EXTINGUISHMENT AND CONTRACTS

1. A sold his entire interest in 24,000 tons of iron ore to B for P75,000, P10,000 of which was
actually paid upon the signing of the contract. With respect to the balance of P65,000, it was agreed that
it “will be paid from the fi rst amount derived from the sale of the ore.’’ To insure payment thereof, B
delivered to A a surety bond which provided that the liability of the surety liability would automatically
expire after the lapse of two years. Inasmuch as the ore had not yet been sold and the surety bond had
expired without being renewed and the balance had not yet been paid in spite of repeated demands, A fi
nally brought an action against B for the recovery of said balance. B, however, interposed the defense
that his obligation to pay is conditional and that inasmuch as the condition has not yet been fulfilled,
therefore, it is not yet due and demandable. Is this defense tenable?
Answer — This defense is untenable. The sale of the iron ore is not a condition precedent to the
payment of the balance but only a suspensive term or period. There is no uncertainty whatsoever with
regard to the fact of payment; what is undetermined is merely the exact date of payment. Normally,
therefore, A will have to wait for the actual sale of the iron ore before he can demand from B for the
payment of the unpaid balance. However, inasmuch as by his own act B has impaired the guaranty or
security after its establishment without giving another one which is equally satisfactory, it is clear that
he has now lost the benefit of the term or period. Consequently, the case now falls squarely within the
purview of pars. 2 and 3 of Art. 1198 of the NCC. (Gaite vs. Fonacier, 112 Phil. 728.)