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, FRNACISCO DANTE, PACIFICO ESCANDOR and
FERNANDO TY, defendants-appellants.

Alejo Mabanag for plaintiff-appellee.

Simplicio U. Tapia, Antonio Barredo and Pedro Guevarra for defendants-appellants.

REYES, J.B.L., J.:

This appeal comes to us directly from the Court of First Instance because the claims involved
aggregate more than P200,000.00.

Defendant-appellant Isabelo Fonacier was the owner and/or holder, either by himself or in a
representative capacity, of 11 iron lode mineral claims, known as the Dawahan Group, situated
in the municipality of Jose Panganiban, province of Camarines Norte.

By a "Deed of Assignment" dated September 29, 1952(Exhibit "3"), Fonacier constituted and
appointed plaintiff-appellee Fernando A. Gaite as his true and lawful attorney-in-fact to enter
into a contract with any individual or juridical person for the exploration and development of the
mining claims aforementioned on a royalty basis of not less than P0.50 per ton of ore that might
be extracted therefrom. On March 19, 1954, Gaite in turn executed a general assignment (Record
on Appeal, pp. 17-19) conveying the development and exploitation of said mining claims into the
Larap Iron Mines, a single proprietorship owned solely by and belonging to him, on the same
royalty basis provided for in Exhibit "3". Thereafter, Gaite embarked upon the development and
exploitation of the mining claims in question, opening and paving roads within and outside their
boundaries, making other improvements and installing facilities therein for use in the
development of the mines, and in time extracted therefrom what he claim and estimated to be
approximately 24,000 metric tons of iron ore.

For some reason or another, Isabelo Fonacier decided to revoke the authority granted by him to
Gaite to exploit and develop the mining claims in question, and Gaite assented thereto subject to
certain conditions. As a result, a document entitled "Revocation of Power of Attorney and
Contract" was executed on December 8, 1954 (Exhibit "A"),wherein Gaite transferred to
Fonacier, for the consideration of P20,000.00, plus 10% of the royalties that Fonacier would
receive from the mining claims, all his rights and interests on all the roads, improvements, and
facilities in or outside said claims, the right to use the business name "Larap Iron Mines" and its
goodwill, and all the records and documents relative to the mines. In the same document, Gaite
transferred to Fonacier all his rights and interests over the "24,000 tons of iron ore, more or less"
that the former had already extracted from the mineral claims, in consideration of the sum of
P75,000.00, P10,000.00 of which was paid upon the signing of the agreement, and
 b. The balance of SIXTY-FIVE THOUSAND PESOS (P65,000.00) will be paid from
and out of the first letter of credit covering the first shipment of iron ores and of the first
amount derived from the local sale of iron ore made by the Larap Mines & Smelting Co.
Inc., its assigns, administrators, or successors in interests.

To secure the payment of the said balance of P65,000.00, Fonacier promised to execute in favor
of Gaite a surety bond, and pursuant to the promise, Fonacier delivered to Gaite a surety bond
dated December 8, 1954 with himself (Fonacier) as principal and the Larap Mines and Smelting
Co. and its stockholders George Krakower, Segundina Vivas, Pacifico Escandor, Francisco
Dante, and Fernando Ty as sureties (Exhibit "A-1"). Gaite testified, however, that when this
bond was presented to him by Fonacier together with the "Revocation of Power of Attorney and
Contract", Exhibit "A", on December 8, 1954, he refused to sign said Exhibit "A" unless another
bond under written by a bonding company was put up by defendants to secure the payment of the
P65,000.00 balance of their price of the iron ore in the stockpiles in the mining claims. Hence, a
second bond, also dated December 8, 1954 (Exhibit "B"),was executed by the same parties to the
first bond Exhibit "A-1", with the Far Eastern Surety and Insurance Co. as additional surety, but
it provided that the liability of the surety company would attach only when there had been an
actual sale of iron ore by the Larap Mines & Smelting Co. for an amount of not less then
P65,000.00, and that, furthermore, the liability of said surety company would automatically
expire on December 8, 1955. Both bonds were attached to the "Revocation of Power of Attorney
and Contract", Exhibit "A", and made integral parts thereof.

On the same day that Fonacier revoked the power of attorney he gave to Gaite and the two
executed and signed the "Revocation of Power of Attorney and Contract", Exhibit "A", Fonacier
entered into a "Contract of Mining Operation", ceding, transferring, and conveying unto the
Larap Mines and Smelting Co., Inc. the right to develop, exploit, and explore the mining claims
in question, together with the improvements therein and the use of the name "Larap Iron Mines"
and its good will, in consideration of certain royalties. Fonacier likewise transferred, in the same
document, the complete title to the approximately 24,000 tons of iron ore which he acquired
from Gaite, to the Larap & Smelting Co., in consideration for the signing by the company and its
stockholders of the surety bonds delivered by Fonacier to Gaite (Record on Appeal, pp. 82-94).

Up to December 8, 1955, when the bond Exhibit "B" expired with respect to the Far Eastern
Surety and Insurance Company, no sale of the approximately 24,000 tons of iron ore had been
made by the Larap Mines & Smelting Co., Inc., nor had the P65,000.00 balance of the price of
said ore been paid to Gaite by Fonacier and his sureties payment of said amount, on the theory
that they had lost right to make use of the period given them when their bond, Exhibit "B"
automatically expired (Exhibits "C" to "C-24"). And when Fonacier and his sureties failed to pay
as demanded by Gaite, the latter filed the present complaint against them in the Court of First
Instance of Manila (Civil Case No. 29310) for the payment of the P65,000.00 balance of the
price of the ore, consequential damages, and attorney's fees.

All the defendants except Francisco Dante set up the uniform defense that the obligation sued
upon by Gaite was subject to a condition that the amount of P65,000.00 would be payable out of
the first letter of credit covering the first shipment of iron ore and/or the first amount derived
from the local sale of the iron ore by the Larap Mines & Smelting Co., Inc.; that up to the time of
the filing of the complaint, no sale of the iron ore had been made, hence the condition had not yet
been fulfilled; and that consequently, the obligation was not yet due and demandable. Defendant
Fonacier also contended that only 7,573 tons of the estimated 24,000 tons of iron ore sold to him
by Gaite was actually delivered, and counterclaimed for more than P200,000.00 damages.

At the trial of the case, the parties agreed to limit the presentation of evidence to two issues:

(1) Whether or not the obligation of Fonacier and his sureties to pay Gaite P65,000.00 become
due and demandable when the defendants failed to renew the surety bond underwritten by the
Far Eastern Surety and Insurance Co., Inc. (Exhibit "B"), which expired on December 8, 1955;
and

(2) Whether the estimated 24,000 tons of iron ore sold by plaintiff Gaite to defendant Fonacier
were actually in existence in the mining claims when these parties executed the "Revocation of
Power of Attorney and Contract", Exhibit "A."

On the first question, the lower court held that the obligation of the defendants to pay plaintiff
the P65,000.00 balance of the price of the approximately 24,000 tons of iron ore was one with a
term: i.e., that it would be paid upon the sale of sufficient iron ore by defendants, such sale to be
effected within one year or before December 8, 1955; that the giving of security was a condition
precedent to Gait's giving of credit to defendants; and that as the latter failed to put up a good
and sufficient security in lieu of the Far Eastern Surety bond (Exhibit "B") which expired on
December 8, 1955, the obligation became due and demandable under Article 1198 of the New
Civil Code.

As to the second question, the lower court found that plaintiff Gaite did have approximately
24,000 tons of iron ore at the mining claims in question at the time of the execution of the
contract Exhibit "A."

Judgment was, accordingly, rendered in favor of plaintiff Gaite ordering defendants to pay him,
jointly and severally, P65,000.00 with interest at 6% per annum from December 9, 1955 until
payment, plus costs. From this judgment, defendants jointly appealed to this Court.

During the pendency of this appeal, several incidental motions were presented for resolution: a
motion to declare the appellants Larap Mines & Smelting Co., Inc. and George Krakower in
contempt, filed by appellant Fonacier, and two motions to dismiss the appeal as having become
academic and a motion for new trial and/or to take judicial notice of certain documents, filed by
appellee Gaite. The motion for contempt is unmeritorious because the main allegation therein
that the appellants Larap Mines & Smelting Co., Inc. and Krakower had sold the iron ore here in
question, which allegedly is "property in litigation", has not been substantiated; and even if true,
does not make these appellants guilty of contempt, because what is under litigation in this appeal
is appellee Gaite's right to the payment of the balance of the price of the ore, and not the iron ore
itself. As for the several motions presented by appellee Gaite, it is unnecessary to resolve these
motions in view of the results that we have reached in this case, which we shall hereafter discuss.

The main issues presented by appellants in this appeal are:

(1) that the lower court erred in holding that the obligation of appellant Fonacier to pay appellee
Gaite the P65,000.00 (balance of the price of the iron ore in question)is one with a period or term
and not one with a suspensive condition, and that the term expired on December 8, 1955; and

(2) that the lower court erred in not holding that there were only 10,954.5 tons in the stockpiles
of iron ore sold by appellee Gaite to appellant Fonacier.

The first issue involves an interpretation of the following provision in the contract Exhibit "A":

7. That Fernando Gaite or Larap Iron Mines hereby transfers to Isabelo F. Fonacier all his
rights and interests over the 24,000 tons of iron ore, more or less, above-referred to
together with all his rights and interests to operate the mine in consideration of the sum of
SEVENTY-FIVE THOUSAND PESOS (P75,000.00) which the latter binds to pay as
follows:

a. TEN THOUSAND PESOS (P10,000.00) will be paid upon the signing of this
agreement.

b. The balance of SIXTY-FIVE THOUSAND PESOS (P65,000.00)will be paid from and

out of the first letter of credit covering the first shipment of iron ore made by the Larap
Mines & Smelting Co., Inc., its assigns, administrators, or successors in interest.

We find the court below to be legally correct in holding that the shipment or local sale of the iron
ore is not a condition precedent (or suspensive) to the payment of the balance of P65,000.00, but
was only a suspensive period or term. What characterizes a conditional obligation is the fact that
its efficacy or obligatory force (as distinguished from its demandability) is subordinated to the
happening of a future and uncertain event; so that if the suspensive condition does not take place,
the parties would stand as if the conditional obligation had never existed. That the parties to the
contract Exhibit "A" did not intend any such state of things to prevail is supported by several
circumstances:

1) The words of the contract express no contingency in the buyer's obligation to pay: "The
balance of Sixty-Five Thousand Pesos (P65,000.00) will be paid out of the first letter of credit
covering the first shipment of iron ores . . ." etc. There is no uncertainty that the payment will
have to be made sooner or later; what is undetermined is merely the exact date at which it will be
made. By the very terms of the contract, therefore, the existence of the obligation to pay is
recognized; only its maturity or demandability is deferred.

2) A contract of sale is normally commutative and onerous: not only does each one of the parties
assume a correlative obligation (the seller to deliver and transfer ownership of the thing sold and
the buyer to pay the price),but each party anticipates performance by the other from the very
start. While in a sale the obligation of one party can be lawfully subordinated to an uncertain
event, so that the other understands that he assumes the risk of receiving nothing for what he
gives (as in the case of a sale of hopes or expectations, emptio spei), it is not in the usual course
of business to do so; hence, the contingent character of the obligation must clearly appear.
Nothing is found in the record to evidence that Gaite desired or assumed to run the risk of losing
his right over the ore without getting paid for it, or that Fonacier understood that Gaite assumed
any such risk. This is proved by the fact that Gaite insisted on a bond a to guarantee payment of
the P65,000.00, an not only upon a bond by Fonacier, the Larap Mines & Smelting Co., and the
company's stockholders, but also on one by a surety company; and the fact that appellants did put
up such bonds indicates that they admitted the definite existence of their obligation to pay the
balance of P65,000.00.

3) To subordinate the obligation to pay the remaining P65,000.00 to the sale or shipment of the
ore as a condition precedent, would be tantamount to leaving the payment at the discretion of the
debtor, for the sale or shipment could not be made unless the appellants took steps to sell the ore.
Appellants would thus be able to postpone payment indefinitely. The desireability of avoiding
such a construction of the contract Exhibit "A" needs no stressing.

4) Assuming that there could be doubt whether by the wording of the contract the parties
indented a suspensive condition or a suspensive period (dies ad quem) for the payment of the
P65,000.00, the rules of interpretation would incline the scales in favor of "the greater reciprocity
of interests", since sale is essentially onerous. The Civil Code of the Philippines, Article 1378,
paragraph 1, in fine, provides:

If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of
interests.

and there can be no question that greater reciprocity obtains if the buyer' obligation is deemed to
be actually existing, with only its maturity (due date) postponed or deferred, that if such
obligation were viewed as non-existent or not binding until the ore was sold.

The only rational view that can be taken is that the sale of the ore to Fonacier was a sale on
credit, and not an aleatory contract where the transferor, Gaite, would assume the risk of not
being paid at all; and that the previous sale or shipment of the ore was not a suspensive condition
for the payment of the balance of the agreed price, but was intended merely to fix the future date
of the payment.

This issue settled, the next point of inquiry is whether appellants, Fonacier and his sureties, still
have the right to insist that Gaite should wait for the sale or shipment of the ore before receiving
payment; or, in other words, whether or not they are entitled to take full advantage of the period
granted them for making the payment.

We agree with the court below that the appellant have forfeited the right court below that the
appellants have forfeited the right to compel Gaite to wait for the sale of the ore before receiving
payment of the balance of P65,000.00, because of their failure to renew the bond of the Far
Eastern Surety Company or else replace it with an equivalent guarantee. The expiration of the
bonding company's undertaking on December 8, 1955 substantially reduced the security of the
vendor's rights as creditor for the unpaid P65,000.00, a security that Gaite considered essential
and upon which he had insisted when he executed the deed of sale of the ore to Fonacier (Exhibit
"A"). The case squarely comes under paragraphs 2 and 3 of Article 1198 of the Civil Code of the
Philippines:
 "ART. 1198. The debtor shall lose every right to make use of the period:

(1) . . .

(2) When he does not furnish to the creditor the guaranties or securities which he has
promised.

(3) When by his own acts he has impaired said guaranties or securities after their
establishment, and when through fortuitous event they disappear, unless he immediately
gives new ones equally satisfactory.

Appellants' failure to renew or extend the surety company's bond upon its expiration plainly
impaired the securities given to the creditor (appellee Gaite), unless immediately renewed or
replaced.

There is no merit in appellants' argument that Gaite's acceptance of the surety company's bond
with full knowledge that on its face it would automatically expire within one year was a waiver
of its renewal after the expiration date. No such waiver could have been intended, for Gaite stood
to lose and had nothing to gain barely; and if there was any, it could be rationally explained only
if the appellants had agreed to sell the ore and pay Gaite before the surety company's bond
expired on December 8, 1955. But in the latter case the defendants-appellants' obligation to pay
became absolute after one year from the transfer of the ore to Fonacier by virtue of the deed
Exhibit "A.".

All the alternatives, therefore, lead to the same result: that Gaite acted within his rights in
demanding payment and instituting this action one year from and after the contract (Exhibit "A")
was executed, either because the appellant debtors had impaired the securities originally given
and thereby forfeited any further time within which to pay; or because the term of payment was
originally of no more than one year, and the balance of P65,000.00 became due and payable
thereafter.

Coming now to the second issue in this appeal, which is whether there were really 24,000 tons of
iron ore in the stockpiles sold by appellee Gaite to appellant Fonacier, and whether, if there had
been a short-delivery as claimed by appellants, they are entitled to the payment of damages, we
must, at the outset, stress two things: first, that this is a case of a sale of a specific mass of
fungible goods for a single price or a lump sum, the quantity of "24,000 tons of iron ore, more or
less," stated in the contract Exhibit "A," being a mere estimate by the parties of the total tonnage
weight of the mass; and second, that the evidence shows that neither of the parties had actually
measured of weighed the mass, so that they both tried to arrive at the total quantity by making an
estimate of the volume thereof in cubic meters and then multiplying it by the estimated weight
per ton of each cubic meter.

The sale between the parties is a sale of a specific mass or iron ore because no provision was
made in their contract for the measuring or weighing of the ore sold in order to complete or
perfect the sale, nor was the price of P75,000,00 agreed upon by the parties based upon any such
measurement.(see Art. 1480, second par., New Civil Code). The subject matter of the sale is,
therefore, a determinate object, the mass, and not the actual number of units or tons contained
therein, so that all that was required of the seller Gaite was to deliver in good faith to his buyer
all of the ore found in the mass, notwithstanding that the quantity delivered is less than the
amount estimated by them (Mobile Machinery & Supply Co., Inc. vs. York Oilfield Salvage Co.,
Inc. 171 So. 872, applying art. 2459 of the Louisiana Civil Code). There is no charge in this case
that Gaite did not deliver to appellants all the ore found in the stockpiles in the mining claims in
questions; Gaite had, therefore, complied with his promise to deliver, and appellants in turn are
bound to pay the lump price.

But assuming that plaintiff Gaite undertook to sell and appellants undertook to buy, not a definite
mass, but approximately 24,000 tons of ore, so that any substantial difference in this quantity
delivered would entitle the buyers to recover damages for the short-delivery, was there really a
short-delivery in this case?

We think not. As already stated, neither of the parties had actually measured or weighed the
whole mass of ore cubic meter by cubic meter, or ton by ton. Both parties predicate their
respective claims only upon an estimated number of cubic meters of ore multiplied by the
average tonnage factor per cubic meter.

Now, appellee Gaite asserts that there was a total of 7,375 cubic meters in the stockpiles of ore
that he sold to Fonacier, while appellants contend that by actual measurement, their witness
Cirpriano Manlañgit found the total volume of ore in the stockpiles to be only 6.609 cubic
meters. As to the average weight in tons per cubic meter, the parties are again in disagreement,
with appellants claiming the correct tonnage factor to be 2.18 tons to a cubic meter, while
appellee Gaite claims that the correct tonnage factor is about 3.7.

In the face of the conflict of evidence, we take as the most reliable estimate of the tonnage factor
of iron ore in this case to be that made by Leopoldo F. Abad, chief of the Mines and
Metallurgical Division of the Bureau of Mines, a government pensionado to the States and a
mining engineering graduate of the Universities of Nevada and California, with almost 22 years
of experience in the Bureau of Mines. This witness placed the tonnage factor of every cubic
meter of iron ore at between 3 metric tons as minimum to 5 metric tons as maximum. This
estimate, in turn, closely corresponds to the average tonnage factor of 3.3 adopted in his
corrected report (Exhibits "FF" and FF-1") by engineer Nemesio Gamatero, who was sent by the
Bureau of Mines to the mining claims involved at the request of appellant Krakower, precisely to
make an official estimate of the amount of iron ore in Gaite's stockpiles after the dispute arose.

Even granting, then, that the estimate of 6,609 cubic meters of ore in the stockpiles made by
appellant's witness Cipriano Manlañgit is correct, if we multiply it by the average tonnage factor
of 3.3 tons to a cubic meter, the product is 21,809.7 tons, which is not very far from the estimate
of 24,000 tons made by appellee Gaite, considering that actual weighing of each unit of the mass
was practically impossible, so that a reasonable percentage of error should be allowed anyone
making an estimate of the exact quantity in tons found in the mass. It must not be forgotten that
the contract Exhibit "A" expressly stated the amount to be 24,000 tons, more or less. (ch. Pine
River Logging & Improvement Co. vs U.S., 279, 46 L. Ed. 1164).
There was, consequently, no short-delivery in this case as would entitle appellants to the
payment of damages, nor could Gaite have been guilty of any fraud in making any
misrepresentation to appellants as to the total quantity of ore in the stockpiles of the mining
claims in question, as charged by appellants, since Gaite's estimate appears to be substantially
correct.

WHEREFORE, finding no error in the decision appealed from, we hereby affirm the same, with
costs against appellants.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 131784 September 16, 1999

FELIX I. GONZALES, petitioner,

vs.
THE HEIRS OF THOMAS and PAULA CRUZ, herein represented by ELENA C.
TALENS, respondents.

PANGANIBAN, J.:

If a stipulation in a contract admits of several meanings, it shall be understood as

bearing that import most adequate to render it effectual. An obligation cannot be
enforced unless the plaintiff has fulfilled the condition upon which it is premised. Hence,
an obligation to purchase cannot be implemented unless and until the sellers have
shown their title to the specific portion of the property being sold.

The Case

Before us is a Petition for Review on Certiorari assailing the August 13, 1997 Decision 1
of the Court of Appeals 2 in CA-GR CV No. 303754, which disposed as follows:

WHEREFORE, the decision of the trial court dated November 16, 1990 is hereby
REVERSED. The appellee FELIX GONZALES is hereby ordered to surrender
possession of the property covered by the Contract of Lease/Purchase to the appellants,
Heirs of Thomas and Paula Cruz, and to pay to the appellants the following amounts:
 1. P15,000.00 per annum as rentals counted from December 1, 1984 until the appellants
shall have recovered possession of the property subject of the Contract of
Lease/Purchase;

2. P5,000.00 as attorney's fees; and

3. Costs of suit. 3

On the other hand, the trial court 4 Decision, 5 which was by the CA, ruled as follows:

WHEREFORE, premises considered, this Court hereby renders judgment in favor of the
defendant, Felix Gonzales, and against the plaintiffs, as follows:

(1) Ordering the dismissal of the case;

(2) Sentencing the plaintiffs, jointly and severally, the sum of P20,000.00
as moral damages and the other sum of P10,000.00 as and for attorney's
fees; and

(3) To pay the costs. 6

The Facts

We hereby reproduce, unedited, the Court of Appeals' summary of the facts of this case
as follows:

On December 1, 1983, Paula Año Cruz together with the plaintiffs heirs of Thomas and
Paula Cruz, namely Ricardo A. Cruz, Carmelita M. Cruz, Salome A Cruz, Irenea C.
Victoria, Leticia C. Salvador and Elena C. Talens, entered into a Contract of
Lease/Purchase with the defendant, Felix L. Gonzales, the sole proprietor and manager
of Felgon Farms, of a half-portion of a "parcel of land containing an area 12 hectares,
more or less, and an accretion of 2 hectares, more or less, situated in Rodriguez Town,
Province of Rizal" and covered by Transfer Certificate of Title No. 12111 (Exhibit A, p.
157, Records). The contract of Lease/Purchase contains the following provisions:

1. The terms of this Contract is for a period of one year

upon the signing thereof. After the period of this
Contract, the LESSEE shall purchase the property on
the agreeable price of One Million Pesos
(P1,000,000.00) payable within Two (2) years period
with an interest of 12% per annum subject to the
devalued amount of the Philippine Peso, according to
the following schedule of payment:

Upon the execution of the Deed of Sale

50% — and thereafter 25% every six (6)
months thereafter, payable within the
first ten (10) days of the beginning of
each period of six (6) months.

2. The LESSEE shall pay by way of annual rental an

amount equivalent to Two Thousand Five Hundred
 (P2,500.00) Pesos per hectare, upon the signing of this
contract on Dec. 1, 1983.

xxx xxx xxx

9. The LESSORS hereby commit themselves and shall

undertake to obtain a separate and distinct T.C.T. over
the herein leased portion to the LESSEE within a
reasonable period of time which shall not in any case
exceed four (4) years, after which a new Contract shall
be executed by the herein parties which shall be the
same in all respects with this Contract of
Lease/Purchase insofar as the terms and conditions are
concerned.

xxx xxx xxx

(Exhibits A, A-1; pp. 157-158. Records)

The defendant Gonzales paid the P2,500.00 per hectare of P15,000.00 annual rental on
the half-portion of the property covered by Transfer Certificate of Title No. 12111 in
accordance with the second provision of the Contract of Lease/Purchase (p. 12, TSN,
September 14, 1989) and thereafter took possession of the property, installing thereon
the defendant Jesus Sambrano as his caretaker (pp. 16-17, 27 TSN, December 12,
1989). The defendant Gonzales did not, however, exercise his option to purchase the
property immediately after the expiration of the one-year lease on November 30, 1984
(pp. 19-20, TSN, September 14, 1989). He remained in possession of the property
without paying the purchase price provided for in the Contract of Lease/Purchase (Ibid.)
and without paying any further rentals thereon (p. 36, TSN, November 7, 1989).

A letter was sent by one of the plaintiffs-heirs Ricardo Cruz to the defendant Gonzales
informing him of the lessors' decision to rescind the Contract of Lease/Purchase due to a
breach thereof committed by the defendant (Exhibit C; p. 162, Records) The letter also
served as a demand on the defendant to vacate the premises within 10 days from receipt
of said letter (Ibid.).

The defendant Gonzales refused to vacate the property and continued possession
thereof (p. 2, Record). The matter was therefore brought before the barangay captain of
San Isidro, but owing to the defendant's refusal to appear before the barangay, a
certification allowing the case to be brought to Court was issued on March 18, 1987
(Exhibit E; p. 165, Records).

The lessor, Paula Año Cruz died the following day, March 19, 1987 (p. 9, TSN,
September 14, 1989).

A final demand letter to vacate the premises was sent by the remaining lessors who are
also the heirs of the deceased lessor Paula Año Cruz, through their counsel on August
24, 1987 which the defendant Gonzales received but did not heed (Exhibits D and D-1;
pp. 163-164, Records).

The property subject of the Contract of Lease/Purchase is currently the subject of an

Extra-Judicial Partition (Exhibits G and G-1; pp. 168-169, Records). Title to the property
remains in the name of the plaintiffs' predecessors-in-interest, Bernardina Calixto and
Severo Cruz (Exhibit B; p. 160, Records).
Alleging breach of the provisions of the Contract of Lease/Purchase, the plaintiffs filed a
complaint for recovery of possession of the property — subject of the contract with
damages, both moral and compensatory and attorney's fees and litigation expenses (p. 3,
Records).

Alleging breach of paragraph nine of the Contract of Lease/Purchase, and payment of

only P50,000.00 of the P500,000.00 agreed down payment on the purchase price of
P1,000,000.00, the defendant Gonzales filed his answer on November 23, 1987 praying
for a dismissal of the complaint filed against him and an award of moral, exemplary and
actual damages, as well as litigation expenses (pp. 19-22, Records).

The defendant Sambrano was, upon motion, declared in default for failure to file an
answer despite valid service of summons (p. 30, Records).

The parties limited the issues to be resolved to:

(1) Whether or not paragraph 9 of the contract is a

condition precedent before the defendant is to pay the
down payment;

(2) Whether or not plaintiffs can rescind the Contract of

Lease/Purchase; and

(3) Whether or not plaintiffs can terminate the Contract

of Lease. (p. 4, Decision; p. 262, Records).

After the termination of the pre-trial conference, the trial court proceeded to hear the case
on the merits and arrived at its appealed decision based on the following findings and
conclusions:

Paragraph 9 of the contract clearly indicates that the lessors-plaintiffs

shall obtain a Transfer Certificate of Title in the name of the lessee within
4 years before a new contract is to be entered into under the same terms
and conditions as the original Contract of Lease/Purchase. Thus, before
a deed of Sale can be entered into between the plaintiffs and the
defendant, the plaintiffs have to obtain the Transfer Certificate of Title in
favor of the defendant. Article 1181 of the New Civil Code states that: "In
conditional obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend upon the
happening of the event which constitutes the condition." When the
obligation assumed by a party to a contract is expressly subjected to a
condition, the obligation cannot be enforced against him unless the
condition is complied with (Wise & Co. vs. Kelly, 37 Phil. 695; PNB vs.
Philippine Trust Co., 68. Phil. 48).1âwphi1.nêt

The failure of the plaintiffs to secure the Transfer Certificate of Title, as

provided for in the contract, does not entitle them to rescind the
contract[.] Article 1191 of the New Civil Code states that: "The power to
rescind obligations is implied in reciprocal ones, in case one of the
obligers should not comply with what is incumbent upon him. The injured
party may choose between the fulfillment of the obligation, with the
payment of damages in either case. He may seek rescission, even after
he has chosen fulfillment, if the latter should become impossible. . . ."
The power to rescind is given to the injured party. Where the plaintiff is
 the party who did not perform, he is not entitled to insist upon the
performance of the contract by the defendant or recover damages by
reason of his own breach (Mateos vs. Lopez, 6 Phil. 206; Borque vs. Yu
Chipco, 14 Phil. 95). An action for specific performance of a contract is
an equitable proceeding, and he who seeks to enforce it must himself be
fair and reasonable, and do equity (Seva vs. Berwin, 48 Phil. 581). In this
case, plaintiffs failed to comply with the conditions precedent after 2-1/2
years from the execution of the contract so as to entitle them to rescind
the contract. Although the contract stated that the same be done within 4
years from execution, still, the defendant has to be assured that the land
subject of the case will be transferred in his name without any
encumbrances, as the Extra-Judicial Partition dated July 17, 1989 was
being processed, and continues to be in process to this date. The failure
to secure the Transfer Certificate of Title in favor of the defendant entitles
not the plaintiffs but, rather, the defendant to either rescind or to ask for
specific performances.1âwphi1.nêt

Are the plaintiffs entitled to terminate the Contract of Lease? Article 1670
of the New Civil Code states that:

If at the end of the contract the lessee should continue

enjoying the thing leased for fifteen days with the
acquies[c]ence of the lessor and unless a notice to the
contrary by either party has previously been given, it is
understood that there is an implied new lease, not for the
period of the original contract, but for the time
established in Articles 1682 and 1687. The other terms
of the original contract shall be revived.

Article 1682 of the New Civil Code states that:

The lease of a piece of rural land, when its duration has

not been fixed, is understood to have been made for all
the time necessary for the gathering of the fruits which
the whole estate leased may yield in one year, or which
it may yield once, although two or more years may have
to elapse for the purpose.

The plaintiffs filed the complaint on October 12, 1987 after making an
extra-judicial demand on July 2, 1986. The contract was entered into on
December 1, 1983. The demand was thus made more than a year and a
half from the expiry date of the original lease considering that there was
no payment made for the second year of the lease. If one has to consider
the fact that the defendant was given the option to purchase the property
after two years, then, the lease would presumably run for at least two
years. If that is so, then, the demand was made seven months after the
expiration of the two-year lease. Still, this demand by the plaintiffs will
come under the implied new lease of Articles 1682 and 1670 so that the
plaintiffs are not entitled to terminate the Contract of Lease.

In sum, the plaintiffs cannot terminate the Contract of Lease due to their
failure to notify the defendant in due time of their intention to that effect.
Nor can they rescind the Contract of Purchase in view of the fact that
there is a condition precedent which the plaintiffs have not fulfilled. It is
the defendant now who has the option to either rescind or demand the
 performance of the contract. Moreover, according to Article 1654 of the
New Civil Code, the lessor is obliged to deliver the thing which is the
object of the contract in such condition as to render it fit for the use
intended. Considering that the lessors-plaintiffs have not delivered the
property in whole over the protest of the defendant, the latter suffered
damages therefor. (p. 4-6, Decision; pp. 262-264, Records)

Their complaint thus dismissed, the plaintiffs, now appellants, assign the trial court of
having committed the following errors:

THE TRIAL COURT GRAVELY ERRED IN HOLDING THAT

PLAINTIFFS-APPELLANTS COULD NOT VALIDLY RESCIND AND
TERMINATE THE LEASE/PURCHASE CONTRACT (EXHIBIT "A") AND
THEREAFTER TO TAKE POSSESSION OF THE LAND IN QUESTION
AND EJECT THEREFROM DEFENDANTS-APPELLEES.

II

THE TRIAL COURT EQUALLY ERRED IN NOT GRANTING THE

RELIEFS PLEADED AND PRAYED FOR BY PLAINTIFFS-
APPELLANTS IN THEIR COMPLAINT. (p. 42, Rollo)

The case was submitted for decision without the appellee's brief as per the Court's
resolution dated July 8, 1992 (p. 71, Rollo).

Ruling of the Court of Appeals

The Court of Appeals reversed the trial court in this wise:

The trial court, in its decision interpreted the ninth provision of the Contract of
Lease/Purchase to mean that before the appellee exercises his option to purchase the
property by paying the 50% plus interest on the P1,000,000.00 purchase price, the
appellants must first transfer the title to the property in the appellee's name. The Court
finds this interpretation of the provision strained if not altogether absurd. The transfer of
title to the property 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 runs
counter [to] the explicit provisions of the contract but also is contrary to the normal course
of things anent the sale of real properties. The terms of the contract [are] explicit and
require no interpretation. Upon the expiration of the lease, the lessee shall purchase the
property. Besides, the normal course of things anent the sale of real properties dictates
that there must first be payment of the agreed purchase price before transfer of title to the
vendee's name can be made.

This was precisely what the appellants and Paula Año Cruz had in mind when they had
the ninth provision incorporated in the Contract of Lease/Purchase. They had asked for a
period of 4 years from the time they receive the downpayment of 50% within which to
have [the] title to the property transferred in the name of the appellee The reason for this
four (4) year period is [that] title to the property still remains in the name of the original
owners, the predecessors-in-interest of the herein appellants and [transferring] the title to
their names and eventually to the lessee-purchaser, appellee herein, would take quite
some time.
 The appellee wanted to have the title to the property transferred in his name first before
he exercises his option to purchase allegedly in accordance with the ninth provision of
the contract. But the ninth provision does not give him this right. A reading of the contract
in its entirety shows that the 4 year period asked for by the appellants within which to
have title to the property transferred in the appellee's name will only start to run when the
appellee exercises his option to purchase. Since the appellee never exercised his option
to purchase, then appellee is not entitled to have the title to the property transferred in his
name.

Attributing reversible errors to the appellate court, petitioner elevated the case to this
Court. 7

The Issues

In his Memorandum, 8 petitioner submits the "following main issues":

I. Whether or not the Court of Appeals has gravely erred and committed grave abuse of
discretion in the interpretation of [the] law between the parties.

II. Whether or not the Court of Appeals committed serious mistakes in the finding of facts
which resulted [in] departing from the usual course of judicial proceedings.

For these issues to be resolved, petitioner asks this Court to answer the following
questions:

1. Is there a conflict between the statement in paragraph 1 of the Lease/Purchase

Contract and that [in] paragraph No. 9 thereof?

2. Is paragraph 9 of the Lease/Purchase Contract a condition precedent before petitioner

could exercise his option to buy the property?

3. Can plaintiff rescind or terminate the Contract of Lease after the one-year period?

In fine, the resolution of this case depends upon the proper interpretation of paragraph
nine of the Contract.

The Court's Ruling

The Petition is meritorious.

Main Issue:

Interpretation of Paragraph Nine

In its first paragraph, the disputed agreement provides that petitioner shall lease the
property for one year, after which he "shall purchase" it. Paragraph nine, on the other
hand, requires herein respondents to obtain a separate and distinct Transfer Certificate
of Title (TCT) over the property, viz.:
 9. The LESSORS hereby commit themselves and shall undertake to obtain a separate
and distinct T.C.T. over the lease portion to the LESSEE within a reasonable period of
time which shall not in any case exceed four (4) years, after which a new Contract shall
be executed by the herein parties which shall be the same in all respects with this
Contract of Lease/Purchase insofar as the terms and conditions are concerned.

Alleging that petitioner has not purchased the property after the lapse of one year,
respondents seek to rescind the Contract and to recover the property. Petitioner, on the
other hand, argues that he could not be compelled to purchase the property, because
respondents have not complied with paragraph nine, which obligates them to obtain a
separate and distinct title in their names. He contends that paragraph nine was a
condition precedent to the purchase of the property.

To be sure, this paragraph — and the entire agreement, for that matter — is not a
model of how a contract should be worded. It is an invitation to a litigation, as in fact the
parties had to go all to way up to this Court to plead for a resolution of their conflict
which is rooted in their failure to express themselves clearly. Small wonder, even the
two lower courts gave contradictory understanding of this provision, thereby
necessitating the intervention of the highest court of the land.

Both the trial court: and the Court of Appeals (CA) interpreted this provision to mean
that the respondents had obliged themselves to obtain a TCT in the name of petitioner-
lessee. The trial court held that this obligation was a condition precedent to petitioner's
purchase of the property. Since respondents had not performed their obligation, they
could not compel petitioner to buy the parcel of land. The CA took the opposite view,
holding that the property should be purchased first before respondents may be obliged
to obtain a TCT in the name of petitioner-lessee-buyer.

As earlier noted, petitioner disagrees with the interpretation of the two courts and
maintains that respondents were obligated to procure a TCT in their names before he
could be obliged to purchase the property in question.

Basic is the rule in the interpretation of contracts that if some stipulation therein should
admit of several meanings, it shall be understood as bearing that import most adequate
to render it effectual. 9 Considering the antecedents of the ownership of the disputed lot,
it appears that petitioner's interpretation renders clause nine most effectual.

The record shows that at the time the contract was executed, the land in question was
still registered in the name of Bernardina Calixto and Severo Cruz, respondents'
predecessors-in-interest. There is no showing whether respondents were the only heirs
of Severo Cruz or whether the other half of the land in the name of Bernardina Calixto
was adjudicated to them by any means. In fact, they admit that extrajudicial proceedings
were still ongoing. Hence, when the Contract of Lease/Purchase was executed, there
was no assurance that the respondents were indeed the owners of the specific portion
of the lot that petitioner wanted to buy, and if so, in what concept and to what extent.
Thus, the clear intent of the ninth paragraph was for respondents to obtain a separate
and distinct TCT in their names. This was necessary to enable them to show their
ownership of the stipulated portion of the land and their concomitant right to dispose of
it. Absent any title in their names, they could not have sold the disputed parcel of land.

It is well-settled principle in law that no one can five what one does not have — nemo
dat quod non habet. Accordingly, one can sell only what one owns or is authorized to
sell, and the buyer can acquire no more than what the seller can transfer legally. 10

Because the property remained registered in the names of their predecessors-in-

interest, private respondents could validly sell only their undivided interest in the estate
of Severo Cruz, the extent of which was however not shown in the records. There being
no partition of the estate thus, far, there was no guarantee as to how much and which
portion would be adjudicated to respondents.

In a contract of sale, the title to the property passes to the vendee upon the delivery of
the thing sold. 11 In this case, the respondent could not deliver ownership or title to 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.

This interpretation is bolstered by the P50,000 petitioner advanced to respondents in

order to help them expedite the transfer of the TCT to their names. Ineluctably, the
intention of the parties was to have the title transferred first to respondents' names as a
condition for the completion of the purchase.

In holding that clause nine was not a condition precedent to the purchase of the
property, the CA relied on a literal interpretation to the effect that the TCT should be
obtained in the name of the petitioner-vendee. It reasoned that the title could be
transferred to the name of the buyer only after the completion of the purchase. Thus,
petitioner should first purchase the property before respondents could be obliged to
transfer the TCT to his name.

We disagree. The literal interpretation not only ignores the factual backdrop of the case;
it also utilizes a faulty parsing of paragraph nine, which should purportedly read as
follows: "The lessors . . . shall undertake to obtain a separate and distinct TCT . . . to the
LESSEE within a reasonable period of time which shall not in any case exceed four (4)
years . . .. " Read in its entirety, however, paragraph nine does not say that the TCT
should be obtain in the name of the lessee. In fact, paragraph nine requires
respondents to obtain a "TCT over the herein leased portion to the LESSEE," thereby
showing that the crucial phrase "to the LESSEE" adverts to "the leased portion" and not
to the name which should appear in the new TCT.
Furthermore, the CA interpretation ignores the other part of paragraph nine, stating that
after a separate TCT had been obtained, "a new contract shall be executed by the
herein parties which shall be the same in all respects with this Contract of
Lease/Purchase insofar as the terms and conditions are concerned."

If, as the CA held, petitioner should purchase the property first before the title can be
transferred to his name, why should there be a waiting period of four years before the
parties can execute the new contract evidencing the sale? Why should the petitioner still
be required to pay rentals after it purchases and pays for the property? The Contract
could not have envisioned this absurd scenario.

Clearly, the appellate court's literal interpretation of the first portion of paragraph nine
renders the latter portion thereof ineffectual. In other words, that portion can only mean
that the respondents should first obtain a TCT in their names, after which petitioner is
given time to purchase and pay for the property.

Respondents insist that "the obligation of petitioner to buy the disputed land immediately
after the termination of the one year lease period is
explicit." 12 However, it is more reasonable to state that the first paragraph was
effectively modified by the ninth. To repeat, petitioner can be compelled to perform his
obligation under the first paragraph, only after respondents have complied with the
ninth. Unless and until respondents have done so, the first paragraph cannot be
enforced against the petitioner.

In sum, we hold that the ninth provision was intended to ensure that respondents would
have a valid title over the specific portion they were selling to petitioner. Only after the
title is assured may the obligation to buy the land and to pay the sums stated in the
Contract be enforced within the period stipulated. Verily, the 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.

Secondary Issues

Ninth Clause Was

a Condition Precedent

Because the ninth clause required respondents to obtain a separate and distinct TCT in
their names and not in the name of petitioner, it logically follows that such undertaking
was a condition precedent to the latter's obligation to purchase and pay for the land. Put
differently, petitioner's obligation to purchase the land is a conditional one and is
governed by Article 1181 of the Civil
Code. 13

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." 14 Without it, the sale of the property under the Contract cannot be
perfected, and petitioner cannot be obliged to purchase the property. "When the
consent of a party to a contract is given subject to the fulfillment of a suspensive
condition, the contract is not perfected unless that condition is first complied with." 15

The Court has held that "[w]hen the obligation assumed by a party to a contract is
expressly subjected to a condition, the obligation cannot be enforced against him unless
the condition is complied with." 16 Furthermore, "[t]he obligatory force of a conditional
obligation is subordinated to the happening of a future and uncertain event, so that if
that event does not take place, the parties would stand as if the conditional obligation
had never existed." 17

In this case, the obligation of the petitioner to buy the land cannot be enforced unless
respondents comply with the suspensive condition that they acquire first a separate and
distinct TCT in their names. The suspensive condition not having been fulfilled, then the
obligation of the petitioner to purchase the land has not arisen.

Respondents Cannot

Rescind the Contract

In the same vein, respondents cannot rescind the contract, 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." 18

Since the reversal of the CA Decision is inevitable, the trial court's judgment should be
reinstated. However, we find no sufficient factual or legal justifications for the award of
moral damages and attorney's fees.1âwphi1.nêt

WHEREFORE, the petition is GRANTED and the appealed Decision is REVERSED and
SET ASIDE. The Decision of the trial court is REINSTATED, but the award of moral
damages and attorney's fees is DELETED for lack of basis. No costs.

SO ORDERED.

PARKS V. PROVINCE OF TARLAC

49 PHIL 142
FACTS:
Cider and Hill donated parcels of land in favor of the Municipality of Tarlac, under certain
conditions. Without revoking donation, they sold the land to Parks. The Municipality then
conveyed the property to the Province. Parks filed an action to recover property.

HELD:
The characteristic of a condition precedent is that the acquisition of a right isn’t effected while
said condition is not complied with or isn’t deemed complied with. Meanwhile, nothing is
acquired and there is only 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.

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.

BELLOSILLO, J.:

CENTRAL PHILIPPINE UNIVERSITY filed this petition for review on certiorari of the
decision of the Court of Appeals which reversed that of the Regional Trial Court of Iloilo
City directing petitioner to reconvey to private respondents the property donated to it by
their predecessor-in-interest.

Sometime in 1939, the late Don Ramon Lopez, Sr., who was then a member of the
Board of Trustees of the Central Philippine College (now Central Philippine University
[CPU]), executed a deed of donation in favor of the latter of a parcel of land identified as
Lot No. 3174-B-1 of the subdivision plan Psd-1144, then a portion of Lot No. 3174-B, for
which Transfer Certificate of Title No. T-3910-A was issued in the name of the donee
CPU with the following annotations copied from the deed of donation —

1. The land described shall be utilized by the CPU exclusively for the establishment and
use of a medical college with all its buildings as part of the curriculum;

2. The said college shall not sell, transfer or convey to any third party nor in any way
encumber said land;
 3. The said land shall be called "RAMON LOPEZ CAMPUS", and the said college shall
be under obligation to erect a cornerstone bearing that name. Any net income from the
land or any of its parks shall be put in a fund to be known as the "RAMON LOPEZ
CAMPUS FUND" to be used for improvements of said campus and erection of a building
thereon. 1

On 31 May 1989, private respondents, who are the heirs of Don Ramon Lopez, Sr., filed
an action for annulment of donation, reconveyance and damages against CPU alleging
that since 1939 up to the time the action was filed the latter had not complied with the
conditions of the donation. Private respondents also argued that petitioner had in fact
negotiated with the National Housing Authority (NHA) to exchange the donated property
with another land owned by the latter.

In its answer petitioner alleged that the right of private respondents to file the action had
prescribed; that it did not violate any of the conditions in the deed of donation because it
never used the donated property for any other purpose than that for which it was
intended; and, that it did not sell, transfer or convey it to any third party.

On 31 May 1991, the trial court held that petitioner failed to comply with the conditions
of the donation and declared it null and void. The court a quo further directed petitioner
to execute a deed of the reconveyance of the property in favor of the heirs of the donor,
namely, private respondents herein.

Petitioner appealed to the Court of Appeals which on 18 June 1993 ruled that the
annotations at the back of petitioner's certificate of title were resolutory conditions
breach of which should terminate the rights of the donee thus making the donation
revocable.

The appellate court also found that while the first condition mandated petitioner to utilize
the donated property for the establishment of a medical school, the donor did not fix a
period within which the condition must be fulfilled, hence, until a period was fixed for the
fulfillment of the condition, petitioner could not be considered as having failed to comply
with its part of the bargain. Thus, the appellate court rendered its decision reversing the
appealed decision and remanding the case to the court of origin for the determination of
the time within which petitioner should comply with the first condition annotated in the
certificate of title.

Petitioner now alleges that the Court of Appeals erred: (a) in holding that the quoted
annotations in the certificate of title of petitioner are onerous obligations and resolutory
conditions of the donation which must be fulfilled non-compliance of which would render
the donation revocable; (b) in holding that the issue of prescription does not deserve
"disquisition;" and, (c) in remanding the case to the trial court for the fixing of the period
within which petitioner would establish a medical college. 2

We find it difficult to sustain the petition. A clear perusal of the conditions 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. 3 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.

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. 4 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. 5 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 shall be
deemed lost and extinguished.

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. 6

Moreover, 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. 7 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.
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. 8

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. 9 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.

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. 10 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.

WHEREFORE, the decision of the Regional Trial Court of Iloilo, Br. 34, of 31 May 1991
is REINSTATED and AFFIRMED, and the decision of the Court of Appeals of 18 June
1993 is accordingly MODIFIED. Consequently, petitioner is directed to reconvey to
private respondents Lot No. 3174-B-1 of the subdivision plan Psd-1144 covered by
Transfer Certificate of Title No. T-3910-A within thirty (30) days from the finality of this
judgment.

Costs against petitioner.

SO ORDERED.

Quiason and Kapunan, JJ., concur.

Separate Opinions

DAVIDE, JR., J., dissenting:

I agree with the view in the majority opinion that the donation in question is onerous
considering the conditions imposed by the donor on the donee which created reciprocal
obligations upon both parties. Beyond that, I beg to disagree.

First of all, may I point out an inconsistency in the majority opinion's description of the
donation in question. In one part, it says that the donation in question is onerous. Thus,
on page 4 it states:

We find it difficult to sustain the petition. A clear perusal of the conditions set forth in the
deed of donation executed by Don Ramon Lopez, Sr., give 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 . . . . (emphasis supplied)

Yet, in the last paragraph of page 8 it states that the donation is basically a
gratuitous one. The pertinent portion thereof reads:

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 interest . . . (emphasis supplied)

Second, the discussion on conditional obligations is unnecessary. 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 is 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 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. 1 (emphasis 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.

The conditions imposed by the donor Don Ramon Lopez determines neither the
existence nor the extinguishment of the obligations of the donor and the donee with
respect to the donation. In fact, the conditions imposed by Don Ramon Lopez upon the
donee are the very obligations of the donation — to build the medical college and use
the property for the purposes specified in the deed of donation. It is very clear that those
obligations are unconditional, the fulfillment, performance, existence or extinguishment
of which is not dependent on any future or uncertain event or past and unknown event,
as the Civil Code would define a conditional obligation. 2

Reliance on the case of Parks vs. Province of Tarlac 3 as cited on page 5 of the majority
opinion is erroneous in so far as the latter stated that the condition in Parks is a
resolutory one and applied this to the present case. A more careful reading of this
Court's decision would reveal that nowhere did we say, whether explicitly or impliedly,
that the donation in that case, which also has a condition imposed to build a school and
a public park upon the property donated, is a resolutory condition. 4 It is incorrect to say
that the "conditions" of the donation there or in the present case are resolutory
conditions because, applying Article 1181 of the Civil Code, that would mean that upon
fulfillment of the conditions, the rights already acquired will be extinguished. Obviously,
that could not have been the intention of the parties.

What the majority opinion probably had in mind was that the conditions are resolutory
because if they are not complied with, the rights of the donee as such will be
extinguished and the donation will be revoked. To my mind, though, it is more accurate
to state that the conditions here are not resolutory conditions but, for the reasons stated
above, are the obligations imposed by the donor.

Third, I 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 Barretto vs. City of
Manila, 5 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.

It is also important to fix the duration or period for the performance of the
conditions/obligations in the donation in resolving the petitioner's claim that prescription
has already barred the present action. I disagree once more with the ruling of the
majority that the action of the petitioners is not barred by the statute of limitations. There
is misplaced reliance again on a previous decision of this Court in Osmeña vs. Rama. 6
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.

Admittedly, the donation now in question is an onerous donation and is governed by the
law on contracts (Article 733) and the case of Osmeña, being one involving a contract,
may apply. But we must not lose sight of the fact that it is still a donation for which this
Court itself applied the pertinent law to resolve situations such as this. That the action to
revoke the donation can still prescribe has been the pronouncement of this Court as
early as 1926 in the case of Parks which, on this point, finds relevance in this case.
There, this Court said,

[that] this action [for the revocation of the donation] is prescriptible, there is no doubt.
There is no legal provision which excludes this class of action 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 [four] years for the revocation
by the subsequent birth of children [Art. 646, now Art. 763], and . . . 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, now Art. 764], it is because
in this respect the donation is considered onerous and is governed by the law of
contracts and the general rules of prescription. 7

More recently, in De Luna v. Abrigo, 8 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.

For the reasons expressed above, I register my dissent. Accordingly, the decision of the
Court of Appeals must be upheld, except its ruling that the conditions of the donation
are resolutory.

Padilla, J., dissents

Separate Opinions

DAVIDE, JR., J., dissenting:

I agree with the view in the majority opinion that the donation in question is onerous
considering the conditions imposed by the donor on the donee which created reciprocal
obligations upon both parties. Beyond that, I beg to disagree.

First of all, may I point out an inconsistency in the majority opinion's description of the
donation in question. In one part, it says that the donation in question is onerous. Thus,
on page 4 it states:

We find it difficult to sustain the petition. A clear perusal of the conditions set forth in the
deed of donation executed by Don Ramon Lopez, Sr., give 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 . . . . (emphasis supplied)

Yet, in the last paragraph of page 8 it states that the donation is basically a
gratuitous one. The pertinent portion thereof reads:

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 interest . . . (emphasis supplied)
Second, the discussion on conditional obligations is unnecessary. 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 is 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 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. 1 (emphasis 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.

The conditions imposed by the donor Don Ramon Lopez determines neither the
existence nor the extinguishment of the obligations of the donor and the donee with
respect to the donation. In fact, the conditions imposed by Don Ramon Lopez upon the
donee are the very obligations of the donation — to build the medical college and use
the property for the purposes specified in the deed of donation. It is very clear that those
obligations are unconditional, the fulfillment, performance, existence or extinguishment
of which is not dependent on any future or uncertain event or past and unknown event,
as the Civil Code would define a conditional obligation. 2

Reliance on the case of Parks vs. Province of Tarlac 3 as cited on page 5 of the majority
opinion is erroneous in so far as the latter stated that the condition in Parks is a
resolutory one and applied this to the present case. A more careful reading of this
Court's decision would reveal that nowhere did we say, whether explicitly or impliedly,
that the donation in that case, which also has a condition imposed to build a school and
a public park upon the property donated, is a resolutory condition. 4 It is incorrect to say
that the "conditions" of the donation there or in the present case are resolutory
conditions because, applying Article 1181 of the Civil Code, that would mean that upon
fulfillment of the conditions, the rights already acquired will be extinguished. Obviously,
that could not have been the intention of the parties.

What the majority opinion probably had in mind was that the conditions are resolutory
because if they are not complied with, the rights of the donee as such will be
extinguished and the donation will be revoked. To my mind, though, it is more accurate
to state that the conditions here are not resolutory conditions but, for the reasons stated
above, are the obligations imposed by the donor.
Third, I 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 Barretto vs. City of
Manila, 5 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.

It is also important to fix the duration or period for the performance of the
conditions/obligations in the donation in resolving the petitioner's claim that prescription
has already barred the present action. I disagree once more with the ruling of the
majority that the action of the petitioners is not barred by the statute of limitations. There
is misplaced reliance again on a previous decision of this Court in Osmeña vs. Rama. 6
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.

Admittedly, the donation now in question is an onerous donation and is governed by the
law on contracts (Article 733) and the case of Osmeña, being one involving a contract,
may apply. But we must not lose sight of the fact that it is still a donation for which this
Court itself applied the pertinent law to resolve situations such as this. That the action to
revoke the donation can still prescribe has been the pronouncement of this Court as
early as 1926 in the case of Parks which, on this point, finds relevance in this case.
There, this Court said,

[that] this action [for the revocation of the donation] is prescriptible, there is no doubt.
There is no legal provision which excludes this class of action 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 [four] years for the revocation
by the subsequent birth of children [Art. 646, now Art. 763], and . . . 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, now Art. 764], it is because
in this respect the donation is considered onerous and is governed by the law of
contracts and the general rules of prescription. 7

More recently, in De Luna v. Abrigo, 8 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.

For the reasons expressed above, I register my dissent. Accordingly, the decision of the
Court of Appeals must be upheld, except its ruling that the conditions of the donation
are resolutory.

Padilla, J., dissents

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.

JOHNSON, J.:

It appears from the record that upon the 15th day of November, 1890, the defendant herein
executed and delivered to Victoriano Osmeña the following contract:
 EXHIBIT A.

P200.00.

CEBU, November 15, 1890.

I, Doña Cenona Rama, a resident of this city, and of legal age, have received from Don
Victoriano Osmeña the sum of two hundred pesos in cash which I will pay in sugar in the
month of January or February of the coming year, at the price ruling on the day of
delivering the sugar into his warehouse, and I will pay him interest at the rate of half a
cuartillo per month on each peso, beginning on this date until the day of the settlement;
and if I can not pay in full, a balance shall be struck, showing the amount outstanding at
the end of each June, including interest, and such as may be outstanding against me shall
be considered as capital which I will always pay in sugar, together with the interest
mentioned above. I further promise that I will sell to the said Señor Osmeña all the sugar
that I may harvest, and as a guarantee, pledge as security all of my present and future
property, and as special security the house with tile roof and ground floor of stone in
which I live in Pagina; in proof whereof, I sign this document, and he shall be entitled to
make claim against me at the expiration of the term stated in this document.

(Signed) CENON RAMA.

Witnesses:

FAUSTO PEÑALOSA.
FRANCISCO MEDALLE.

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

EXHIBIT B.

CEBU, October 27, 1891.

On this date I have asked for further loan and have received from Don Victoriano
Osmeña the sum of seventy pesos in cash, fifty pesos of which I have loaned to Don
Evaristo Peñares, which we will pay in sugar in the month of January of the coming year
according to the former conditions.

(Signed) CENONA RAMA.

From Don Evaristo P50

Peñares

Doña Cenona Rama 20

 P70

Received — Evaristo Peñares.

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

On the 15th day of March, 1902 the plaintiff presented the contracts to the defendant for
payment and she acknowledged her responsibility upon said contracts by an indorsement upon
them in the following language:

EXHIBIT C.

CEBU, March 15, 1902.

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

(Signed) CENONA RAMA.

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

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

After hearing the evidence adduced during the trial, the lower court rendered a judgment in favor
of the plaintiff and against the defendant for the sum of P200 with interest at the rate of 18 3/4
per cent per annum, from the 15th day of November, 1890, and for the sum of P20 with interest
at the rate of 18 3/4 per cent per annum, from the 27th day of October, 1891, until the said sums
were paid. From this judgment the defendant appealed.

The lower court found that P50 of the P70 mentioned in Exhibit B had been borrowed by the
defendant, but by one Evaristo Peñares; therefore the defendant had no responsibility for the
payment of the said P50.
The only questions raised by the appellant were questions of fact. The appellant alleges that the
proof adduced during the trial of the cause was not sufficient to support the findings of the lower
court. It was suggested during the discussion of the case in this court that, in the
acknowledgment above quoted of the indebtedness made by the defendant, she imposed the
condition that she would pay the obligation if she sold her house. If that statement found in her
acknowledgment of the indebtedness should be regarded as a condition, it was a condition which
depended upon her exclusive will, and is therefore, void. (Art. 1115, Civil Code.) The
acknowledgment, therefore, was an absolute acknowledgment of the obligation and was
sufficient to prevent the statute of limitation from barring the action upon the original contract.

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

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

Republic
of the
Philippine
s
SUPREM
E COURT
Manila
SECOND
DIVISIO
N
G.R. No.
77425
June 19,
1991
THE
ROMAN
CATHOL
IC
ARCHBI
SHOP OF
MANILA,
THE
ROMAN
CATHOL
IC
BISHOP
OF
IMUS,
and the
SPOUSES
FLOREN
CIO
IGNAO
and
SOLEDA
D C.
IGNAO,p
e titione
rs,
vs.
HON.
COURT
OF
APPEAL
S, THE
ESTATE
OF
DECEAS
ED
SPOUSES
EUSEBIO
DE
CASTRO
and
MARTIN
A RIETA,
represente
d by
MARINA
RIETA
GRANAD
OS and
THERES
A RIETA
TOLENTI
NO,re
sponde
nts.
G.R. No.
77450
June 19,
1991
THE
ROMAN
CATHOL
IC
ARCHBI
SHOP OF
MANILA,
THE
ROMAN
CATHOL
IC
BISHOP
OF
IMUS,
and the
SPOUSES
FLOREN
CIO
IGNAO
and
SOLEDA
D C.
IGNAO,p
e titione
rs,
vs.
HON.
COURT
OF
APPEAL
S, THE
ESTATE
OF
DECEAS
ED
SPOUSES
EUSEBIO
DE
CASTRO
and
MARTIN
A RIETA,
represente
d by
MARINA
RIETA
GRANAD
OS and
THERES
A RIETA
TOLENTI
NO,re
sponde
nts.
Severino
C.
Domingue
z for
petitioner
Roman
Catholic
Bishop of
Imus,
Cavite.
Dolorfino
and
Domingue
z Law
Offices for
Sps.
Ignao.
Joselito R.
Enriquez
for private
responden
ts.
REGALA
DO,J.:p
These two
petitions
for review
once rti
orari1 seek
to
overturn
the
decision
of the
Court of
Appeals in
CA-
G.R. CV
No.
054562
which
reversed
and set
aside
the order
of the
Regional
Trial
Court of
Imus,
Cavite
dismissing
Civil Case
No. 095-
84, as well
as the
order of
said
responden
t court
denying
petitioner'
s
motions
for the
reconsider
ation of its
aforesaid
decision.
On
November
29, 1984,
private
responden
ts as
plaintiffs,
filed a
complaint
for
nullificati
on of deed
of
donation,
rescission
of contract
and
reconveya
nce
of real
property
with
damages
against
petitioners
Florencio
and
Soledad
C. Ignao
and the
Roman
Catholic
Bishop of
Imus,
Cavite,
together
with the
Roman
Catholic
Archbisho
p of
Manila,
before the
Regional
Trial
Court,
Branch
XX, Imus,
Cavite and
which was
docketed
as Civil
Case No.
095-84
therein.3
In their
complaint,
private
responden
ts alleged
that
on August
23, 1930,
the
spouses
Eusebio
de Castro
and
Martina
Rieta, now
both
deceased,
executed a
deed of
donation
in favor of
therein
defendant
Roman
Catholic
Archbisho
p of
Manila
covering a
parcel of
land (Lot
No. 626,
Cadastral
Survey of
Kawit),
located at
Kawit,
Cavite,
containing
an area
of 964
square
meters,
more or
less. The
deed of
donation
allegedly
provides
that the
donee
shall not
dispose or
sell the
property
within a
period of
one
hundred
(100)
years from
the
execution
of the
deed
of
donation,
otherwise
a violation
of such
condition
would
render
ipso facto
null and
void the
deed of
donation
and the
property
would
revert to
the
estate of
the
donors.
It is
further
alleged
that on or
about June
30, 1980,
and while
still within
the
prohibitiv
e period to
dispose of
the
property,
petitioner
Roman
Catholic
Bishop of
Imus, in
whose
administra
tion all
properties
within the
province
of Cavite
owned by
the
Archdioce
se of
Manila
was
allegedly
transferred
on April
26, 1962,
executed a
deed of
absolute
sale
of the
property
subject of
the
donation
in favor of
petitioners
Florencio
and
Soledad
C. Ignao
in
considerat
ion of the
sum of
P114,000.
00. As a
consequen
ce of the
sale,
Transfer
Certificate
of Title
No.
115990
was issued
by the
Register
of Deeds
of
Cavite on
November
15, 1980
in the
name of
said
petitioner
spouses.
What
transpired
thereafter
is narrated
by
responden
t court in
its assailed
decision.4
On
December
17, 1984,
petitioners
Florencio
Ignao and
Soledad
C. Ignao
filed a
motion to
dismiss
based on
the
grounds
that (1)
herein
private
responden
ts, as
plaintiffs
therein,
have no
legal
capacity to
sue; and
(2) the
complaint
states no
cause of
action.
On
December
19, 1984,
petitioner
Roman
Catholic
Bishop of
Imus also
filed a
motion to
dismiss on
three (3)
grounds,
the first
two (2)
grounds of
which
were
identical
to that of
the motion
to dismiss
filed
by the
Ignao
spouses,
and the
third
ground
being
that the
cause of
action has
prescribed
.
On
January 9,
1985, the
Roman
Catholic
Archbisho
p
of Manila
likewise
filed a
motion to
dismiss on
the
ground
that he is
not a real
party in
interest
and,
therefore,
the
complaint
does not
state a
cause of
action
against
him.
After
private
responden
ts had
filed their
opposition
s
to the said
motions to
dismiss
and the
petitioners
had
countered
with their
respective
replies,
with
rejoinders
thereto by
private
responden
ts, the trial
court
issued an
order
dated
January
31, 1985,
dismissing
the
complaint
on the
ground
that the
cause of
action has
prescribed
.5
Private
responden
ts
thereafter
appealed
to the
Court of
Appeals
raising the
issues on
(a)
whether or
not the
action for
rescission
of
contracts
(deed of
donation
and deed
of sale)
has
prescribed
; and (b)
whether or
not the
dismissal
of the
action for
rescission
of
contracts
(deed of
donation
and deed
of sale) on
the ground
of
prescriptio
n carries
with it
the
dismissal
of the
main
action for
reconveya
nce of
real
property.6