The appellant have forfeited the right court below that the the contract should be construed in a liberal
in a liberal manner and with
Gaite v. Fonacier
Facts:Gaite was appointed by Fonacier as attorney-in-fact to
contract any party for the exploration and development of mining
claims. Gaite executed a deed of assignment in favor of a single
proprietorship owned by him. For some reasons, Fonacier revoked
the agency, which was acceded to by Gaite, subject to certain
conditions, one of which being the transfer of ores extracted from
the mineral claims for P75,000, of which P10,000 has already been
paid upon signing of the agreement and the balance to be paid
from the first letter of credit for the first local sale of the iron ores. To
secure payment, Fonacier delivered a surety agreement with Larap
Mines and some of its stockholders, and another one with Far
Eastern Insurance. When the second surety agreement expired with
no sale being made on the ores, Gaite demanded the P65,000
balance. Defendants contended that the payment was subject to
the condition that the ores will be sold.
Issue:(1) Whether the sale is conditional or one with a period(2)
Whether there were insufficient tons of ores
Held:(1) 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.
· July 31, 1973. Miguel Tajangco (respondent and lessor) and Celso
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
· Before the term ended, asshole Miguel said to Fernandez that he
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
· June 12, 1983. Fernandez filed an action against Miguel. He said
obligation to pay the balance of P65,000.00.
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.
(2) 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.
Fernandez vs. Court of Appeals GR No. L-80231. October 18, 1988
case digest
Facts:
The controversy here revolves around the appropriate reading of
a clause in a lease contract that was executed about fifteen years
ago.
Fernandez (petitioner and lessee) entered into a ten-year Contract
of Lease over a piece of land situated along Kahilum Street,
Pandacan, Manila, where Fernandez would put up the then
proposed New Zamora Market. The parties agreed that the lease,
which was scheduled to end on 1 July 1983, would be "renewable
for another ten (10) years at the option of both parties under such
terms, conditions and rental reasonable at that time" and that,
upon expiration of the lease, whatever improvements were then
existing thereon should automatically belong to Miguel without
having to pay Fernandez.
is no longer willing to renew the contract. Fernandez being a
hardass, replied that he wants to renew the contract so he could
recover the expenses he had made. Miguel not giving in, replied
through his lawyer, advised that Miguel could not accept
Fernandez's unilateral action to renew the lease because, under
the contract, any renewal or extension thereof was possible only "at
the option of both parties.
that he was entitled to renew the lease contract, under paragraph
3 Section 2 thereof, for another ten (10) years, which paragraph in
justice. In his prayer, he sought to compel Miguel to renew the
lease agreement for another term, or asked the court to consider
the original contract as renewed for another ten (10) years or to fix
another period for the renewal contract.
Miguel the asshole replied that judicial interpretation is not
needed, the contract is so simple worded that even Homer
Simpson can understand it.
The trial court held its decision in favor of Fernandez. Miguel,
being an asshole and won’t accept defeat, appealed with the CA.
The CA reversed the decision of the trial court. BOOM! HEIRARCHY
YOW!
Issue: W/ON the condition of the contract is clear or not.
Held: Shit is clear. The CA said that the contract language as
comprising, not technical terms or terms of legal art, but rather just
plain and ordinary words. SC affirmed the decision of the CA
ABESAMIS VS. WOODCRAFT WORKS, INC.
FACTS:This case was a contract in the delivery of logs before the
end of July 1951 but not earlier than April of same year as an option
depending on availability of logs and vessels between Woodcraft
Works and Abesamis Shipping. The failure of the appellant to send
vessels to Dolores, Samar was because of the storm that swept
away all the log on May 5, 1951. Under contract the delivery period
of date was accomplished and that have been agreed to avoid
the storm. Woodcraftworks sued Abesamis to bear all loss as a result
of typhoon
ISSUE:Whether or not Abesamis is liable to pay of the loss?
HELD:As a consequence of typhoon that struck on May 5 there was
yet no delay on the part of the Abasamis. The obligation between
parties are the reciprocal one, appellant to furnish the vessel and
appellee to furnish the logs. It was also the obligation to benefit
both parties. The period that agreed upon are decided to actually
avoid typhoons.Thecorresponding loss must be shouldered by the
appellee.

ARANETA VS PHIL. SUGAR ESTATES
DEVELOPMENT CO.
20 SCRA 330
FACTS:
J. M. Tuason & Co., Inc. is the owner of a big tract
land situated in Quezon City, and on July 28, 1950,
[through Gregorio Araneta, Inc.] sold a portion thereof to
Philippine Sugar Estates Development Co., Ltd.
The parties stipulated, among in the contract of
purchase and sale with mortgage, that the buyer will build
on the said parcel land the Sto. Domingo Church and
Convent while the seller for its part will construct streets.
But the seller, Gregorio Araneta, Inc., which began
constructing the streets, is unable to finish the
construction of the street in the Northeast side because a
certain third-party, by the name of Manuel Abundo, who
has been physically occupying a middle part thereof,
refused to vacate the same;
Both buyer and seller know of the presence of
squatters that may hamper the construction of the streets
by the seller. On May 7, 1958, Philippine Sugar Estates
Development Co., Lt. filed its complaint against J. M.
Tuason & Co., Inc., and instance, seeking to compel the
latter to comply with their obligation, as stipulated in the
above-mentioned deed of sale, and/or to pay damages in
the event they failed or refused to perform said obligation.
The lower court and the appellate court ruled in
favor of Phil. Sugar estates, and gave defendant Gregorio
Araneta, Inc., a period of two (2) years from notice hereof,
within which to comply with its obligation under the
contract, Annex "A".Gregorio Araneta, Inc. resorted to a petition for
review by certiorari to this Court.
ISSUES:
Was there a period fixed?
RULING:
Yes. The fixing of a period by the courts under
Article 1197 of the Civil Code of the Philippines is sought to
be justified on the basis that petitioner (defendant below)
placed the absence of a period in issue by pleading in its
answer that the contract with respondent Philippine Sugar
Estates Development Co., Ltd. gave petitioner Gregorio
Araneta, Inc. "reasonable time within which to comply
with its obligation to construct and complete the streets."
If the contract so provided, then there was a period fixed, a
"reasonable time;" and all that the court should have done
was to determine if that reasonable time had already
elapsed when suit was filed if it had passed, then the court
should declare that petitioner had breached the contract,
Was it within the powers of the lower court to set the
performance of the obligation in two years time?
NO. Even on the assumption that the court should have
found that no reasonable time or no period at all had been
fixed (and the trial court's amended decision nowhere
declared any such fact) still, the complaint not having
sought that the Court should set a period, the court could
not proceed to do so unless the complaint included it as
first amended;
Granting, however, that it lay within the Court's power to
fix the period of performance, still the amended decision is
defective in that no basis is stated to support the conclusion that
the period should be set at two years after
finality of the judgment. The list paragraph of Article 1197
is clear that the period can not be set arbitrarily. The law
expressly prescribes that “the Court shall determine such
period as may under the circumstances been probably
contemplated by the parties.”
It must be recalled that Article 1197 of the Civil Code
involves a two-step process. The Court must first
determine that "the obligation does not fix a period" (or
that the period is made to depend upon the will of the
debtor)," but from the nature and the circumstances it can
be inferred that a period was intended" (Art. 1197, pars. 1
and 2). This preliminary point settled, the Court must then
proceed to the second step, and decide what period was
"probably contemplated by the parties" (Do., par. 3). So
that, ultimately, the Court can not fix a period merely
because in its opinion it is or should be reasonable, but
must set the time that the parties are shown to have
intended. As the record stands, the trial Court appears to
have pulled the two-year period set in its decision out of
thin air, since no circumstances are mentioned to support
it. Plainly, this is not warranted by the Civil Code.
Does “reasonable time” mean that the date of performance
would be indefinite?
The Court of Appeals objected to this conclusion that it
would render the date of performance indefinite. Yet, the
circumstances admit no other reasonable view; and this
very indefiniteness is what explains why the agreement did
not specify any exact periods or dates of performance.
RADIOWEALTH FINANCE COMPANY vs. DEL ROSARIO 335 SCRA 288
RADIOWEALTH FINANCE COMPANY vs. DEL ROSARIO
335 SCRA 288
FACTS:Spouses Vicente & Maria Del Rosario jointly & severally
executed, signed and delivered in favor of Radiowealth Finance
Company a promissory note for P138,948.Thereafter, respondents
defaulted on the monthly installments. Despite repeated demands,
they failed to pay their obligation.
Petitioner filed a complaint for the collection of sum of money
before the RTC.Trial court dismissed the complaint for the evidence
presented were merely hearsay.CA reversed & remanded the case
for further proceedings.Petitioner claims that respondents are liable
for the whole amount of their debt and the interest thereon, after
they defaulted on the monthly installments. Respondents counter
that the installments were not yet due and demandable. They
theorize that the action for immediate enforcement of their
obligation is premature because its fulfillment is dependent on the
sole will of the debtor. Hence, they consider that the proper court
should first fix a period for payment, pursuant to Articles 1180 and
1197 of the Civil Code.
ISSUE:WON the installments had already became due and
demandable? YES
HELD:The act of leaving blank space the due date of the first
installment did not necessary mean that the debtors were allowed
to pay as & when they could. If this was the intention of the parties,
they should have so indicated in the promissory note. However, it
did not reflect any such intention.While the specific date on which
each installment would be due was left blank, the note clearly
provided that each installment should be payable each month.
Furthermore, it also provided for an acceleration clause and a late
payment penalty, both of which showed the intention of the parties
that the installment should be paid at a definite date. Had they
intended that the debtors could pay as & when they could, there
would have been no need for these 2 clauses.
The installments had already became due & demandable is
bolstered by the fact that respondents started paying installments
on the promissory note. The obligation of the respondents had
matured & they clearly defaulted when their checks bounced. Per
the acceleration clause, the whole debt became due one month
after the date of the note because the check representing their first
installment bounced.