Javier vs.

Court of Appeals and Leonardo Tiro

Art. 1181, Suspensive Condition

Facts:

Petitioner and private respondent entered into an agreement into which Petitioner bound himself to
transfer his rights(shares of stocks) on Timberlwealth Corp to private respondent.

That for and in consideration of the transfer of rights, Petitioner undertakes to pay Private

Respondent subject to the condition that Bureau of Forestry approves the application of Private
Respondent for an additional area for forest concession.

Private Respondent did not obtain the approval.

Issue:

W/N an agreement may be nullified for non-performance of the conditions stipulated therein

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

In this case, the petitioners failed to obtain the approval of the Bureau of Forestry for additional area for
forest concession therefore, the deed that the parties executed produces no effect for its effectivity lied
with the happening of the aforementioned event.

Vda. De Mistica vs. Naguiat

Art. 1182. Potestative Condition

Facts

Predecessor-in-interest of Petitioner and herein Defendants entered into a contract to sell in which
the latter prayed the initial payment and undertake to pay the remaining by installment within 10
years after which, payment shall be subject to 12% interest per annum
Payment was not made within the said period
 Petitioner filed a complaint for rescission alleging failure and refusal of Defendants to pay the
balance constitutes a violation of the contract which entitles her to rescind the same
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. She further avers that the proviso on the payment of
interest did not extend the period to pay. To interpret it in that way would make the obligation
purely potestative and, thus, void under Article 1182 of the Civil Code.
Issue/Scope

WON Petitioner is entitled to rescind the contract

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.

Moreover, it is undisputed that during the ten-year period, petitioner and her deceased husband
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.

If petitioner would like to impress upon this Court that the parties intended otherwise, she has to
show competent proof to support her contention. Instead, she argues that the period cannot be
extended beyond ten years, because to do so would convert the buyers obligation to a purely
potestative obligation that would annul the contract under Article 1182 of the Civil Code.

This contention is likewise untenable. The Code prohibits purely potestative, suspensive,
conditional obligations that depend on the whims of the debtor, because such obligations are usually not
meant to be fulfilled. Indeed, to allow the fulfillment of conditions to depend exclusively on the debtors
will would be to sanction illusory obligations. The Kasulatan does not allow such thing. 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.
Art 1181

Central Philippine University v CA

FACTS:

In 1939, the late Don Ramon Lopez was a member of the board of trustees of Central Philippine
University when he executed a donation to the school, stating that the land must be for exclusive use of
a medical college. 50 years later, The heirs of Ramon Lopez filed an action to annul the donation, stating
the failure of the school to construct the medical college over the land. RTC ruled in favor of
respondents, which the CA affirmed.

ISSUE: Whether there is a resolutory condition

RULING:

The donation was an onerous one, where failure of the school to construct a medical college would give
the heirs the power to revoke the donation, reverting the property back to the heirs of the donor. It is
therefore a resolutory condition. Although, the period was not stated, and the courts should have fixed a
period, in this case, 50 years has lapsed since the donation was executed, thus fixing a period would
serve no purpose and the property must already be reverted back.

Dissenting Opinion:

Davide considered the donation as "modal" where the obligations are unconditional, and the fulfillment,
performance, existence or extinguishment is not dependent on any future and uncertain event. It is
more accurate to say that the condition stated is not a resolutory condition, rather a obligation itself,
being an onerous donation. Since this is an onerous donation, it has to comply with the rules on Oblicon,
and therefore the courts should have fixed a period.

Art 1182

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 the downpayment 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 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. Where, of course, the condition is
imposed upon the perfection of the contract itself, the failure of such condition would prevent the
juridical relation itself from coming into existence.

In determining the real character of the contract, the title given to it by the parties is not as much
significant as its substance. For example, a deed of sale, although denominated as a deed of conditional
sale, may be treated as absolute in nature, if title to the property sold is not reserved in the vendor or if
the vendor is not granted the right to unilaterally rescind the contract predicated on the fulfillment or
non-fulfillment, as the case may be, of the prescribed condition. The term "condition" in the context of a
perfected contract of sale pertains, in reality, to the compliance by one party of an undertaking the
fulfillment of which would beckon, in turn, the demandability of the reciprocal prestation of the other
party. The reciprocal obligations referred to would normally be, in the case of vendee, the payment of
the agreed purchase price and, in the case of the vendor, the fulfillment of certain express warranties
(which, in the case at bench is the timely eviction of the squatters on the property).

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.

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 Paunang-Bayad (contract to
sell land with a down payment) covering the property. They agreed on a price, payable in three
instalments. When the Atienzas demanded payment of the second installment of P 1,750,000.00 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 Trial Court (RTC) of Cabanatuan City in a Civil Case. Issue Whether or
not the Atienzas were entitled to the cancellation of the contract to sell they 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 in their 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

Parks v Province of Tarlac

FACTS:

In 1910, Concepcion Cirer and James Hill donated parcels of land to the municipality of Tarlac on the
condition that it be used absolutely and exclusively for the erection of a central school and public parks,
the work to commence within six months. The president of the municipality of Tarlac accepted and
registered the donation.
In 1921, Cirer and Hill sold the same property to George L. Parks.

Later on the, the municipality of Tarlac transferred their rights in the property to the Province of Tarlac.

Parks filed a complaint seeking the annulment of the donation and asking that he be declared the
absolute owner of the property. Parks allege that the conditions of the donation were not complied with.

ISSUE:

Whether or not the donation was coupled with a condition precedent? W/N the action to revoke has
prescribed?

HELD:

No. The condition to erect a school within six months is not a condition precedent. The characteristic of a
condition precedent is that the acquisiito of the right is not effected while said condition is mot complied
with or is not deemed complied with. Meanwhile nothing is acquired and there is only an expectancy of
a 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. In the present case
the condition that a public school be erected and a public park be made of the donated land could not
be complied with except after giving effect to the donation.

The action to revoke the donation has prescribed. The prescriptive periods are: 5 years for the revocation
by the subsequent birth of children, 1 year if by reason of ingratitude. If no special period is prescribed,
10 years, for an onerous donation following the law of contracts and general rules on prescriptions. The
donation was made in 1910, the cause of action accrued in 1911, while the action to revoke was filed
1924, twenty three years later.

Trillana v Quezon City College

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
Osmena III v SSS

Facts

Osmena III and 4 other members of the Senate and SSS members seek for nullification of the following
issuances of Social 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

IssueW/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