FELIX PLAZO URBAN POOR SETTLERS COMMUNITY ASSOCIATION, vs

ALFREDO LIPAT, SR. and ALFREDO LIPAT, JR

Facts:

On December 13, 1991, Lipat Sr., as represented by Lipat Jr., executed a Contract to Sell
(CTS) in favor of the petitioner, as represented by its President, Manuel Tubao (Tubao ),
whereby the former agreed to sell to the latter two parcels of land in Naga City covered by
Transfer Certificates of Title Nos. 12236 and 12237 (subject properties) for a consideration of
₱200.00 per square meter.4

As stipulated in the CTS, the petitioner had 90 days to pay in full the purchase price of the
subject properties; otherwise, the CTS shall automatically expire. The period, however, elapsed
without payment of the full consideration by the petitioner.5

According to the petitioner, the 90-day period provided in the CTS was subject to the condition
that the subject properties be cleared of all claims from third persons considering that there
were pending litigations involving the same.6

Upon the expiry of the 90-day period, and despite the failure to clear the subject properties from
the claims of third persons, the petitioner contributed financial assistance for the expenses of
litigation involving the subject properties with the assurance that the CTS will still be enforced
once the cases are settled.7

In the meantime, the petitioner agreed to pay rental fees for their occupation of the subject
properties from 1992 to 1996.8

After the termination of the cases involving the subject properties, however, the respondents
refused to enforce the CTS on the ground that the same had expired and averred that there was
no agreement to extend its term.

For their defense, the respondents alleged that the CTS was not enforced due to the petitioner's
failure to pay the P200.00 per sq m selling price before the expiration of its term. 11 As a result,
the members of the petitioner were required to pay rental fees corresponding to the area they
occupy.12

Moreover, the respondents claimed that the so called "financial assistance" they received from
the petitioner's members was in the nature of a loan and that it has nothing to do with the
alleged extension of their CTS.13

Considering that the CTS already expired, Lipat Jr. suggested an individual contract for each
member of the petitioner. Only four members, however, were able to buy individual lots, namely,
Consuelo Gomez, Edna Estioko, Gina Villar, and Pablo Calubad. 14 Also, Rosemarie
Buenaventura, who is not a member of the petitioner, was able to buy two lots on the subject
properties. Consequently, she filed an urgent Motion for Leave to Intervene which was granted
by the trial court on August 4, 1997
RTC: rendered a Decision16 in favor of the petitioner directing the respondent to enforce the
CTS after payment by the petitioner of the selling price in the amount of ₱200.00 per sq m

CA: granted the appeal of the respondents, holding that the CTS dated December 13, 1991
they entered into with the petitioner is still in force and effect.; petitioner cannot exact fulfillment
from the respondents without itself having first complied with what is incumbent upon it under
the CTS. As shown in the records, the petitioner failed to make full payment of the purchase
price. Further, records do not show that the petitioner ever attempted to at least, make the
proper consignation of the amounts due to the court

Issue: 1. WHETHER OR NOT THE CA ERRED IN REVERSING THE TRIAL COURT'S

DECISION THAT THE PETITIONER CAN OBLIGE THE RESPONDENTS TO SELL THE
PROPERTIES COVERED BY THE CTS, THE CONTRACT BEING STILL EFFECTIVE;

Ruling: NO.

The parties are bound to the stipulations they mutually agreed upon in the CTS

Indeed, the contract executed by the parties is the law between them. Consequently, from the
time the contract is perfected, all parties privy to it are bound not only to the fulfillment of what
has been expressly stipulated but likewise to all consequences which, according to their nature,
may be in keeping with good faith, usage and law.27

Here, the pertinent provisions of the CTS, denominated as Contract/ Agreement, between the
parties read:

1. The Parties hereby agree that for and in consideration of the amount of TWO HUNDRED
(₱200.00) Pesos, [Philippine] Currency per square meter, the VENDOR shall sell, cede, convey
and transfer unto the VENDEE, its assigns, or representative the above mentioned property;

xxxx

3. The registration fee for the mortgage to secure the loan to be obtained by the vendee to
finance the acquisition of the land shall be for the account of the VENDEE; [and]

4. This Contract/ Agreement shall automatically expire on the Ninetyth [sic] (90) th [sic] day
commencing from the aforesaid date.28

Concededly, it is undisputed that the abovementioned contract is in the nature of a CTS. As

such, the obligation of the seller to sell becomes demandable only upon the occurrence of the
suspensive condition.29 In the present case, as correctly observed by the CA, the suspensive
condition is the payment in full of the purchase price by the petitioner prior to the expiration of
the 90-day period stipulated in their CTS, which the latter failed to do so

In Spouses Garcia, et al. v. Court of Appeals, et al., 31 the Court emphasized that in a CTS,
payment of the full purchase price is a positive suspensive condition, failure of which is not
considered a breach of the same but an occurrence that prevents the obligation of the seller to
transfer title from becoming effective. 32 Here, there is no dispute that the petitioner failed to pay
the full purchase price stipulated in the CTS on the date fixed therein. Thus, the respondents
are within their rights to refuse to enforce the same.

At any rate, assuming without conceding that the 90-day period was extended by the parties,
the obligation of the respondents based on the CTS did not arise as a result of the continued
failure of the petitioner to pay the full purchase price. As the Court held in Ursa! v. Court of
Appeals,37 the perfected CTS imposed on the buyer the obligation to pay the balance of the
purchase price. As such, the buyer should have made the proper tender of payment and
consignation of the price in court as required by law. It is essential that consignation be made in
court in order to extinguish the obligation of the buyer to pay the balance of the purchase
price.38 Here, records are bereft of any showing that the petitioner even attempted to make the
proper consignation of the amounts due, as a result, the obligation on the part of the
respondents never acquired obligatory force, thus, the seller is released from his obligation to
sell.

CLEMENTE VS REPUBLIC

FACTS:

 (Clemente Siblings) were the owners of a parcel of land covered by Transfer Certificate of Title
(TCT) No. T-50896. During their lifetime, they executed a Deed of Donation 8 dated 16 March
1963 over a one-hectare portion of their property (Subject Property) in favor of the Republic of
the Philippines. 

In the same Deed of Donation, District Engineer II Ciceron A. Guerrero of DPWH Region IV-A
accepted said donation. On 29 March 1963, TCT No. T-50896 was partially cancelled by TCT
No. T-51745 covering the Subject Property and issued in the name of the Province of Quezon.

In accordance with the Deed of Donation, the construction of a building for a hospital was
started in the following year. However, for reasons unknown, the construction was never
completed and only its foundation remains today

In a letter dated 23 August 2003,10 Socorro and Rosario P. Clemente wrote to the District
Engineer of Quezon asking for information on the development of the government hospital, as
they were aware that the construction of the foundation of the hospital structure had already
been started. In a subsequent letter dated 24 November 2003, Socorro wrote to the District
Engineer restating their inquiry and consultation on 20 November 2003, when the District
Engineer informed her that the DPWH no longer had a plan to construct a hospital at the site
and that the DPWH had no budget for the hospital construction.11

In 2004, almost forty-one (41) years after the Deed of Donation was executed, Socorro, as heir
and successor-in-interest of Mayor Clemente, filed a Complaint, and subsequently an Amended
Complaint, for Revocation of Donation, Reconveyance and Recovery of Possession alleging
that the Republic of the Philippines failed to comply with the condition imposed on the Deed of
Donation, which was to use the property "solely for hospital site only and for no other else,
where a [government [h]ospital shall be constructed."1

RTC: held that since the parties did not fix the period within which to comply with the condition,
but a period was indeed intended, the Court may fix the period for the performance of the
donee's obligation, under Article 1197 of the Civil Code. However, since Socorro failed to pray
for the fixing of the period, the RTC dismissed the case.

CA: enied the appeal, finding that while there may be basis for the recovery of the property,
Socorro, as an heir of a deceased co-donor, cannot assert the concept of heirship to participate
in the revocation of the property donated by her successor-in-interest

ISSUE:

1.WON  non-fulfillment of the condition gives the donor the right to revoke the donation

2..WON there is no need for a settlement of the estate before an action for revocation of
donation, reconveyance, and recovery of possession of property may be filed by an heir of a co-
owner.

3. WON RTC IS CORRECT that the action is premature because there can be no breach before
the court fixes a period to comply with the obligation.

RULING:

1.YES

The nature of the donation made by the Clemente Siblings is a donation subject to a condition –
the condition being the construction of a government hospital and the use of the Subject
Property solely for hospital purposes. Upon the non-fulfillment of the condition, the donation
may be revoked and all the rights already acquired by the donee shall be deemed lost and
extinguished.18 This is a resolutory condition because it is demandable at once by the done19 but
the non-fulfillment of the condition gives the donor the right to revoke the donation.20

In this case, upon the execution of the Deed of Donation and the acceptance of such donation
in the same instrument, ownership was transferred to the Republic, as evidenced by the new
certificate of title issued in the name of the Province of Quezon. Because the condition in the
Deed of Donation is a resolutory condition, until the donation is revoked, it remains
valid.21 However, for the donation to remain valid, the donee must comply with its obligation to
construct a government hospital and use the Subject Property as a hospital site. The failure to
do so gives the donor the right to revoke the donation. Article 764 of the Civil Code provides:

Art. 764. The donation shall be revoked at the instance of the donor, when the donee fails to
comply with any of the conditions which the former imposed upon the latter.

In this case, the property donated shall be returned to the donor, the alienations made by the
donee and the mortgages imposed thereon by him being void, with the limitations established,
with regard to third persons, by the Mortgage Law and the Land Registration Laws.
This action shall prescribe after four years from the non-compliance with the condition, may be
transmitted to the heirs of the donor, and may be exercised against the donee's heirs.

Respondent argues that the obligation to construct a hospital was fulfilled when respondent
started to construct a hospital.

We do not agree. It is clear from the records that the donee failed to comply with its obligation to
construct a government hospital and to use the premises as a hospital site.

When the parties provided in the Deed of Donation that the donee should construct a
government hospital, their intention was to have such hospital built and completed, and to have
a functioning hospital on the Subject Property. This can be evidenced by the accompanying
words in the Deed of Donation – "solely for hospital site only and for no other else, where a
[g]overnment [h]ospital shall be constructed." The condition imposed upon the donee has two
parts – first, to construct a government hospital, and second, to use the Subject Property solely
as a hospital site. The argument of respondent that the mere construction of the foundation of a
building complies with the condition that a government hospital be constructed on the Subject
Property is specious. A foundation of a building is obviously not a government hospital. The
other condition in the Deed of Donation, which is to use the Subject Property solely as a hospital
site, is also not complied with when the Subject Property is left idle, which means the Subject
Property is not being used as a hospital site. The foundation of a building cannot function as a
hospital site. Thus, even if we are to consider, for the sake of argument, that the construction of
the foundation of a hospital building is enough to comply with the obligation to construct a
government hospital, the subsequent abandonment of the construction results in the non-
compliance with the second part of the donee's obligation – which is to use the Subject Property
solely as a hospital site.

Based on the foregoing, we find that the donee failed to comply with the resolutory condition
imposed in the Deed of Donation.

2. YES. there is no need for the settlement of the estate before one of the heirs can institute an
action on behalf of the other co-heirs. Although an heir's right in the estate of the decedent
which has not been fully settled and partitioned is merely inchoate, Article 493 of the Civil
Code27 gives the heir the right to exercise acts of ownership. 28 Thus, even before the settlement
of the estate, an heir may file an action for reconveyance of possession as a co-owner thereof,
provided that such heir recognizes and acknowledges the other co-heirs as co-owners of the
property as it will be assumed that the heir is acting on behalf of all the co-heirs for the benefit of
the co-ownership.

3. NO.  In Central Philippine University v. Court of Appeals,31 which had a similar factual

background with this case, the Court held:

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.
This general rule however cannot be applied considering the different set of circumstances
existing in the instant case. More than a reasonable period of fifty (50) years has already been
allowed petitioner to avail of the opportunity to comply with the condition even if it be
burdensome, to make the donation in its favor forever valid. But, unfortunately, it failed to do
so. Hence, there is no more need to fix the duration of a term of the obligation when such
procedure would be a mere technicality and formality and would serve no purpose than
to delay or lead to an unnecessary and expensive multiplication of suits. Moreover,
under Art. 1191 of the Civil Code, when one of the obligors cannot comply with what is
incumbent upon him, the obligee may seek rescission and the court shall decree the
same unless there is just cause authorizing the fixing of a period. In the absence of any
just cause for the court to determine the period of the compliance, there is no more obstacle for
the court to decree the rescission claimed

Because of the failure of the Deed of Donation to specify the period within which to comply with
the condition, there can be no delay in asserting the right against respondent. In contrast,
respondent is guilty of unreasonable delay and neglect in complying with its obligation to
construct a government hospital and to use the Subject Property as a hospital site.

Based on the foregoing, the revocation of the donation and the reconveyance and recovery of
possession of the Subject Property in favor of the donors – or the heirs of the donors – are
necessary and proper.
 PROVINCE OF CAMSUR VS BODEGA GLASSWARE

FACTS:

Petitioner is the registered owner of a parcel of land in Peñafrancia, Naga City. petitioner
donated around 600 square meters of this parcel of land to the Camarines Sur Teachers'
Association, Inc. (CASTEA) through a Deed of Donation Inter Vivos (Deed of Donation).

CASTEA accepted the donation in accordance with the formalities of law and complied with the
conditions stated in the deed. However, on August 15, 1995, CASTEA entered into a Contract
of Lease with Bodega over the donated property. 9 Under the Contract of Lease, CASTEA
leased the property to Bodega for a period of 20 years commencing on September 1, 1995 and
ending on September 15, 2015. Bodega took actual possession of the property on September 1,
1995.

Sometime in July 2005, the Office of the Provincial Legal Officer of the Province of Camarines
Sur wrote Bodega regarding the building it built on the property. The Provincial Legal Officer
requested Bodega to show proof of ownership or any other legal document as legal basis for his
possession. Bodega failed to present any proof. Nevertheless, petitioner left Bodega
undisturbed and merely tolerated its possession of the property

On November 11, 2007, petitioner sent a letter to Bodega dated October 4, 2007. 12 In this letter,
petitioner stated that Bodega's occupation of the property was by mere tolerance of the
petitioner.13 As it now intended to use the property for its developmental projects, petitioner
demanded that Bodega vacate the property and surrender its peaceful possession. Bodega
refused to comply with the demand.14

Petitioner, through its then Provincial Governor Luis Raymund F. Villafuerte, Jr., revoked its
donation through a Deed of Revocation of Donation 15 (Deed of Revocation) dated October 14,
2007. It asserted that CASTEA violated the conditions in the Deed of Donation when it leased
the property to Bodega. Thus, invoking the automatic revocation clause in the Deed of
Donation, petitioner revoked, annulled and declared void the Deed of Donation.16 It appears
from the record that CASTEA never challenged this revocation.

On March 13, 2008, petitioner filed an action for unlawful detainer against Bodega before the
MTC Naga City. It prayed that Bodega be ordered to vacate the property and surrender to
petitioner its peaceful possession. Petitioner also prayed for the payment of P15,000 a month
from October 2007 until Bodega vacates the land
RTC AND CA: CA affirmed the ruling of the RTC Naga City that the petitioner cannot demand
that Bodega vacate the property. The CA explained that Bodega 's possession of the property is
based on its Contract of Lease with CASTEA. CASTEA, in tum, claims ownership of the
property by virtue of the Deed of Donation. According to the CA, while petitioner alleges that
CASTEA violated the conditions of the donation and thus, the automatic revocation clause
applies, it should have first filed an action for reconveyance of the property against CASTEA.
The CA theorized that judicial intervention is necessary to ascertain if the automatic revocation
clause suffices to declare the donation revoked

ISSUE: who between petitioner and Bodega has the right to the actual physical possession of
the property.

RULING: PETITIONER.

In this case, the Deed of Donation contains a clear automatic revocation clause.

he provision identifies three conditions for the donation: (1) that the property shall be used for
"no other purpose except the construction of its building to be owned and to be constructed by
the above-named DONEE to house its offices to be used by the said Camarines Sur Teachers'
Association, Inc., in connection with its functions under its charter and by-laws and the Naga
City Teachers' Association as well as the Camarines Sur High School Alumni Association," (2)
CASTEA shall "not sell, mortgage or incumber the property herein donated including any and all
improvements thereon in favor of any party," and (3) "the construction of the building or
buildings referred to above shall be commenced within a period of one (1) year from and after
the execution." The last clause of this paragraph states that "otherwise, this donation shall be
deemed automatically revoked x x x."50 We read the final clause of this provision as an
automatic revocation clause which pertains to all three conditions of the donation. When
CASTEA leased the property to Bodega, it breached the first and second conditions.

The provision identifies three conditions for the donation: (1) that the property shall be used for
"no other purpose except the construction of its building to be owned and to be constructed by
the above-named DONEE to house its offices to be used by the said Camarines Sur Teachers'
Association, Inc., in connection with its functions under its charter and by-laws and the Naga
City Teachers' Association as well as the Camarines Sur High School Alumni Association," (2)
CASTEA shall "not sell, mortgage or incumber the property herein donated including any and all
improvements thereon in favor of any party," and (3) "the construction of the building or
buildings referred to above shall be commenced within a period of one (1) year from and after
the execution." The last clause of this paragraph states that "otherwise, this donation shall be
deemed automatically revoked x x x."50 We read the final clause of this provision as an
automatic revocation clause which pertains to all three conditions of the donation. When
CASTEA leased the property to Bodega, it breached the first and second conditions.
 SONGFO VS HAWAIIAN PH

FACTS:

Hawaiian-Philippine Co (HPC) entered into a contract with Song Fo and Co (SFC)

where it would deliver molasses to the latter evidenced by a letter containing their
contract. The same states that Mr. Song Fo agreed to the delivery of 300,000
gallons of molasses and the same requested for an additional 100,000 molasses
which the HPC promised that it will do its best to comply with the additional
shipment. However, the HPC was only able to deliver 55,006 gallons. SFC
thereafter filed a complaint with two causes of action for breach of contract against
the HPC and asked for P70,369.50. HPC answered that there was a delay in the
payment from
SFC and that HPC has the right to rescind the contract because of the same· The
trial court condemned HPC to pay SFC a total of P35,317.93, with legal interest.

ISSUES:

1. Whether or not SFC is entitled to damages

2. Whether or not HPC has a right to rescind the contract?

RULING:

As to the first question, yes, SFC is entitled to damages. Article 1170 of the Civil
Code provides “Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof,
are liable for damages”

The failure of HPC to deliver the rest of the molasses constitutes a breach of
contract by contravention of tenor and is thus liable for damages. The bases for
damages is the cost in excess of the agreed price in the contract when SFC was
made to acquire the needed molasses from another supplier and the expenses
related to the transportation of the same. Loss of profits would have been included
as part of damages had SFC been able to substantiate such a claim.

As to the second question, no, HPC has no right to rescind the contract.

The court provided that the general rule is that rescission will not be permitted
for a slight or casual breach of the contract, but only for such breaches as are so
substantial and fundamental as to defeat the object of the parties in making the
agreement.
It should be noted that the time of payment stipulated for in the contract should be
treated as of the essence of the contract. There was only a slight breach of contract
when the payment was delayed for 20 days and does not violate essential condition
of the contract which warrants rescission for non-performance. Furthermore, HPC
accepted the payment of the overdue accounts and continued with the contract,
waiving its right to rescind the same.

Petition of partly granted, and the judgment appealed is modified. Plaintiff shall have
and recover from the defendant the sum of P3,000, with legal interest from date of
judgment, no special costs.