c


 i| The shipment of local sale of the iron ore is not a condition precedent to the
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 i|
FACTS:
i| Fonacier was the owner and/or holder of an iron lode mineral claims, known as
Dawahan Group, situated in Camarines Norte
i| Fonacier appointed Gaite as atty-in-fact by a ͞Deed of Assignment͟ to enter into a
contract with the exploration and development of mining claims (above) on a
royalty basis (P.50 per ton) for the ore that might be extracted therefrom
i| Gaite executed a general assignment conveying the development and exploitation
of said claims to Arap Iron Mines (he is the sole proprietor) for the same royalty
basis.
i| Gaite embarked the development and exploitation, made other improvements and
extracted therefrom aroung 24,000 metric tons of ore
i| Fonacier revoked the authority
i| Gaite transferred all his rights and interest for the roads, improvements, right to
use the business Arap Iron Mines. He also transferred all his rights and interests on
the ore extracted for a consideration
i| P10,000 was paid upon signing of the agreement and the balance of P65,000 shall
be paid ½


½
payment of the balance, but was only a suspensive period or term
Condition ʹ what characterizes is the fact that its efficacy or obligatory force is
subordinated to the happening of a future and uncertain event; is the condition did
not take place, as if the obligation has never existed.
i| It is a period as supported by the following:
V| The words of the contract express no contingency in the buyer͛s
obligation to pay. There is no uncertainty that the payment will have to
be made sooner or later; what is undetermined is the exact date of
payment
V| Nothing is found that Gaite desired or assumed to run the risk of losing
his right to the ore without getting paid for it, or that Fonacier
understood that Gaite assumed any such risk.
V| To subordinate the obligation to pay the balance to the sale or shipment
of the ore as a condition precedent, would be tantamount to leaving the
payment at the discretion of the debtor, for the sale or shipment could
not be made unless the appellants took steps to sell the ore.
V| Assuming there is doubt in the wording of the contract, the rules of
interpretation would incline the scales in favor of ͞the greater reciprocity
of interests͟
½ 



½



½  

½




½ 
 ½  


½
 



 


½ 


 
  
 i| ÷ational view: sale on credit and not an aleatory contract (transferor would assume
  
  

 
     

 

  the risk of not being paid at all)


 i| ÷ational view: sale/shipment of ore is not a condition but intended to merely fix
i| Fonacier delivered a surelty bond to assure payment of the balance. He is the the future date of payment
principal and Arap Mines & Co and its few stockholders as surety.
ISS·E (2): WON Fonacier and his sureties still have the right to insist that Gaite should wait
i| Gaite refused
for the sale of shipment of the ore before receiving payment or WON they are entitled to
i| Another bond was executed with Far Eastern Surety and Insurance Co as additional
take full advantage of the period granted them for making payment.
surety it provided that the liability of the surety company would attach only when
there had been an actual sale of iron ore by the Larap Mines & Smelting Co. for an
HELD:
amount of not less then P65,000.00, and that, furthermore, the liability of said
i| No.
surety company would automatically expire on December 8, 1955
i| Appellants have forfeited the right because they failed to renew the bond or else
i| ·p to Dec 8, 1955 no sale had been made nor the balance had been paid by
replace it with an equivalent guarantee. (note: exp on 12/8/1955)
Fonacier on the theory that they had lost the period given them when their bond
automatically expired i| See par 2 & 3 of Art 1198
i| Gaite filed a complaint i| The expiration of the bond reduced substantially the security of the vendor͛s rights
for the balance, a security that Gaite considered as essential
i| All the defendants except one set up the uniform defense that the obligation was
subject to a condition (italic above) and the condition has not yet been fulfilled i| Appellants' failure to renew or extend the surety company's bond upon its
expiration plainly impaired the securities given to the creditor (appellee Gaite),
ISS·E (1): WON the obligation is one with a condition. unless immediately renewed or replaced.
i| Gaite acted within his rights in demanding payment and filing an action
HELD:
i| No.
˜
   ISS·E: WON the order of execution (above case) is appealable or not. (with discretion of the
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FACTS:
i| In a suit for foreclosure of a real estate mortgage filed by Corpus vs Acme Steel
Manufacturing Co., Inc., judgment was rendered upon a compromise: 1) that the
unpaid balance (for previous purchase of 2 lots) is 100,000; 2) the defendant will
pay the balance at any time between the period from the signing of the
compromise agreement to Dec 15, 1965 (with provision for interest of 1% per
month or 12,000 per year; 3) parties waive their claims for attorney͛s fees and
damages; and 4) upon failure to pay of any of the amounts stated, the plaintiff shall
be entitled to the issuance of writ of execution of the entire balance including
interest.
i| The first of 2 checks (6,500 & 6,000) given was cashed but the other one
(postdated) was not due to insufficiency of funds. The check was received before
the compromise agreement
i| Corpus moved for the execution of the entire balance
i| Defendant opposed the motion on the ground that, in issuing checks after the said
postdated check, it failed to, detect, through oversight and mathematic error in
computation, that its funds in the bank will run short by about a few hundred pesos
to cover the amount of the dishonored check; that immediately after it learned
that the check was dishonored, it informed the plaintiff that he may redeposit the
check and the same would be honored; but instead of doing so, the plaintiff filed
the motion for execution; that the delayed payment was not a substantial violation
of the compromise agreement because all that plaintiff had to do was to redeposit
the postdated check and, at any rate, the amount of P6,000.00 was only as advance
payment of interest.
i| TC ordered the execution for the payment
i| Defendant appealed. TC ordered the suspension of the enforcement of the writ.
i| On 7 October 1964, the trial Court allowed the appeal. Plaintiff Corpus moved
for reconsideration but was denied on 17 October 1964. The appeal is now before
this Court as case No. L-23720. The amended record on appeal was forwarded to
this Court by the Clerk of Court of the Court of First Instance of Manila on 26
October 1964
i| Meanwhile, on 23 October 1964, even before the transmittal of the amended
record on appeal from the trial court, Corpus filed in this Supreme Court a petition
for 
TC)
HELD:
i| No. The terms of the compromise agreement are complete, definite and certain
and no suspensive condition is attached to them.
i| Ëut even if the order was really appealable, the appeal is untenable. The dishonor
of the check representing the advance interest resulted in the forfeiture of the
period given to the principal (Art 1198 Par 4)
i| Art 1198 is applicable (not Art 1191) since in asking for execution, the appelle was
not seeking the resolution of the compromise but its enforcement. . The appellee's
acceptance of the check had suspended his action to enforce the payment of the
balance of the principal; but it was not a true payment until the value of the check
was realized (Civ. C. Art. 1249). Since the check was dishonored, the appellant
automatically became in default and lost the right to the period for paying the
principal of P100,000.00.chanroblesvirtualawlibrary chanrobles virtual law library
i| The acceptance of the check did not novate the original compromise because it
was issued as a means to comply with the provisions of the compromise
i| Failure to provide the funds for paying the value of the check at maturity is a
substantial breach. The failure is not only due to delay in payment, but in positive
injury to the credit of the appellee, who had endorsed the check to a stranger.
Appellant had the duty to foresee such eventuality, since the check issued by it was
negotiable. That appellee the next day provided the requisite funds could not cure
the injury. Further, after its check was dishonored, appellant could not expect or
demand that appellee should redeposit the check once more.
i| Also, whether the appellant's breach was substantial or not is primarily a question
addressed to the discretion of the trial court; and in deciding that execution should
issue, the Court  
was clearly intimating that it regarded the breach as
substantial. We find that conclusion to be neither legally erroneous nor in abuse of
discretion.c

 , prohibition and , with preliminary injunction, praying for
the nullification of the allowance of the appeal (orders of 7 and 17 October 1964);
that the respondent judge be prohibited from allowing any further, appeal from
the decision and the order of execution and to command him to give due course to
the writ of execution.