Felix Gonzales Vs.

The Heirs of Thomas and Paula Cruz Panganiban j;

Facts:
On December 1, 1983, Paula Cruz together with the heirs of Thomas and Paula Cruz entered into a lease/ purchase contract with Felix Gonzales
of a parcel of land.
The said contract provide as follows:
1. The term of this contract is for a period of 1 year upon signing thereof. After the period of this contract, the LESSEE shall purchase the property
on the agreeable price of 1,000,000 payable within 2 years. The payment schedule should be 50% upon the execution of the deed of sale, 25%
every 6 months thereafter.
2. The lessee shall pay by way of annual rental in the amount of 2,500 per hectare or a total of 15,000 upon signing of the contract of lease.

But the paragraph 9 of the said contract provides:

The Lessors hereby commit themselves and shall undertake to obtain a separate and distinct TCT over the herein leased portion to the Lessee within
reasonable period of time which shall not in any case exceed 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 concerned.
Gonzales paid the required amount of annual rental in accordance with the second provision of the contract and thereafter took possession of the
property, upon expiration of his lease contract, Gonzales did not exercise his purchase option on the property but he remained in possession of the property
without paying the purchase price provided in the contract and without paying any further rentals.
A letter was sent by the heirs of Cruz informing him of the lessor’s decision to rescind the contract due to breach committed and Gonzales and
the letter serve as a demand on him to vacate the premise, but Gonzales refused to vacate and continued in possession of the property.
The property subject in the contract is currently the subject to Extra-judicial partition, the title of which remains in the name of the predecessor
in interest Bernardita Calixt and Severo Cruz.
With this foregoing, heirs of Cruz filed a complaint for the recovery of possession of property with damages.
Alleging breach of paragraph 9 of the contract by the lessor heirs of Cruz and payment of 50,000 of the 500,000 agreed down payment, Gonzales
pray for a dismissal of the complaint.

Issue:
Whether or not the paragraph 9 of the contract is condition for the performance of the obligation of Gonzales to purchase the leased property to him?

Ruling:
Yes, paragraph 9 requires the heirs of Cruz as a seller of the property to obtain a separate and distinct TCT over the property.
At the time of execution of the contract, the land was still registered in the name of the predecessor in interest and not yet registered in the name of the
lessors. There was no showing that the lessors were the only heirs of the predecessor in interest; they even admit that the land was still currently subject to
extra-judicial proceedings of partition. Hence, there was no assurance that they are the real owner of the portion of lot that Gonzales wanted to buy, so the
intent of paragraph 9 of the contract was for them to obtain separate TCT in their name over the said lot.

Paragraph 9 of the contract is a condition on the obligation of Gonzales to purchase the subject lot; the heirs of Cruz should first obtain a separate
and distinct TCT over the leased asset before the obligation of Gonzales to purchase start. This obligation of Gonzales is conditional obligation that
governs by Article 1181 of the civil code.

Condition has been defined as every future and uncertain event upon which an obligation is made to depend.
HSBCL-SRP VS BROQUEZA GR 178610

FACTS: Broqueza and Gerong are employees of HSBC, and also members of the petitioner. The herein petitioner is a retirement plan
established by the HSBC.

In 1990, Petitioner Broqueza obtained a car loan and an appliance loan. On the other hand, Gerong obtained an emergency loan in
1993. The said loans were paid through automatic salary deduction.

In 1993, a labor dispute arose between HSBC and its employees. Majority of HSBC’s employees were terminated, among whom are
Broqueza and Gerong. The employees then filed an illegal dismissal case, which is currently pending, before the NLRC against
HSBC.

As a result of their termination, Broqueza and Gerong were not able to pay monthly amortization for said loans. Thus, respondent
HSBCL-SRP considered the accounts of petitioners delinquent. Demands to pay the respective obligations were made upon
petitioners, but they failed to pay. Thereafter, the petitioners filed a case against them for recovery and collection of sums of money.

The MeTC ruled in favor of the petitioner, stating that the labor case has no connection to the ongoing labor dispute, that the loans
were unsecure and pure obligations and are immediately demandable.

In appeal, the RTC affirmed the MeTC’s decision. However, the CA reversed the decision stating that the loan obligation is not yet
matured, that the petitioners have no cause of action, and therefore dismissed the case.

Meanwhile, the petitioner filed a motion to withdraw the petition against Gerong because the latter has already settled the obligation.

ISSUE: WON the loan of BROQUEZA is already demandable.

HELD: YES.

Art. 1179. Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event unknown to
the parties, is demandable at once.

The RTC is correct in ruling that since the Promissory Notes do not contain a period, HSBCL-SRP has the right to demand
immediate payment. Article 1179 of the Civil Code applies. The spouses Broqueza’s obligation to pay HSBCL-SRP is a pure
obligation. The fact that HSBCL-SRP was content with the prior monthly check-off from Editha Broqueza’s salary is of no moment.
Once Editha Broqueza defaulted in her monthly payment, HSBCL-SRP made a demand to enforce a pure obligation.

Editha Broqueza authorized HSBCL-SRP to make deductions from her payroll until her loans are fully paid. Editha Broqueza,
however, defaulted in her monthly loan payment due to her dismissal. Despite the spouses Broqueza’s protestations, the payroll
deduction is merely a convenient mode of payment and not the sole source of payment for the loans. HSBCL-SRP never agreed that
the loans will be paid only through salary deductions. Neither did HSBCL-SRP agree that if Editha Broqueza ceases to be an
employee of HSBC, her obligation to pay the loans will be suspended. HSBCL-SRP can immediately demand payment of the loans
at anytime because the obligation to pay has no period. Moreover, the spouses Broqueza have already incurred in default in paying
the monthly installments.

The enforcement of a loan agreement involves "debtor-creditor relations founded on contract and does not in any way concern
employee relations. As such it should be enforced through a separate civil action in the regular courts and not before the Labor
Arbiter.
FRANCISCO LAO LIM V. CA and BENITO VILLSVICENCIO DY

FACTS:

 Private Respondent entered into a contract of lease with a petitioner for a period of 3 years. (1976-1979)
 After the expiry of the stipulated term, Dy, refused to vacate the premises
 Hence, Lim filed an ejectment suit under City Court of Manila
 But the case was terminated by judicially approved compromise agreement of the parties
“The term of the lease shall be renewed every three years retroacting from Oct 1979 to Oct 1982; petitioner after which the abovenamed rental
shall be raised automatically by 20% every three years for long as defendant needed the premises and can meet and pay the said increases, the
defendant to give notice of his intent to renew 60 days before the expiration of the term.”
 April 1985, petitioner advised the respondent that he would no longer renew the contract. However, the respondent thru writing, informed the
former for his intent to renew the contract
 Another ejectment suit: DISMISSED (a) lease contract was not expired for being a continuous period depended upon lessee’s need and
ability to pay (b) compromise agreement constitutes res judicata to the case
 CA affirmed
 Hence, this motion for reconsideration

ISSUE: 1.WON the stipulation and renewal of the compromise agreement is valid and binding. NO

2. WON the motion for reconsideration is barred by res judicata. NO

RULING:

The court ruled that the compromise agreement is purely potestative condition because it leaves the effectivity and enjoyment of leasehold rights to the
sole and exclusive will of the lessee. It is likewise a suspensive condition because the renewal of the lease, which give rise to a new lease, depends upon
the said condition. (same terms as to the expired terms)

The invalidity of a condition in a lease contract similar to Encarnacion V. Baldomar ruled that in an action of ejectment, the defense interposed by the
lesses that contract of lease authorized them to continue occupying the premises as long as they paid the rents is untenable, because it would leave to
the lesses the sole power to determine whether the lease should continue or not.

=It clearly violates Art. 1182 “ When the fulfillment of the condition depends upon the sole will of the ddebtor, the conditional obligation shall be void.
If it depends upon chance or upon the will of a third person, the obligation shall take effect in conformity with the provisions of this Code.”

Violation of Art 1308 “The contracts must be bind both contracting parties; its validity or compliance cannot be left to the will of one of them”

Add’l Notes

 Perpetual leases are not favored in law, nor are covenants for continued renewals tending to create a perpetuity, and the rule of construction
is well settled that a covenant for renewal or for an additional term should not be held to create a right to repeated grants in perpetuity,
unless by plain and unambiguous terms the parties have expressed such intention.
 In a reciprocal contract like lease, the period of lease must be deemed to have been agreed upon for the benefit of both parties, absent
language showing the term, was deliberately set for the benefit of the lessee or the lessor alone.
Quijada v. CA G.R. No. 126444. December 4, 1998 Sale

FACTS:

On April 5, 1956, Trinidad Quijada together with her sisters and brother, executed a conditional deed of donation of the two-hectare parcel of land subject
of the case in favor of the Municipality of Talacogon, the condition being that the parcel of land shall be used solely and exclusively as part of the campus
of the proposed provincial high school in Talacogon.

On July 29, 1962, Trinidad sold one (1) hectare of the subject parcel of land to Regalado Mondejar (respondent). Subsequently, Trinidad verbally sold the
remaining one (1) hectare to respondent without the benefit of a written deed of sale and evidenced solely by receipts of payment. After the death of
Trinidad, her heirs filed a complaint for forcible entry against respondent, which complaint was, however, dismissed for failure to prosecute.

The proposed provincial high school having failed to materialize, the Sangguniang Bayan of the municipality of Talacogon enacted a resolution reverting
the two (2) hectares of land donated back to the donors. In the meantime, respondent Regalado Mondejar sold portions of the land to several persons.

Petitioners filed this action against respondents, alleging that their deceased mother never sold, conveyed, transferred or disposed of the property in question
to any person or entity much less to Regalado Mondejar save the donation made to the Municipality of Talacogon in 1956; that at the time of the alleged
sale to Regalado Mondejar by Trinidad Quijada, the land still belongs to the Municipality of Talacogon, hence, the supposed sale is null and void.

As affirmative and/or special defense, respondents alleged that plaintiffs’ action is barred by laches or has prescribed.

Judgment was rendered in favor of the petitioner.

On appeal, the CA reversed and set aside the judgment, ruling that the sale made by Trinidad Quijada to respondent Mondejar was valid as the former
retained an inchoate interest on the lots by virtue of the automatic reversion clause in the deed of donation.

ISSUE:

WON the sale of the subject property made by Trinidad Quijada to respondent Mondejar is void, considering that at that time, ownership was already
transferred to the Municipality of Talacogon.

RULING:

We affirm the decision of the respondent court.

Be that at it may, there is one thing which militates against the claim of petitioners. Sale, being a consensual contract, is perfected by mere consent, which
is manifested the moment there is a meeting of the minds as to the offer and acceptance thereof on three (3) elements: subject matter, price and terms of
payment of the price. ownership by the seller on the thing sold at the time of the perfection of the contract of sale is not an element for its perfection.

What the law requires is that the seller has the right to transfer ownership at the time the thing sold is delivered. Perfection per se does not transfer ownership
which occurs upon the actual or constructive delivery of the thing sold. A perfected contract of sale cannot be challenged on the ground of non-ownership
on the part of the seller at the time of its perfection; hence, the sale is still valid.

The consummation, however, of the perfected contract is another matter. It occurs upon the constructive or actual delivery of the subject matter to the
buyer when the seller or her successors-in-interest subsequently acquires ownership thereof. Such circumstance happened in this case when petitioners —
who are Trinidad Quijada’s heirs and successors-in-interest — became the owners of the subject property upon the reversion of the ownership of the land
to them. Consequently, ownership is transferred to respondent Mondejar and those who claim their right from him. Article 1434 of the New Civil Code
supports the ruling that the seller’s “title passes by operation of law to the buyer.” This rule applies not only when the subject matter of the contract of sale
is goods, but also to other kinds of property, including real property.

There is also no merit in petitioners’ contention that since the lots were owned by the municipality at the time of the sale, they were outside the commerce
of men under Article 1409 (4) of the NCC; thus, the contract involving the same is inexistent and void from the beginning. However, nowhere in Article
1409 (4) is it provided that the properties of a municipality, whether it be those for public use or its patrimonial property are outside the commerce of men.

Besides, the lots in this case were conditionally owned by the municipality. To rule that the donated properties are outside the commerce of men would
render nugatory the unchallenged reasonableness and justness of the condition which the donor has the right to impose as owner thereof. Moreover, the
objects referred to as outsides the commerce of man are those which cannot be appropriated, such as the open seas and the heavenly bodies.

Central Philippine University vs. Court of Appeals

Summary: A donor donated a parcel of land to the donee school with a resolutory condition that a medical school be constructed thereon. Fifty years
elapsed, but the donee has not complied. The heirs of the donor are now asking for rescission of the donation because of the donee's failure to comply.

Rule of Law: Under Article 1191 of the Civil Code, when one of the obligors cannot comply with the conditions, the obligee may ask for rescission and
the court shall grant the same unless there is just cause authorizing the fixing of a period. In the absence of any, there is no more obstacle for the court to
decree the rescission claimed.

Facts: 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)—donated a parcel of land to the Central Philippine University (D) with certain conditions.

The heirs (P) of Don Ramon Lopez, Sr., filed an action for the annulment of the donation, reconveyance and damages against CPU (D) alleging that
since 1939 up to the time the action was filed the latter had not complied with the conditions of the donation. The heirs (P) also alleged that CPU (D) 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, CPU (D) alleged that the right of the heirs (P) to file the action had prescribed and 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 it did not sell, transfer or convey it to
any third party.

The trial court held that CPU (D) failed to comply with the conditions of the donation and declared it null and void. The court a quo further directed CPU
(D) to execute a deed of reconveyance of the property in favor of the heirs (P) of the donor.

CPU (D) appealed the decision. The appellate court 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. Further, while the first condition mandated CPU (D) to
utilize the donated property for 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, CPU (D) 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
CPU (D) should comply with the first condition annotated in the certificate of title.

Issues: WON the resolutory condition of the deed of donation take effect and thus, extinguish the rights of donee over the donated property?

Ruling: Yes. Records are clear and facts are undisputed that since the deed of donation up to the filing of the case, CPU (D) has failed to comply with its
obligation as donee. CPU (D) has slept on its obligation for an unreasonable length of time. Hence, it is only just to declare the subject donation
ineffective and, for all purposes, revoked. CPU (D) as donee should now return the donated property to the heirs (P) of the donor by means of
reconveyance.

A review of the conditions in the deed of donation leads to the conclusion that the donation was onerous—one executed for a valuable consideration
which is considered the equivalent of the donation itself. When Don Ramon Lopez donated the parcel of land to CPU (D) but imposed an obligation
upon the latter to establish a medical college thereon, the donation must be for an onerous consideration.
Under Article 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.
—Parks vs. Province of Tarlac, 49 Phil. 142 (1926).

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.
—Parks vs. Province of Tarlac, supra.

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.
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
Article 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.
—Concepcion vs. People, 74 Phil. 63 (1942).

However, this general rule cannot be applied because of different circumstances. More than fifty (50) years has elapsed to allow CPU (D) to comply with
the conditions, however burdensome, to make the donation forever valid in its favor. Unfortunately, it didn't. Hence, there is no need to fix the duration
of a term of the obligation when such procedure would serve no purpose than to delay or lead to an unnecessary and expensive multiplication of suits.

Moreover, under Article 1191 of the Civil Code, when one of the obligors cannot comply with the conditions, the obligee ask for rescission and the court
shall grant the same unless there is just cause authorizing the fixing of a period. In the absence of any, there is no more obstacle for the court to decree
the rescission claimed.

Finally, since the 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. (Article 1378, Civil Code)

MULTINATIONAL VILLAGE HOMEOWNERS ASSOCIATION, INC. and DANILO F. CUNETA, petitioners, vs. ARA SECURITY &
SURVEILLANCE AGENCY, INC., Represented by THERESA C. MAMAED, President and General Manager, respondent. G.
FACTS
**Ara Security and Surveillance, Inc. (Ara) was hired by Multinational Village Homeowners Association, Inc. (Multinational) to provide security
services at the Multinational Village, Parañaque, Metro Manila.

**The contract was to take effect for a period of one (1) year from May 25, 1994 up to May 25, 1995 on a monthly fee of One Hundred Seven
Thousand Five Hundred (₱107,500.00) Pesos, payable every 15th and end of the month without need of demand.

** In less than a year, Danilo F. Cuneta, President of Multinational, wrote Ara a letter terminating the aforesaid contract, having found the guards’
services to be unsatisfactory, causing loss of confidence in the ability of the security guards to comply with the terms of the contract.

**Thus, Ara commenced the present suit for injunction with preliminary injunction, preliminary mandatory injunction and temporary restraining order
with damages. A TRO was issued enjoining Multinational from replacing the guards with another agency. Multinational submitted an Answer
together with an opposition to the injunction claiming that it has the right to pre-terminate the contract under paragraph 5 thereof stating:

“… After three (3) months of satisfactory performance, the parties may negotiate for the extension of this contract and other matters that might be
advantageous to both parties.”

**Petitioners argue that the above stipulation in the Contract of Guard Services is a resolutory condition. They allege that under this paragraph, the
Contract can no longer be enforced after the three-month period if the guards’ performance is unsatisfactory.

**The trial court ruled in favor of Ara. Unsatisfied, petitioners appealed to the CA. The CA held that petitioners had breached their Contract when they
pre-terminated it on the basis of paragraph 5 thereof. Furthermore, the CA ruled that petitioners had no good and valid ground to pre-terminate
the Contract, because the documentary evidence they had presented was hearsay and of no probative value. The appellate court affirmed the lower
court’s findings.

ISSUE
Whether or not the lower court erred in finding respondent’s position as the more acceptable interpretation of the contract in question that the contract
cannot be terminated even after three months of unsatisfactory performance.

HELD
**Petitioners’ contentions are not convincing. A reading of paragraph 5 yields the simple and natural meaning that the parties may extend the
Contract’s life upon mutual agreement. The appellate court was correct in holding that the provision was a mere superfluity. The parties need not
provide that they may extend the Contract should they mutually agree, because they may do so with or without this benign provision. Although
paragraph 5 mentions extensions, it is ominously and significantly silent on the matter of pre-termination.

**True, parties may validly provide for resolutory conditions and unilateral rescission in their contract. However, paragraph 5 is not a resolutory
condition, as it is not one that constitutes "a future and uncertain event[,] upon the happening or fulfillment of which rights which are already acquired by
virtue of the obligation are extinguished or lost."

**As correctly held by the CA in the instant case, petitioners failed to produce evidence of the alleged breach of obligation by respondent.

**Finally, it is a settled principle of law that rescission will not be permitted for a slight or casual breach of a contract, but only for such breaches as are
so substantial and fundamental as to defeat the object of the parties in entering into the agreement.22 Petitioners failed to produce evidence of any
substantial and fundamental breach that would warrant the rescission of the Contract.