Development Bank of the Philippines vs.

Court of Appeals

262 SCRA 245

Padilla J.:

Facts: The private respondents were the original owners of a parcel of an agricultural land which
they mortgaged to petitioner bank and was subsequently foreclosed for the former's default in
the obligation. Consequently, a Transfer Certificate Title were issued in petitioner's name being
the sole bidder in the auction for the foreclosure of the said land.

Thereafter,petitioner and private respondents entered into a Deed of Conditional Sale

wherein the petitioner agreed to the conveyance of the foreclosed property to the private
respondents, the heirs, the administrators and assigns a good and sufficient deed of conveyance
covering the property, the subject matter of the said deed of conditional sale, upon completion
of payment by said private respondents. Upon the completion of payments of the repurchase
price, private respondents demanded from petitioner the execution of the Deed of Conveyance
in their favor.

Petitioner then informed private respondents that the prestation to execute and deliver
a Deed of Conveyance in their favor had become legally impossible in view of Section 6 of
Comprehensive Agrarian Reform Law. The former law anulling all sales, dispositions, leases
management contracts or transfers of possession of private lands executed by the original land
owner in violation of the retention limits provided thereof upon its effectivity while the latter law
requires all the government to immediately execute deeds of transfer in favor of the Republic of
the Philippines as represented by the Department of Agrarian Reform and to surrender to the
department all lands suitable for agriculture.

Aggrieved, private respondents filed a complaint for specific performance with damages
against the petitioner.

Issue: Whether or not the said laws has rendered it legally impossible compliance by petioner
with its obligation to execute a deed of conveyance of the subject land in favor of private
respondents.

Decision: It is under the provision of our laws that if the obligation depends upon suspensive
condition, the demandability as well as the effectivity of rights arising from the obligations
suspended pending the happening or fulfillment of the fact or event which constitutes the
condition.One of the event which constitutes is fulfilled resulting in the effectivity of the
obligation, its effects to retroacts to the moment when the essential elements which gave birth
to the obligation have taken place. Applying this precept to the case, full payment of the
appellees retroacts to the time when the conditional sale was executed. From that time, all
elements of contract were present. Consequently, the contract was perfected. Thus, the said sale
is not under coverage of the Comprehensive Agrarian Reform Law.