Gaite v. Fonacier, 2 SCRA 830 (1961)
201. Gonzales v. Heirs of Thomas, 314 SCRA 585 (1999)
202. Gonzales v. Heirs of Thomas, 314 SCRA 585 (1999)
203. Coronel v. CA, 263 SCRA 15 (1996) G
204. Parks v. Province of Tarlac, 49 Phil 142(1927)
205. Central Philippines University v. CA, 246 SCRA 511 (1995)
206. Quijada v. CA, 299 SCRA 695 (1998)
207. Lim v.CA, 191 SCRA 150 (1990)
208. NagaTelephone v. CA, 230 SCRA 351 (1990)
209. Osmeña v.Rama, 14 Phil 99 (1909)
210. Hermosa v. Longora, 93 Phil 971 (1953)
211. Taylor v. Uy Tieng Piao, 43 Phil 873 (1922)
212. Smith Bell v. Sotelo Matti, 44 Phil 875(1922)
213. Rustan Pulp and Paper v.IAC, 214 SCRA 665 (1992)
214. Romero v. CA, 250 SCRA 223 (1995)

1. ABELARDO B. LICAROS vs. ANTONIO P. GATMAITAN

G.R. No. 142838. August 9, 2001.
J. GONZAGA-REYES

Doctrine:

SYNOPSIS
The Anglo-Asean Bank and Trust Limited (Anglo-Asean), is a private bank registered and
organized to do business under the laws of the Republic of Vanuatu but not in the Philippines.
Its business consists primarily in receiving fund placements by way of deposits from
institutions and individual investors from different parts of the world. Enticed by the lucrative
prospects of doing business with Anglo-Asean, Abelardo Licaros, a Filipino businessman,
decided to make a fund placement with said bank sometime in the 1980's. After having
invested in Anglo-Asean, he encountered tremendous and unexplained difficulties in
retrieving, not only the interest or profits, but also the very investments he had put in Anglo-
Asean. He decided to seek the counsel of Antonio P. Gatmaitan, a reputable banker and
investment manager who had been extending managerial, financial and investment
consultancy services to various firms and corporations both here and abroad. Gatmaitan
voluntarily offered to assume the payment of Anglo-Asean's indebtedness to Licaros subject
to certain terms and conditions. In order to effectuate and formalize the parties' respective
commitments, the two executed a notarized memorandum of agreement. Thereafter,
Gatmaitan presented to Anglo-Asean the said memorandum of agreement for the purpose of
collecting Licaros' placement thereat. No formal response was ever made by said bank to
either Licaros or Gatmaitan. Evidently, because of his inability to collect from Anglo-Asean,
Gatmaitan did not bother anymore to make good his promise to pay Licaros the amount
stated in his promissory note. Licaros, however, thought differently. He felt that he had a right
to collect on the basis of the promissory note regardless of the outcome of Gatmaitan's
recovery efforts. Thus, Licaros, thru counsel, addressed successive demand letters to
Gatmaitan; demanding payment of the latter's obligations under the promissory note.
Gatmaitan, however, did not accede to these demands. Licaros filed a complaint in the
Regional Trial Court of Makati and prayed that Gatmaitan should pay him the principal
obligation, attorney's fees, and legal interest. After trial on the merits, the court a quo
rendered judgment in favor of petitioner Licaros. Respondent Gatmaitan appealed the trial
court's decision to the Court of Appeals. In a decision promulgated on February 10, 2000, the
appellate court reversed the decision of the trial court and held that respondent Gatmaitan did
not at any point become obligated to pay to petitioner Licaros the amount stated in the
promissory note. The Court of Appeals also denied petitioner's Motion for Reconsideration.
Hence this petition for review. The threshold issue for the determination of the Supreme Court
is whether the memorandum of agreement between petitioner and respondent was one of
assignment of credit or one of conventional subrogation. CTAIHc
The Supreme Court agreed with the finding of the Court of Appeals that the Memorandum of
Agreement was in the nature of a conventional subrogation which requires the consent of the
debtor, Anglo-Asean Bank, for its validity. The Memorandum of Agreement never came into
effect due to the failure of the parties to get the consent of Anglo-Asean Bank and, as such,
respondent never became liable for the amount stipulated therein. The absence of such
conformity by Anglo-Asean Bank prevented the Memorandum of Agreement from becoming
valid and effective. Accordingly, the Court of Appeals did not err when it ruled that the
Memorandum of Agreement was never perfected. The Supreme Court denied the petition and
affirmed the decision of the Court of Appeals.
SYLLABUS
1. CIVIL LAW; CONTRACTS; ASSIGNMENT OF CREDIT; DEFINED. — An assignment
of credit has been defined as the process of transferring the right of the assignor to the
assignee who would then have the right to proceed against the debtor. The assignment may
be done gratuitously or onerously, in which case, the assignment has an effect similar to that
of a sale.
2. ID.; ID.; SUBROGATION; DEFINED. — On the other hand, subrogation has been
defined as the transfer of all the rights of the creditor to a third person, who substitutes him in
all his rights. It may either be legal or conventional. Legal subrogation is that which takes
place without agreement but by operation of law because of certain acts. Conventional
subrogation is that which takes place by agreement of parties.
3. ID.; ID.; ID.; DISTINGUISHED FROM ASSIGNMENT OF CREDIT. — The general
tenor of the foregoing definitions of the terms "subrogation" and "assignment of credit" may
make it seem that they are one and the same which they are not. A noted expert in civil law
notes their distinctions thus: "Under our Code, however, conventional subrogation is not
identical to assignment of credit. In the former, the debtor's consent is necessary; in the latter
it is not required. Subrogation extinguishes the obligation and gives rise to a new one;
assignment refers to the same right which passes from one person to another. The nullity of
an old obligation may be cured by subrogation, such that a new obligation will be perfectly
valid; but the nullity of an obligation is not remedied by the assignment of the creditor's right to
another." For our purposes, the crucial distinction deals with the necessity of the consent of
the debtor in the original transaction. In an assignment of credit, the consent of the debtor is
not necessary in order that the assignment may fully produce legal effects. What the law
requires in an assignment of credit is not the consent of the debtor but merely notice to him as
the assignment takes effect only from the time he has knowledge thereof. A creditor may,
therefore, validly assign his credit and its accessories without the debtor's consent. On the
other hand, conventional subrogation requires an agreement among the three parties
concerned — the original creditor, the debtor, and the new creditor. It is a new contractual
relation based on the mutual agreement among all the necessary parties. Thus, Article 1301
of the Civil Code explicitly states that "(C)onventional subrogation of a third person requires
the consent of the original parties and of the third person." SaIACT
4. ID.; ID.; INTERPRETATION THEREOF; AS A RULE, VARIOUS STIPULATIONS
SHALL BE INTERPRETED TOGETHER ATTRIBUTING TO THE DOUBTFUL ONES THAT
SENSE WHICH MAY RESULT FROM ALL OF THEM TAKEN JOINTLY; APPLICATION IN
CASE AT BAR. — It is a basic rule in the interpretation of contracts that "(t)he various
stipulations of a contract shall be interpreted together, attributing to the doubtful ones that
sense which may result from all of them taken jointly." Moreover, under our Rules of Court, it
is mandated that "(i)n the construction of an instrument where there are several provisions or
particulars, such a construction is, if possible, to be adopted as will give effect to all." Further,
jurisprudence has laid down the rule that contracts should be so construed as to harmonize
and give effect to the different provisions thereof. In the case at bench, the Memorandum of
Agreement embodies certain provisions that are consistent with either a conventional
subrogation or assignment of credit. It has not been shown that any clause or provision in the
Memorandum of Agreement is inconsistent or incompatible with a conventional subrogation.
On the other hand, the two cited provisions requiring consent of the debtor to the
memorandum is inconsistent with a contract of assignment of credit. Thus, if we were to
interpret the same as one of assignment of credit, then the aforementioned stipulations
regarding the consent of Anglo-Asean Bank would be rendered inutile and useless
considering that, as previously discussed, the consent of the debtor is not necessary in an
assignment of credit.
5. ID.; ID.; ID.; QUESTION OF LAW MAY NOT BE THE SUBJECT OF STIPULATIONS
AND ADMISSIONS; CASE AT BAR. — With respect to the argument of petitioner that
respondent himself allegedly admitted in open court that an assignment of credit was
intended, it is enough to say that respondent apparently used the word "assignment" in his
testimony in the general sense. Respondent is not a lawyer and as such, he is not so well
versed in law that he would be able to distinguish between the concepts of conventional
subrogation and of assignment of credit. Moreover, even assuming that there was an
admission on his part, such admission is not conclusive on this court as the nature and
interpretation of the Memorandum of Agreement is a question of law which may not be the
subject of stipulations and admissions.
DECISION

[G.R. No. L-11827. July 31, 1961.]

FERNANDO A. GAITE, plaintiff-appellee, vs. ISABELO FONACIER, GEORGE KRAKOWER,
LARAP MINES & SMELTING CO., INC., SEGUNDINA VIVAS, FRANCISCO DANTE,
PACIFICO ESCANDOR and FERNANDO TY, defendants-appellants.
Alejo Mabanag for plaintiff-appellee.
Simplicio U. Tapia Antonio Barredo and Pedro Guevarra for defendants-appellants.
SYLLABUS
1. OBLIGATIONS AND CONTRACTS; CONDITIONAL OBLIGATIONS; EFFICACY
SUBORDINATED TO THE HAPPENING OF A FUTURE AND UNCERTAIN EVENT. — What
characterizes a conditional obligation is the fact that its efficacy or obligatory force 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.
2. SALES; COMMUTATIVE AND ONEROUS NATURE OF CONTRACT OF SALES;
CONTINGENT CHARACTER OF OBLIGATION MUST CLEARLY APPEAR. — A contract of
sale is normally commutative and onerous: not only does each of the parties assume a
correlative obligation, but each party anticipates performance by the other from the very start.
Although 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, it
is not in the usual course of business to do so; hence, the contingent character of the
obligation must clearly appear.
3. ID.; ID.; HOW DOUBT IN THE INTENTION OF PARTIES IS RESOLVED. — Sale is
essentially onerous, and if there is doubt whether the parties intended a suspensive condition
or a suspensive period for the payment of the agreed price, the doubt shall be settled in favor
of the greatest reciprocity of interests, which will obtain if the buyer's obligation is deemed to
be actually existing, with only its maturity postponed or deferred.
DECISION
REYES, J.B.L., J p:
THIRD DIVISION
[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.
Felix L. Gonzales for and in his behalf.
Felix B. Lerio for private respondents.
SYNOPSIS
On December 1, 1983, Paula Ano Cruz, together with the respondents, entered into a
contract of lease/purchase with the petitioner, 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 12111.
Petitioner paid the P2,500.00 per hectare or P15,000.00 annual rental on the half portion of
the property covered by said title in accordance with the second provision of the contract of
lease purchase and thereafter took possession of the property installing Jesus Sambrano as
his caretaker. Petitioner did not, however, exercise his option to purchase the property
immediately after the expiration of the one-year lease on November 30, 1984, but remained in
possession of the property without paying the purchase price provided in the contract and
without paying any further rentals thereon. Due to this non-payment, demand letters were
sent to petitioner demanding him to vacate the premises, but the petitioner refused to vacate
and continued possession thereof. Alleging breach of the provisions of the contract of
Lease/Purchase, the respondents filed a complaint for recovery of possession of the property
with damages. After the termination of the pre-trial conference, the trial court proceeded to
hear the case on the merits and thereafter, rendered a decision declaring that the
respondents cannot terminate the contract of lease due to their failure to notify the petitioner
in due time of their intention to that effect. Nor can they rescind the contract of purchase
considering that there was a condition precedent which the respondents failed to fulfill. The
Court of Appeals reversed the decision of the trial court and ruled that the transfer of title in
the appellee's name cannot be interpreted as a condition precedent to the payment of the
agreed purchase price because such interpretation not only run counter to the explicit
provisions of the contract but also was contrary to the normal course of things anent the sale
of real property. Hence, the petition. CIcEHS
The Court found the petition meritorious. The Court ruled that the respondents cannot rescind
the contract because they have not caused the transfer of the TCT to their names, which is a
condition precedent to petitioner's obligations. Particularly, 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 petitioner's
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. Accordingly, the
petition was granted and the appealed decision was reversed and set aside.
SYLLABUS
1. CIVIL LAW; SALES; 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; CASE AT BAR. — 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. 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.
2. ID.; ID.; IN A CONTRACT OF SALE, TITLE TO THE PROPERTY PASSES TO THE
VENDEE UPON DELIVERY OF THING SOLD; CASE AT BAR. — In a contract of sale, the
title to the property passes to the vendee upon the delivery of the thing sold. In this case, the
respondent could not deliver ownership or title to a specific portion 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. DHESca
3. ID.; OBLIGATIONS AND CONTRACTS; CONDITION DEFINED; 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; CASE AT BAR. — Condition has 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." 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."
4. ID.; ID.; WHEN THE OBLIGATION ASSUMED BY A PARTY IS EXPRESSLY
SUBJECTED TO A CONDITION, THE OBLIGATION CANNOT BE ENFORCED AGAINST
HIM UNLESS THE CONDITION IS COMPLIED WITH; CASE AT BAR. — 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." 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." 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.
5. ID.; ID.; THERE CAN BE NO RESCISSION OF AN OBLIGATION AS YET NON-
EXISTENT, BECAUSE THE SUSPENSIVE CONDITION HAS NOT HAPPENED; CASE AT
BAR. — Respondents cannot rescind the contract, because they have not caused the transfer
of the TCT to their names, which is a condition precedent to petitioner's 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." TSHcIa
DECISION
PANGANIBAN, J p:

EN BANC
[G.R. No. 24190. July 13, 1926.]
GEORGE L. PARKS, plaintiff-appellant, vs. TARLAC, MUNICIPALITY OF TARLAC,
CONCEPCION CIRER, and JAMES HILL, her husband, defendants-appellees.
Jos. N. Wolfson for appellant.
Provincial Fiscal Lopez de Jesus for the Province and Municipality of Tarlac.
SYLLABUS
1. IMMOVABLE PROPERTY; CONDITIONAL DONATION, CONDITION PRECEDENT. —
The characteristic of condition. precedent is that the acquisition of the right is not effected
while said condition is not complied with or is not deemed complied with. Meanwhile nothing
is acquired and there is only an expectancy of right. Consequently, when a condition is
imposed, the compliance of which cannot be effected except when the right is deemed
acquired, such condition cannot be a condition precedent.
2. ID.; ID.; ACTION FOR REVOCATION; PRESCRIPTION. — The action for the
revocation of a donation is not excluded from the statute of limitations And not only this, — the
law itself recognizes the prescriptibility of the action for the revocation of a donation, providing
a special period of five years for the revocation by the subsequent birth of children (art. 646,
Civil Code), and one year for the revocation by reason of ingratitude. If no special period is
provided for the prescription of the action for revocation for noncompliance of the conditions
of the donation (art. 647, Civil Code), it is because, in this respect, the donation is considered
onerous and is governed by the law or contracts and the general rules of prescription. Under
the laws in force (sec. 43, Code of Civ. Proc.) the period of prescription of this class; of action
is ten years.
DECISION
AVANCEÑA, C.J p:

FIRST DIVISION
[G.R. No. 112127. July 17, 1995.]
CENTRAL PHILIPPINE UNIVERSITY, petitioner, vs. COURT OF APPEALS, REMEDIOS
FRANCO, FRANCISCO N. LOPEZ, CECILIA P. VDA. DE LOPEZ, REDAN LOPEZ AND
REMARENE LOPEZ, respondents.
Juanito M. Acanto for petitioner.
Santos B. Aguadera for private respondents.
SYLLABUS
1. CIVIL LAW; PROPERTY; MODES OF ACQUIRING OWNERSHIP; DONATION;
CONSIDERED ONEROUS WHEN EXECUTED FOR A VALUABLE CONSIDERATION
WHICH IS CONSIDERED THE EQUIVALENT OF THE DONATION. — A clear perusal of the
condition set forth in the deed of donation executed by Don Ramon Lopez, Sr., gives us no
alternative but to conclude that his donation was onerous, one executed for a valuable
consideration which is considered the equivalent of the donation itself, e.g., when a donation
imposes a burden equivalent to the value of the donation. A gift of land to the City of Manila
requiring the latter to erect schools, construct a children's playground and open streets on the
land was considered an onerous donation. Similarly, where Don Ramon Lopez donated the
subject parcel of land to petitioner but imposed an obligation upon the latter to establish a
medical college thereon, the donation must be for an onerous consideration.
2. ID.; ID.; ID.; ID.; MAY BE REVOKED FOR NON-FULFILLMENT OR NON-
COMPLIANCE OF THE CONDITIONS SET FORTH THEREIN; CASE AT BAR. — Under Art.
1181 of the Civil Code, on 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. Thus, when a person donates land to another on the
condition that the latter would build upon the land a school, the condition imposed was not a
condition precedent or a suspensive condition but a resolutory one. It is not correct to say that
the schoolhouse had to be constructed before the donation became effective, that is, before
the donee could become the owner of the land, otherwise, it would be invading the property
rights of the donor. The donation had to be valid before the fulfillment of the condition. If there
was no fulfillment or compliance with the condition, such as what obtains in the instant case,
the donation may now be revoked and all rights which the donee may have acquired under it.
3. ID.; ID.; ID.; ID.; DONEE'S ACCEPTANCE AND ACKNOWLEDGMENT OF ITS
OBLIGATION PROVIDED IN THE DEED, SUFFICIENT TO PREVENT THE STATUTE OF
LIMITATION FROM BARRING THE ACTION OF DONOR UPON THE ORIGINAL
CONTRACT. — The claim of petitioner that prescription bars the instant action of private
respondents is unavailing. The condition imposed by the donor, i.e., the building of a medical
school upon the land donated, depended upon the exclusive will of the donee as to when this
condition shall be fulfilled. When petitioner accepted the donation, it bound itself to comply
with the condition thereof. Since the time within which the condition should be fulfilled
depended upon the exclusive will of the petitioner, it has been held that its absolute
acceptance and the acknowledgment of its obligation provided in the deed of donation were
sufficient to prevent the statute of limitations from barring the action of private respondents
upon the original contract which was the deed of donation.
4. ID.; ID.; ID.; ID.; IN CASE OF REVOCATION, A CAUSE OF ACTION ARISES WHEN
THAT WHICH SHOULD HAVE BEEN DONE IS NOT DONE, OR THAT WHICH SHOULD
NOT HAVE BEEN DONE IS DONE. — The time from which the cause of action accrued for
the revocation of the donation and recovery of the property donated cannot be specifically
determined in the instant case. A cause of action arises when that which should have been
done is not done, or that which should not have been done is done. In cases where there is
no special provision for such computation, recourse must be had to the rule that the period
must be counted from the day on which the corresponding action could have been instituted.
It is the legal possibility of bringing the action which determines the starting point for the
computation of the period. In this case, the starting point begins with the expiration of a
reasonable period and opportunity for petitioner to fulfill what has been charged upon it by the
donor.
5. ID.; ID.; ID.; ID.; GENERALLY, WHEN THE OBLIGATION DOES NOT FIX A PERIOD
BUT FROM ITS NATURE AND CIRCUMSTANCES IT CAN BE INFERRED THAT A PERIOD
WAS INTENDED, COURT MAY FIX THE PERIOD FOR COMPLIANCE. — The period of time
for the establishment of a medical college and the necessary buildings and improvements on
the property cannot be quantified in a specific number of years because of the presence of
several factors and circumstances involved in the erection of an educational institution, such
as government laws and regulations pertaining to education, building requirements and
property restrictions which are beyond the control of the donee. Thus, when the obligation
does not fix a period but from its nature and circumstances it can be inferred that a period
was intended, the general rule provided in Art. 1197 of the Civil Code applies, which provides
that the courts 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 and
such period has arrived.
6. ID.; ID.; ID.; ID.; WHEN OBLIGOR CANNOT COMPLY WITH WHAT IS INCUMBENT
UPON HIM, THE OBLIGEE MAY SEEK RESCISSION; EXCEPTION. — This general rule
however cannot be applied considering the different set of circumstances existing in the
instant case. 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. Moreover, under Art. 1191 of the Civil
Code, when one of the obligors cannot comply with what is incumbent upon him, the obligee
may seek rescission and the court shall decree the same 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 the compliance, there is no more obstacle for the court to decree the rescission
claimed.
7. ID.; ID.; ID.; ID.; IN CASE OF GRATUITOUS DONATION DOUBTS SHOULD BE
RESOLVED IN FAVOR OF THE LEAST TRANSMISSION OF RIGHTS AND INTERESTS. —
Finally, since the questioned deed of donation herein is basically a gratuitous one, doubts
referring to incidental circumstances of a gratuitous contract should be resolved in favor of the
least transmission of rights and interests. 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.
DAVIDE, JR., J, dissenting opinion:
1. CIVIL LAW; PROPERTY, MODES OF ACQUIRING OWNERSHIP; DONATION; IN
LAW OF DONATION, "CONDITIONS" REFERS TO OBLIGATION OR CHARGES IMPOSED
BY THE DONOR ON THE DONEE. — There is no conditional obligation to speak of in this
case. It seems that the "conditions" imposed by the donor and as the word is used in the law
of donations confused with "conditions" as used in the law of obligations. In his annotation of
Article 764 of the Civil Code on Donations, Arturo M. Tolentino, citing the well-known civilists
such as Castan, Perez Gonzalez and Alguer, and Colin & Capitant, states clearly the context
within which the term "conditions" is used in the law of donations, to wit: The word
"conditions" in this article does not refer to uncertain events on which the birth or
extinguishment of a juridical relation depends, but it is used in the vulgar sense of obligations
or charges imposed by the donor on the donee. It is used, not in its technical or strict legal
sense, but in its broadest sense. (Italics supplied) Clearly then, when the law and the deed of
donation speaks of "conditions" of a donation, what are referred to are actually the
obligations, charges or burdens imposed by the donor upon the donee and which would
characterize the donation as onerous. In the present case, the donation is, quite obviously,
onerous, but it is more properly called a "modal donation." A modal donation is one in which
the donor imposes a prestation upon the donee. The establishment of the medical college as
the condition of the donation in the present case is one such prestation.
2. ID.; ID.; ID.; ID.; WHEN NO FIXED PERIOD IN WHICH THE CONDITION SHOULD
BE FULFILLED, IT IS THE DUTY OF THE COURT TO FIX A SUITABLE TIME FOR ITS
FULFILLMENT. — J. Davide, Jr., cannot subscribe to the view that the provisions of Article
1197 cannot be applied here. The conditions/obligations imposed by the donor herein are
subject to a period. I draw this conclusion/based on our previous ruling which, although made
almost 90 years ago, still finds application in the present case. In Barreto vs. City of Manila,
we said that when the contract of donation, as the one involved therein, has no fixed period in
which the condition should be fulfilled, the provisions of what is now Article 1197 (then Article
1128) are applicable and it is the duty of the court to fix a suitable time for its fulfillment.
Indeed, from the nature and circumstances of the conditions/obligations of the present
donation, it can be inferred that a period was contemplated by the donor. Don Ramon Lopez
could not have intended his property to remain idle for a long period of time when in fact, he
specifically burdened the donee with the obligation to set up a medical college therein and
thus put his property to good use. There is a need to fix the duration of the time within which
the conditions imposed are to be fulfilled.
3. ID.; ID.; ID.; ID.; MERE FACT THAT THERE IS NO TIME FIXED AS TO WHEN THE
CONDITION THEREOF ARE TO BE FULFILLED DOES NOT IPSO FACTO MEAN THAT
THE STATUTE OF LIMITATION WILL NOT APPLY. — There is misplaced reliance again on a
previous decision of this Court in Osmeña vs. Rama. That case does not speak of a deed of
donation as erroneously quoted and cited by the majority opinion. It speaks of a contract for a
sum of money where the debtor herself imposed a condition which will determine when she
will fulfill her obligation to pay the creditor, thus, making the fulfillment of her obligation
dependent upon her will. What we have here, however, is not a contract for a sum of money
but a donation where the donee has not imposed any conditions on the fulfillment of its
obligations. Although it is admitted that the fulfillment of the conditions/obligations of the
present donation may be dependent on the will of the donee as to when it will comply
therewith, this did not arise out of a condition which the donee itself imposed. It is believed
that the donee was not meant to and does not have absolute control over the time within
which it will perform its obligations. It must still do so within a reasonable time. What that
reasonable time is, under the circumstances, for the courts to determine. Thus, the mere fact
that there is no time fixed as to when the conditions of the donation are to be fulfilled does not
ipso facto mean that the statute of limitations will not apply anymore and the action to revoke
the donation becomes imprescriptible.
4. ID.; ID.; ID.; ID.; ACTION TO REVOKE THEREOF PRESCRIBES IN FOUR (4)
YEARS. — More recently, in De Luna vs. Abrigo, this Court reiterated the ruling in Parks and
said that: It is true that under Article 764 of the New Civil Code, actions for the revocation of a
donation must be brought within four (4) years from the non-compliance of the conditions of
the donation. However, it is Our opinion that said article does not apply to onerous donations
in view of the specific provision of Article 733 providing that onerous donations are governed
by the rules on contracts. In the light of the above, the rules on contracts and the general
rules on prescription and not the rules on donations are applicable in the case at bar. The law
applied in both cases is Article 1144(1). It refers to the prescription of an action upon a written
contract, which is what the deed of an onerous donation is. The prescriptive period is ten
years from the time the cause of action accrues, and that is, from the expiration of the time
within which the donee must comply with the conditions/obligations of the donation. As to
when this exactly is remains to be determined, and that is for the courts to do as reposed
upon them by Article 1197.
DECISION
BELLOSILLO, J p:

SECOND DIVISION
[G.R. No. 126444. December 4, 1998.]
ALFONSO QUIJADA, CRESENTE QUIJADA, REYNELDA QUIJADA, DEMETRIO QUIJADA,
ELIUTERIA QUIJADA, EULALIO QUIJADA, and WARLITO QUIJADA, petitioners, vs. COURT
OF APPEALS, REGALADO MONDEJAR, RODULFO GOLORAN, ALBERTO ASIS,
SEGUNDINO RAS, ERNESTO GOLORAN, CELSO ABISO, FERNANDO BAUTISTA,
ANTONIO MACASERO, and NESTOR MAGUINSAY, respondents.
SYLLABUS
1. CIVIL LAW; DONATION; DONATION WITH A RESOLUTORY CONDITION; IF
PERFECTED, DONEE BECOMES THE OWNER OF THE PROPERTY DONATED
NOTWITHSTANDING THE CONDITION IMPOSED. — When the Municipality's acceptance
of the donation was made known to the donor, the former became the new owner of the
donated property — donation being a mode of acquiring and transmitting ownership —
notwithstanding the condition imposed by the donee. The donation is perfected once the
acceptance by the donee is made known to the donor. Accordingly, ownership is immediately
transferred to the latter and that ownership will only revert to the donor if the resolutory
condition is not fulfilled. aSATHE
2. ID.; ID.; ID.; NON-FULFILLMENT THEREOF, WHEN BROUGHT TO THE
KNOWLEDGE OF THE DONOR AUTOMATICALLY REVERTS OWNERSHIP OF THE
PROPERTY DONATED AS PROVIDED. — Since no period was imposed by the donor on
when must comply with the condition, the latter remains the owner so long as he has tried to
comply with the condition within a reasonable period. Such period, however, became
irrelevant herein when the donee-Municipality manifested through a resolution that it cannot
comply with the condition of building a school and the same was made known to the donor.
Only then — when the non-fulfillment of the resolutory condition was brought to the donor's
knowledge — that ownership of the donated property reverted to the donor as provided in the
automatic reversion clause of the deed of donation.
3. ID.; ID.; ID.; DONOR'S INCHOATE INTEREST IN THE DONATED PROPERTY MAY
BE THE SUBJECT OF CONTRACTS INCLUDING A CONTRACT OF SALE. — The donor
may have an inchoate interest in the donated property during the time that ownership of the
land has not reverted to her. Such inchoate interest may be the subject of contracts including
a contract of sale.
4. ID.; LACHES; IS NEGLIGENCE OR OMISSION TO ASSERT A RIGHT WITHIN A
REASONABLE TIME GIVING RISE TO A PRESUMPTION THAT THE PARTY ENTITLED TO
ASSERT IT EITHER HAS ABANDONED OR DECLINED TO ASSERT IT; CASE AT BAR. —
As to laches, petitioner's action is not yet barred thereby. Laches presupposes failure or
neglect for an unreasonable and unexplained length of time, to do that which, by exercising
due diligence, could or should have been done earlier; "it is negligence or omission to assert
a right within a reasonable time, thus, giving rise to a presumption that the party entitled to
assert it either has abandoned or declined to assert it." Petitioners' cause of action to quiet
title commenced only when the property reverted to the donor and/or his successors-in-
interest in 1987. Certainly, when the suit was initiated the following year, it cannot be said that
petitioners had slept on their rights for a long time. The 1960's sales made by Trinidad
Quijada cannot be the reckoning point as to when petitioners' cause of action arose. They had
no interest over the property at the time except under the deed of donation to which private
respondents were not privy. Moreover, petitioners had previously filed an ejectment suit
against private respondents only that it did not prosper on a technicality.
5. ID.; SALE; A CONSENSUAL CONTRACT PERFECTED BY MERE CONSENT;
OWNERSHIP BY THE SELLER OF THE THING SOLD IS NOT AN ELEMENT OF
PERFECTION. — Sale, being a consensual contract, is perfecting by mere consent, which is
manifested the moment there is a meeting of the minds as to the offer and acceptance thereof
on three (3) elements; subject matter, price and terms of payment of the price. Ownership by
the seller on the thing sold at the time of the perfection of the contract of sale is not an
element for its perfection. What the law requires is that the seller has the right to transfer
ownership at the time the thing sold is delivered. Perfection per se does not transfer
ownership which occurs upon the actual or constructive delivery of the thing sold. A perfected
contract of sale cannot be challenged on the ground of non-ownership on the part of the seller
at the time of its perfection: hence, the sale is still valid.
6. ID.; ID,; CONSUMMATION THEREOF OCCURS UPON THE CONSTRUCTIVE OR
ACTUAL DELIVERY OF THE SUBJECT MATTER TO THE BUYER; CASE AT BAR. — The
consummation, however, of the perfected contract is another matter. It occurs upon the
constructive or actual delivery of the subject matter to the buyer when the seller of her
successors-in-interest subsequently acquires ownership thereof. Such circumstance
happened in this case when petitioners — who are Trinidad Quijada's heirs and successors-
in-interest — became the owners of the subject property upon the reversion of the ownership
of the land to them. Consequently, ownership is transferred to respondent Mondejar and
those who claim their right from him. Article 1434 of the New Civil Code supports the ruling
that the seller's "title passes by operation of law to the buyer." This rule applies not only when
the subject matter of the contract of sale is goods, but also to other kinds of property,
including real property. CADHcI
7. ID.; DONATION; DONOR MAY IMPOSE ONLY REASONABLE AND JUST
CONDITIONS THEREON. — Nowhere in Article 1409 (4) is it provided that the properties of a
municipality, whether it be those for public use or its patrimonial property are outside the
commerce of men. Besides, the lots in this case were conditionally owned by the municipality.
To rule that the donated properties are outside the commerce of men would render nugatory
the unchallenged reasonableness and justness of the condition which the donor has the right
to impose as owner thereof. Moreover, the objects referred to as outsides the commerce of
men are those which cannot be appropriated, such as the open seas and the heavenly
bodies.
8. ID.; DAMAGES; ATTORNEY'S FEES, LITIGATION EXPENSES AND MORAL
DAMAGES CANNOT BE RECOVERED IN THE CASE AT BAR. — With respect to the trial
court's award of attorney's fees, litigation expenses and moral damages, there is neither
factual nor legal basis thereof. Attorney's fees and expenses of litigation cannot, following the
general rule in Article 2208 of the New Civil Code, be recovered in this case, there being no
stipulation to that effect and the case does not fall under any of the exceptions. It cannot be
said that private respondents had compelled petitioners to litigate with third persons. Neither
can it be ruled that the former acted in "gross and evident bad faith" in refusing to satisfy the
latter's claims considering that private respondents were under an honest belief that they
have legal right over the property by virtue of the deed of sale. Moral damages cannot
likewise be justified as one of the circumstances enumerated under Article 2219 and 2220 of
the New Civil Code concur in this case. CITaSA
DECISION
MARTINEZ, J p:

SECOND DIVISION
[G.R. No. 107112. February 24, 1994.]
NAGA TELEPHONE CO., INC. (NATELCO) AND LUCIANO M. MAGGAY, petitioners, vs. THE
COURT OF APPEALS AND CAMARINES SUR II ELECTRIC COOPERATIVE, INC.
(CASURECO II), respondents.
SYLLABUS
1. CIVIL LAW; OBLIGATION AND CONTRACTS; RULE WHERE A PERSON BY HIS
CONTRACT CHARGES HIMSELF WITH AN OBLIGATION POSSIBLE TO BE PERFORMED.
— The case of Reyes v. Caltex (Philippines), Inc. enunciated the doctrine that where a person
by his contract charges himself with an obligation possible to be performed, he must perform
it, unless its performance is rendered impossible by the act of God, by the law, or by the other
party, it being the rule that in case the party desires to be excused from performance in the
event of contingencies arising thereto, it is his duty to provide the basis therefor in his
contract. With the enactment of the New Civil Code, a new provision was included therein
namely, Article 1267 which provides: "When the service has become so difficult as to be
manifestly beyond the contemplation of the parties, the obligor may also be released
therefrom, in whole or in part." In the report of the Code Commission, the rationale behind
this innovation was explained, thus: "The general rule is that impossibility of performance
releases the obligor. However, it is submitted that when the service has become so difficult as
to be manifestly beyond the contemplation of the parties, the court should be authorized to
release the obligor in whole or in part. The intention of the parties should govern and if it
appears that the service turns out to be so difficult as to have been beyond their
contemplation, it would be doing violence to that intention to hold the obligor still responsible."
In other words, fair and square consideration underscores the legal precept therein.
2. ID.; ID.; "SERVICE" UNDER ART. 1267 REFERS TO THE PERFORMANCE OF AN
OBLIGATION; CASE AT BAR. — Petitioners assert earnestly that Article 1267 of the New
Civil Code is not applicable primarily because the contract does not involve the rendition of
service or a personal prestation and it is not for future service with future unusual change.
Instead, the ruling in the case Occeña, et al. v. Jabson, etc, et al., (G.R. No. L-44349, October
29, 1976, 73 SCRA 637) which interpreted the article, should be followed in resolving this
case. Besides, said article was never raised by the parties in their pleadings and was never
the subject of trial and evidence. Article 1267 speaks of "service" which has become so
difficult. Taking into consideration the rationale behind this provision, the term "service"
should be understood as referring to the "performance" of the obligation. In the present case,
the obligation of private respondent consists in allowing petitioners to use its posts in Naga
City, which is the service contemplated in said article. Furthermore, a bare reading of this
article reveals that it is not a requirement thereunder that the contract be for future service
with future unusual change. According to Senator Arturo M. Tolentino, Article 1267 states in
our law the doctrine of unforeseen events. This is said to be based on the discredited theory
of rebus sic stantibus in public international law; under this theory, the parties stipulate in the
light of certain prevailing conditions, and once these conditions cease to exist the contract
also ceases to exist. Considering practical needs and the demands of equity and good faith,
the disappearance of the basis of a contract gives rise to a right to relief in favor of the party
prejudiced.
3. ID.; ID.; POTESTATIVE CONDITION; MEANING THEREOF; APPLICATION IN CASE
AT BAR. — A potestative condition is a condition, the fulfillment of which depends upon the
sole will of the debtor, in which case, the conditional obligation is void. Based on this
definition, respondent court's finding that the provision in the contract, to wit: "(a) That the
term or period of this contract shall be as long as the party of the first part (petitioner) has
need for the electric light posts of the party of the second part (private respondent) . . ." is a
potestative condition, is correct. However, it must have overlooked the other conditions in the
same provision, to wit: ". . . it being understood that this contract shall terminate when for any
reason whatsoever, the party of the second part (private respondent) is forced to stop,
abandoned (sic) its operation as a public service and it becomes necessary to remove the
electric light post (sic);" which are casual conditions since they depend on chance, hazard, or
the will of a third person. In sum, the contract is subject to mixed conditions, that is, they
depend partly on the will of the debtor and partly on chance, hazard or the will of a third
person, which do not invalidate the aforementioned provision.
4. ID.; PRESCRIPTION OF ACTIONS; RULE ON WRITTEN CONTRACT. — Article 1144
of the New Civil Code provides, inter alia, that an action upon a written contract must be
brought within ten (10) years from the time the right of the action accrues. Clearly, the ten (10)
year period is to be reckoned from the time the right of action accrues which is not necessarily
the date of execution of the contract. As correctly ruled by respondent court, private
respondent's right of action arose "sometime during the latter part of 1982 or in 1983 when
according to Atty. Luis General, Jr. . . ., he was asked by (private respondent's) Board of
Directors to study said contract as it already appeared disadvantageous to (private
respondent). (Private respondent's) cause of action to ask for reformation of said contract
should thus be considered to have arisen only in 1982 or 1983, and from 1982 to January 2,
1989 when the complaint in this case was filed, ten (10) years had not yet elapsed."
DECISION
NOCON, J p:

FIRST DIVISION
[G.R. No. 4437. September 9, 1909.]
TOMAS OSMEÑA, plaintiff-appellee, vs. CENONA RAMA, defendant-appellant.
Filemon Sotto for appellant.
J.H. Junquera for appellee.
SYLLABUS
CONTRACT; CONDITIONAL PROMISE TO PAY. — A condition imposed upon a contract by
the promisor, the performance of which depends upon his exclusive will, is void, in
accordance with the provisions of article 1115 of the Civil Code.
DECISION
JOHNSON, J p:

EN BANC
[G.R. No. L-5267. October 27, 1953.]
LUZ HERMOSA, as administratrix of the Intestate Estate of Fernando Hermosa, SR., and
FERNANDO HERMOSA, JR., petitioners, vs. EPIFANIO M. LONGARA, respondent.
Manuel O. Chan for petitioners.
Jacinto R. Bohol for respondents.
SYLLABUS
1. OBLIGATIONS AND CONTRACTS; CONDITIONAL OBLIGATIONS; A CONDITION
THAT DOES NOT DEPEND UPON THE EXCLUSIVE WILL OF THE DEBTOR;
SUSPENSIVE CONDITIONS. — The condition of the obligation was that payment was to be
made "as soon as he (obligor) receives funds derived from the sale of his property in Spain."
The will to sell on the part of the debtor (intestate) was present in fact, or presumed legally to
exist, although the price and other conditions thereof were still within his discretion and final
approval. But in addition to this acceptability of the sale to him (obligor), there were still other
conditions that had to concur to effect the sale, mainly that of the presence of a buyer, ready,
able and willing to purchase the property under the conditions demanded by the vendor.
Without such a buyer the sale could not be carried out or the proceeds thereof sent to the
islands. Held: The condition does not depend exclusively upon the will of the debtor, but also
upon other circumstances beyond his power or control. If the condition were "if he decides to
sell his house," or "if he likes to pay the sums advanced," or any other condition of similar
import implying that upon him (the debtor) alone payment would depend, the condition would
be potestativa, dependent upon his will or discretion. The condition, as stated above, implies
that the obligor had already decided to sell his house, or at least that he had made his
creditors believe that he had done so, and that all that was needed to make his obligation (to
pay his indebtedness) demandable is that the sale be consummated and the price thereof
remitted to the islands. The condition of the obligation was not a purely potestative one,
depending exclusively upon the will of the obligor, but a mixed one, depending partly upon
chance, i. e., the presence of a buyer of the property for the price and under the conditions
desired by the obligor. The obligation is clearly governed by the second sentence of article
1115 of the old Civil Code (8 Manresa, 126). The condition is, besides, a suspensive
condition, upon the happening of which the obligation to pay is made dependent. And upon
the happening of the condition, the debt became immediately due and demandable. (Article
1114, old Civil Code; 8 Manresa, 119.)
2. ID., EVIDENCE, PRESUMPTION OR INFERENCE FROM PRESERVATION AND
POSSESSION OF EVIDENCE OF INDEBTEDNESS. — The sale was not affected in the
lifetime of the debtor (the intestate), but after his death and by his administrator, the very wife
of the claimant. There was no evidence to show that the claim was the product of a collusion
or connivance between the administratrix and the claimant. The receipts of the advances
were preserved. Held: That there was really a promise made by the intestate to pay for the
credit advances, may be implied from the fact that the receipts thereof had been preserved;
had the advances been made without intention of demanding their payment later, said
receipts would not have been preserved. Regularity of the advances and the close
relationship between the intestate and the claimant also support this contention.
3. ID.; SUSPENSIVE CONDITION WHICH TOOK PLACE AFTER OBLIGOR'S DEATH;
STATUTE OF LIMITATIONS. — The fact that the suspensive condition took place after the
death of the debtor, and that the advances were made more than ten years before the sale
are immaterial (4 Sanchez Roman, p. 122). The obligation retroacts to the date when the
contract was entered into, and all amounts advanced from the time of the agreement became
due upon the happening of the suspensive condition. As the obligation to pay became due
and demandable only when the house was sold and the proceeds received in the islands, the
action to recover the same only accrued, within the meaning of the statute of limitations, on
the date the money became available here; hence, the action to recover the advances has
not yet prescribed.
4. ID.; DESCENT AND DISTRIBUTION; GRANDSON'S ALLOWANCE, A PERSONAL
OBLIGATION. — Credits furnished the intestate's grandson after his (intestate's) death
should not be allowed. Even if authorization to furnish necessaries to his grandson may have
been given, this authorization could not be made to extend after his death, for two obvious
reasons: (1) The obligation to furnish support is personal and is extinguished upon the death
of the person obliged to give support (article 150, old Civil Code); and (2) upon the death of a
principal (the intestate), his agent's authority or authorization is deemed terminated (article
1732, old Civil Code).
5. ID.; STATUTE OF NONCLAIMS; APPEALS; QUESTIONS NOT RAISED IN LOWER
COURTS. — The question of whether or not the appellant's claims are barred by the statute
of non-claims cannot be passed upon on appeal where this question was never raised in any
of the courts below.
DECISION
LABRADOR, J p:

EN BANC
[G.R. No. 16109. October 2, 1922.]
M.D. TAYLOR, plaintiff-appellant, vs. Uy TIENG PIAO and TAN LIUAN, doing business under
the firm name and style of TAN LIUAN, & Company, defendant. UY TIENG PIAO, defendant-
appellant.
Cohn, Fisher & DeWitt and William C. Brandy for plaintiff and appellant.
Gabriel La O for defendant and appellant Uy Tieng Piao.
Crossfield & O'Brien for Tan Liuan and Tan Liuan & Co.
SYLLABUS
1. CONTRACT; RESOLUTORY CLAUSE; OPTION OF OBLIGOR TO CAN CONTRACT
IN CERTAIN CONTINGENCY. — Article 1256 of the Civil Code constitutes no impediment to
the insertion in a contract for personal service of a resolutory clause permitting the
cancellation of the contract by the employer in a certain contingency even though said
contingency is under the domination of the employer. Such stipulation does not make either
the validity or the fulfillment of the contract defendant upon the will of the employer; for where
contracting parties have agreed that the option shall exist, the exercise of the option is as
much in the fulfillment of the contract as any other act which may have been the subject of
agreement. The cancellation of a contract in accordance with conditions agreed upon
beforehand is fulfillment.
2. ID.; ID.; OBLIGOR IMPEDING FULFILLMENT OF CONDITION. — Article 1119 of the
Civil Code, which declare that a condition shall be deemed fulfilled if the obligor intentionally
impedes its fulfillment, has no application to the case of the resolutory provision giving to the
obligor a right to cancel a contract upon a contingency within the control of the obligor.
3. ID.; ID.; CASE AT BAR. — The defendants employed the plaintiff for a term of two
years as superintendent of an oil mill which the defendants contemplated establishing. In the
contract was inserted a stipulation authorizing the defendants to cancel the contract if certain
machinery necessary for starting the mill should for any reason not arrive in Manila within six
months. The machinery not arriving within that period, the defendants gave notice of the
cancellation of the contract and discharged the plaintiff, whereupon the latter instituted an
action for damages. Held: That the defendants were acting within their rights in cancelling the
contract at the expiration of six months and it was immaterial whether the failure of the
machinery to arrive was due to some circumstance within the control of the defendants or not.
DECISION
STREET, J p:

EN BANC
[G.R. No. 16570. March 9, 1922.]
SMITH, BELL & CO., LTD., plaintiff-appellant, vs. VICENTE SOTELO MATTI, defendant-
appellant.
Ross & Lawrence and Ewald E. Selph for plaintiff-appellant.
Ramon Sotelo for defendant-appellant.
SYLLABUS
1. CONTRACTS; PURCHASE AND SALE OF MERCHANDISE; UNCERTAINTY OF
TIME OF FULFILLMENT OF OBLIGATION. — As no definite date was fixed for the delivery of
the goods, which the plaintiff undertook to deliver, the term which the parties attempted to
establish being so uncertain that one cannot tell whether, as a matter of fact, the aforesaid
goods could, or could not, be imported into Manila, the obligation must be regarded as
conditional and not one with a term.
2. ID.; ID.; WHEN FULFILLMENT OF CONDITION NOT DEPENDENT ON THE WILL OF
OBLIGOR. — Where the fulfillment of the condition does not depend on the will of the obligor,
but on that of a third person who can in no way be compelled to carry it out, the obligor's part
of the contract is complied with, if he does all that is in his power, and it then becomes
incumbent upon the other contracting party to comply with the terms of the contract.
3. ID.; ID.; WHEN TIME NOT ESSENTIAL. — Where no date is fixed in the contract for
the delivery of the thing sold, time is considered unessential, and delivery must be made
within a reasonable time to be determined by the courts in accordance with the circumstances
of the case.
4. PRINCIPAL AND AGENT; THIRD PERSONS. — When an agent acts in his own name,
the principal has no right of action against the persons with whom the agent has contracted,
or such persons against the principal. In such case, the agent is directly liable to the person
with whom he has contracted, as if the transaction were his own. (Art. 1717, Civil Code.)
DECISION
ROMUALDEZ, J p:
THIRD DIVISION
[G.R. No. 70789. October 19, 1992.]
RUSTAN PULP & PAPER MILLS, INC., BIENVENIDO R. TANTOCO, SR., and ROMEO S.
VERGARA, petitioners, vs. THE INTERMEDIATE APPELLATE COURT AND ILIGAN
DIVERSIFIED PROJECTS, INC., ROMEO A. LLUCH and ROBERTO G. BORROMEO,
respondents.
Napoleon J. Poblador for petitioner.
Pinito W. Mercado and Pablo S. Badong for respondents.
SYLLABUS
1. CIVIL LAW; OBLIGATIONS AND CONTRACT; POTESTATIVE CONDITION; MAY BE
OBLITERATED WITHOUT AFFECTING THE REST OF THE STIPULATIONS. — The matter
of Tantoco's and Vergara's joint and several liability as a result of the alleged breach of the
contract is dependent, first of all, on whether Rustan Pulp and Paper Mills may legally
exercise the right of stoppage should there be a glut of raw materials at its plant.
And insofar as the express discretion on the part of petitioners is concerned regarding the
right of stoppage, We feel that there is cogent basis for private respondents' apprehension on
the illusory resumption of deliveries inasmuch as the prerogative suggests a condition solely
dependent upon the will of petitioners. Petitioners can stop delivery of pulp wood from private
respondents if the supply at the plant is sufficient as ascertained by petitioners, subject to re-
delivery when the need arises as determined likewise by petitioners. This is Our simple
understanding of the literal import of paragraph 7 of the obligation in question. A purely
potestative imposition of this character must be obliterated from the face of the contract
without affecting the rest of the stipulations considering that the condition relates to the
fulfillment of an already existing obligation and not to its inception. It is, a truism in legal
jurisprudence that a condition which is both potestative (or facultative) and resolutory may be
valid, even though the saving clause is left to the will of the obligor.
2. ID.; ID.; ID.; RIGHT OF STOPPAGE GUARANTEED IN THE CONTRACT, HELD
INOPERATIVE; REASON. — Petitioners are of the impression that the letter dated
September 30, 1968 sent to private respondents is well within the right of stoppage
guaranteed to them by paragraph 7 of the contract of sale which was construed by petitioners
to be a temporary suspension of deliveries. There is no doubt that the contract speaks loudly
about petitioners' prerogative but what diminishes the legal efficacy of such right is the
condition attached to it which, as aforesaid, is dependent exclusively on their will for which
reason, We have no alternative but to treat the controversial stipulation as inoperative (Article
1306, New Civil Code). It is for this same reason that We are not inclined to follow the
interpretation of petitioners that the suspension of delivery was merely temporary since the
nature of the suspension itself is again conditioned upon petitioners' determination of the
sufficiency of supplies at the plant.
3. ID.; ID.; FRUSTRATION OF COMMERCIAL OBJECT AS GROUND FOR
TERMINATION OF THE CONTRACT, NOT ACCEPTABLE; REASONS. — Neither are We
prepared to accept petitioners' exculpation grounded on frustration of the commercial object
under Article 1267 of the New Civil Code, because petitioners continued accepting deliveries
from the suppliers. This conduct will estop petitioners from claiming that the breakdown of the
machinery line was an extraordinary obstacle to their compliance to the prestation. It was
indeed incongruous for petitioners to have sent the letters calling for suspension and yet, they
in effect disregarded their own advice by accepting the deliveries from the suppliers. Knowing
fully well that they will encounter difficulty in producing output because of the defective
machinery line, petitioners opted to open the plant to greater loss, thus compounding the
costs by accepting additional supply to the stockpile. Verily, the Appellate Court emphasized
the absurdity of petitioners' action when they acknowledged that "if the plant could not be
operated on a commercial scale, it would then be illogical for defendant Rustan to continue
accepting deliveries of raw materials."
4. ID.; AGENCY; OFFICERS OF CORPORATIONS NOT LIABLE INDIVIDUALLY UNDER
THE CONTRACT SIGNED BY THEM IN THEIR OFFICIAL CAPACITY; EXCEPTION. — We
have to agree with petitioners' citation of authority to the effect that the President and
Manager of a corporation who entered into and signed a contract in his official capacity,
cannot be made liable thereunder in his individual capacity in the absence of stipulation to
that effect due to the personality of the corporation being separate and distinct from the
persons composing it (Bangue Generale Belge vs. Walter Bull and Co., Inc., 84 Phil. 164).
And because of this precept, Vergara's supposed non-participation in the contract of sale
although he signed the letter dated September 30, 1968 is completely immaterial. The two
exceptions contemplated by Article 1897 of the New Civil Code where agents are directly
responsible are absent and wanting.
DECISION
MELO, J p:

THIRD DIVISION
[G.R. No. 107207. November 23, 1995.]
VIRGILIO R. ROMERO, petitioner, vs. HON. COURT OF APPEALS and ENRIQUETA CHUA
VDA. DE ONGSIONG, respondents. cdll
Antonio C. Cabreros, Jr. & Peter M. Porras Law Offices and Yap, Apostol, Gumaru & Balgua
for petitioner.
Joaquin "Bobby" Yuseco for private respondent.
SYLLABUS
1. CIVIL LAW; CONTRACTS; SALES; NATURE AND FORM; CONSTRUED. — A
perfected contract of sale may either be absolute or conditional depending on whether the
agreement is devoid of, or subject to, any condition imposed on the passing of title of the
thing to be conveyed or on the obligation of a party thereto. When ownership is retained until
the fulfillment of a positive condition the breach of the condition will simply prevent the duty to
convey title from acquiring an obligatory force. If the condition is imposed on an obligation of a
party which is not complied with, the other party may either refuse to proceed or waive said
condition (Art. 1545, Civil Code). Where, of course, the condition is imposed upon the
perfection of the contract itself, the failure of such condition would prevent the juridical relation
itself from coming into existence.
2. ID.; ID.; CHARACTER THEREOF; DETERMINED BY THE SUBSTANCE, NOT BY
THE TITLE GIVEN BY THE PARTIES. — 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.
3. ID.; ID.; ID.; TERM "CONDITION" IN THE CONTEXT OF A PERFECTED CONTRACT
OF SALE; CONSTRUED. — The term "condition" in the context of a perfected contract of
sale pertains, in reality, to the compliance by one party of an undertaking the fulfillment of
which would beckon, in turn, the demandability of the reciprocal prestation of the other party.
The reciprocal obligations referred to would normally be, in the case of vendee, the payment
of the agreed purchase price and, in the case of the vendor, the fulfillment of certain express
warranties (which, in the case at bench is the timely eviction of the squatters on the property).
4. ID.; ID.; ID.; WHEN PERFECTED. — 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.
5. ID.; ID.; ID.; CONDITIONAL SALE; FULFILLMENT OF CONDITION; OPERATIVE ACT
SETTING INTO MOTION VENDEE'S OBLIGATION. — 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. The ejectment of the squatters is a condition the
operative act of which sets into motion the period of compliance by petitioner of his own
obligation, i.e., to pay the balance of the purchase price. cdlex
6. ID.; ID.; ID.; ID.; RIGHT OF A VENDEE IN CASE OF NON-FULFILLMENT OF
CONDITION. — 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, aforementioned, allows the obligee to choose
between proceeding with the agreement or waiving the performance of the condition. It is this
provision which is the pertinent rule in the case at bench. Here, evidently, petitioner has
waived the performance of the condition imposed on private respondent to free the property
from squatters.
7. ID.; ID.; ID.; ID.; CONDITION IN CASE AT BAR; NOT POTESTATIVE. — We share the
opinion of the appellate court that the undertaking required of private respondent does not
constitute a "potestative condition dependent solely on his will" that might, otherwise, be void
in accordance with Article 1182 of the Civil Code but a "mixed" condition "dependent not on
the will of the vendor alone but also of third persons like the squatters and government
agencies and personnel concerned." We must hasten to add, however, that where the so-
called "potestative condition" is imposed not on the birth of the obligation but on its fulfillment,
only the condition is avoided, leaving unaffected the obligation itself.
8. ID.; ID.; ID.; ID.; ACTION FOR RESCISSION; NOT WARRANTED IN CASE AT BAR.
— Private respondent's action for rescission is not warranted. She is not the injured party. The
right of resolution of a party to an obligation under Article 1191 of the Civil Code 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. In
his letter of 23 June 1989, counsel for petitioner has tendered payment and demanded
forthwith the execution of the deed of absolute sale. Parenthetically, this offer to pay, having
been made prior to the demand for rescission, assuming for the sake of argument that such a
demand is proper under Article 1592 of the Civil Code, would likewise suffice to defeat private
respondent's prerogative to rescind thereunder. cdlex
DECISION
VITUG, J p: