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Evangelista, Ma. Clara G. Maling, Patrick Santuyo, Kenneth Soriano, Mikhail Tamonte, Juan Paolo JAVIER VS. CA G.R.

No. L-48194 March 15, 1990

FACTS: Private respondent Leonardo Tiro is a holder of an ordinary timber license issued by the Bureau of Forestry covering 2,535 hectares in the town of Medina, Misamis Oriental. On February 15, 1966 he executed a "Deed of Assignment" in favor of petitioners Jose M. Javier and Estrella F. Javier to assign, transfer and convey his shares of stocks in Timberwealth Corporation in consideration of the sum of Php120, 000.00 in which the Php20, 000.00 shall be paid upon signing of the said contract and the balance of Php100, 000.00 shall be paid in Php10, 000.00 for every shipment of export log actually produced from the forest concession. At the time the said deed of assignment was executed, private respondent had pending application for an additional 2,000 hectares of forest concession. Hence, private respondent made another agreement on February 28, 1966 with petitioners that in the event that his application will be approved, his rights to the additional forest concession shall be transferred to petitioners in consideration of the sum of Php30, 000.00.

On November 18, 1966, private respondent was informed that his forest concession was renewed but since the area is only 2,535 hectares, he was ordered to form an organization with adjoining licensees so as to have a total holding area of 20,000 hectares, otherwise, his license will not be renewed. Consequently, petitioners, now acting as timber license holders by virtue of the deed of assignment executed by private respondent in their favor, entered into a Forest Consolidation Agreement. Thereafter, private respondent files a civil case for the failure of petitioners to pat the balance of the two deeds of assignment. In the petitioners answer, they contend that private respondent failed his contractual obligations and the conditions for the enforceability of the obligations did not materialize. Private respondent, then, replied that the deed of assignment did not only transfer his shares of stocks but his rights and interest in the logging concession. The trial court then rendered judgment for the petitioners; however, on appeal to the Court of Appeals, the trial courts decision was revered. Hence this petition. ISSUES: 1. Whether or not the Deed of Assignment dated February 15, 1966 was null and void. 2. Whether or not the agreement dated February 28, 1966 was null and void. HELD: No. As found by the Court of Appeals, the true cause or consideration of the said deed was the transfer of the forest concession of the private respondent to petitioners for P120,000,00. Also, the contemporaneous and subsequent acts of petitioners and

private respondent reveal that the cause stated in the questioned deed of assignment is false. It is settled that the previous and simultaneous and subsequent acts of the parties are properly cognizable indica of their true intention. Where the parties to a contract have given it a practical construction by their conduct as by acts in partial performance, such construction may be considered by the court in construing the contract, determining its meaning and asserting the mutual intention of the parties at the time of contracting. The parties practical construction of their contract has been characterized as a clue or index, or as evidence of, their intention or meaning and as an important, significant, convincing, persuasive, or influential factor in determining the proper construction of the agreement. The deed of assignment of February 15, 1966 is a relatively simulated contract which states a false cause or consideration, or one where the parties conceal their true agreement. A contract with a false consideration is null and void per se. under Article 1346 of the Civil Code, a relatively simulated contract, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement. Yes. The efficacy of the said deed of assignment is subject to the condition that the application of private respondent for an additional area for forest concession be approved by the Bureau of Forestry. Since private respondent did not obtain that approval said deed produces no effect, when a contract is subject to a suspensive condition, its birth or effectivity can take place only if and when the event which constitutes the condition happens or is fulfilled. If the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. The said agreement is a bilateral contract which gave rise to reciprocal obligations, that is, the obligation of

private respondent to transfer his rights ion the forest concession over the additional are and, on the other hand, the obligation of petitioners to pay P30,000.00. The demandability of the obligation of one party depends upon the fulfillment of the obligation of the other; in this case, the failure of private respondent to comply with his obligation negates his right to demand performance from petitioners. Delivery and payment in a contract of sale are so interrelated and intertwined with each other that without delivery of the goods there is no corresponding obligation to pay. The two complement each other. Moreover, under the second paragraph of Article 1461 of the Civil Code, the efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence. In this case, since private respondents never acquired any right over the additional area for failure to secure the approval of the Bureau of Forestry, the agreement executed therefore, which had for its object the transfer of said right to petitioners, never became effective or enforceable.

Evangelista, Ma. Clara G. Maling, Patrick Santuyo, Kenneth Soriano, Mikhail Tamonte, Juan Paolo LO v. COURT OF APPEALS GR. No. 141434 September 23, 2003


Petitioner acquired in an auction sale two parcels of land with an office building constructed thereon, then leased by private respondent. Upon expiration of the lease contract, however, private respondent refused to vacate the premises as it was contesting petitioner's acquisition of the land in an action for annulment of sale, redemption and damages. When petitioner thereafter filed an action for ejectment, both the MTC and the RTC ruled in favor of petitioner, granting the stipulated penalty of P5,000 per day of delay in surrendering possession of the property to petitioner. The Court of Appeals, on the other hand, while also ruling in favor of petitioner, modified the amount of penalty to P1,000. Hence, this petition.


Whether or not the Court of Appeals erred in their decision to reduce the penalty of P5, 000.00 to P1, 000.00 for each day of delay.


No. Whether the reduced amount of penalty by the Court of Appeals to P1,000.00 was proper, the Court ruled in the affirmative. Per stipulation, the monthly rental of the premises was P30,000; the daily penalty for delay in surrendering possession thereof was P5,000 or P150,000 per month. This penalty of P150,000.00 per month is not only exorbitant but also unconscionable. This power of the courts is explicitly sanctioned by Article 1229 of the Civil Code which provides:

Article 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable.

taking into account that the delay in surrendering the leased premises was because of a well-founded belief that private respondent's right of pre-emption to purchase the premises had been violated. Also considered is the fact that private respondent is an agricultural cooperative collectively owned by farmers with limited resources.

Evangelista, Ma. Clara G. Maling, Patrick Santuyo, Kenneth Soriano, Mikhail Tamonte, Juan Paolo GEORGE L. PARKS, plaintiff-appellant, vs. PROVINCE OF TARLAC, MUNICIPALITY OF TARLAC, CONCEPCION CIRER, and JAMES HILL, her husband, defendants-appellees. G.R. No. L-24190 July 13, 1926 Facts: In 1910, Concepcion Cirer and James Hill donated parcels of land to the municipality of Tarlac on the condition (one of the parcels donated was to be used absolutely and exclusively for the erection of a central school and the other for a public park and that the work to commence in both cases within the period of six months from the date of the ratification by the partes of the document evidencing the donation received by the Municipal President De Jesus. These conditions were not complied with. On January 15 1921, Concepcion Cirer and James Hill sold the Parcel of Land to Parksbut this sale had no effect because when the sale was made, Concepcion Cirer and James Hill were no longer the owners of this parcel and could not have sold it to the

Parks. On August 24, 1923, municipality transferred in the name of the Province of Tarlac. Parks argues that the donation had no effect because the conditions that were previously stated were not met. Issues: 1. Whether or not the donation was had a condition precedent? 2. Whether or not the action to revoke has prescribed? Held: (1) No. The condition to erect a school within six months is not a condition precedent. The characteristic of a condition precedent is that the acquisition of the right is not effected while said condition is not complied with or is not deemed complied with. Meanwhile nothing is acquired and there is only an expectancy of right. In the present case the condition that a public school be erected and a public park be made of the donated land could not be complied with except after giving effect to the donation. (2)Yes. The period for bringing an action for the revocation of the donation has prescribed. The action for the revocation of the donation for this cause arose on April 19, 1911, that is six months after the ratification of the instrument of donation of October 18, 1910. The complaint in this action was presented July 5, 1924, more than ten years after this cause accrued.