FELIX GONZALES V.

HEIRS OF
THOMAS AND PAULA CRUZ
Facts:On December 1, 1983, Paula Ano Cruz together with the heirs of Thomas and Paula Cruz,
entered into a Contract of Lease/Purchase with the defendant, Felix L. Gonzales, of a half-portion of a
parcel of land containing an area of 12 hectares and an accretion of 2 hectares in Rizal. The defendant
Gonzales paid the annual rental on the property in accordance with the provisions of the Contract of
Lease/Purchase and thereafter took possession of the property, installing thereon the defendant Jesus
Sambrano as his caretaker. The defendant Gonzales did not, however, exercise his option to purchase
the property immediately after the expiration of the one-year lease. He remained in possession of the
property without paying the purchase price provided for in the Contract of Lease/Purchase and without
paying any further rentals thereon. A letter was sent by one of the plaintiffs-heirs to the defendant
Gonzales informing him of the lessors decision to rescind the Contract due to a breach thereof
committed by the defendant and asked him to vacate the premises within 10 days. The defendant
Gonzales refused to vacate the property and continued possession thereof. The plaintiffs filed a
complaint for recovery of possession of the property.
Issue:Whether or not the condition of the contract is a precedent before the defendant is to pay the
down payment
Held:When the obligation assumed by a party to a contract is expressly subjected to a condition, the
obligation cannot be enforced against him unless the condition is complied with. The contract clearly
indicates that the lessors-plaintiffs shall obtain a Transfer Certificate of Title in the name of the lessee
within 4 years before a new contract is to be entered into under the same terms and conditions as the
original Contract of Lease/Purchase. Thus, before a deed of Sale can be entered into between the
plaintiffs and the defendant, the plaintiffs have to obtain the Transfer Certificate of Title in favor of the
defendant. The failure of the plaintiffs to secure the Transfer Certificate of Title, as provided for in the
contract, does not entitle them to rescind the contract. The failure to secure the Transfer Certificate of
Title in favor of the defendant entitles not the plaintiffs but, rather, the defendant to either rescind or
to ask for specific performances. Ineluctably, the intention of the parties was to have the title
transferred first to respondents names as a condition for the completion of the purchase. In holding
that clause nine was not a condition precedent to the purchase of the property; it reasoned that the
title could be transferred to the name of the buyer only after the completion of the purchase. Thus,
petitioner should first purchase the property before respondents could be obliged to transfer the TCT to
his name. Verily, the petitioners obligation to purchase has not yet ripened and cannot be enforced
until and unless respondents can prove their title to the property subject of the Contract.

Gonzales vs. Heirs of Thomas and Paula Cruz

GR No. 131784
FACTS:
1.
Petition for Review on Certiorari on decision of CA:
1.
WHEREFORE, premises considered, this Court hereby renders judgment
in favor of the defendant, Felix Gonzales, and against the plaintiffs, as follows:
i. Ordering the dismissal of the case;
ii. Sentencing the plaintiffs, jointly and severally, the sum of P20,000.00 as moral damages
and the other sum of P10,000.00 as and for attorneys fees; and
iii. to pay the costs.
2.
CRUZ entered into a Contract of Lease/Purchase with Gonzales (sole proprietor
and manager of Felgon Farms) of a half-portion of a parcel of land containing an area of
12 hectares, more or less, and an accretion of 2 hectares, more or less, situated in
Rodriguez Town, Province of Rizal UNDER TERMS:
1.
Term of contract is for a period of one year upon the signing thereof.
2.
After the period, GONZALES shall purchase the property P1,000,000.00, 2
years payable with 12% per annum interest subject to the devalued amount of the
Philippine Peso, according to the following schedule of payment:
i. Upon the execution of deed 50%
ii. 25% every 6 months thereafter
1. Payable within first 10 days of the beginning of each 6 months
3.
GONZALES shall pay annual rental equivalent to P2,500.00 per hectare,
upon the signing of this contract
4.
LESSORS (CRUZ) shall undertake to obtain a separate certificate over
leased portion to the LESSEE within a reasonable period of time which shall not in any
case exceed four (4) years
i. 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 are
concerned.
3.
GONZALES paid the P2,500.00 per hectare or P15,000.00 annual rental on the
half-portion of the property covered by certificate in accordance with the second
provision of the Contract of Lease/Purchase, took possession of the property, installing
thereon the defendant Jesus Sambrano as his caretaker.
1.
Did not purchase the property immediately after the expiration of the oneyear lease
2.
Remained in possession of the property without paying the purchase price
and without paying any further rentals
4.
CRUZ SENT LETTER TO GONZALES INFORMING DECISION TO RESCIND CONTRACT
DUE TO GONZALES BREACH
1.
Demanded defendant to vacate the premises within 10 days from receipt
of said letter.
4 GONZALES refused to vacate the property and continued possession, case brought
against GONZALES.
5 LESSOR, PAULA CRUZ DIED.
1.
Final demand letter to vacate the premises was sent by the remaining
lessors.
2.
Title to the property remains in the name of CRUZ

3.

Filed a complaint for recovery of possession of the property - subject of the

contract with damages, both moral and compensatory and attorneys fees and litigation
expenses.
4 SAMBRANO (FOR GONZALES), upon motion, declared in default for failure to file an
answer despite valid service of summons.
5 ISSUES SUBMITTED AT THAT TIME:
1.
WON PAR 9 is a condition precedent before the defendant is to pay the
down payment;
i. PAR 9: LESSORS (CRUZ) shall undertake to obtain a separate certificate over leased
portion to the LESSEE within a reasonable period of time which shall not in any case
exceed four (4) years
ii. 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 are
concerned.
2.
WON CRUZ can rescind the Contract of Lease/Purchase
3.
WON CRUZ can terminate the Contract of Lease.
9.
DECISION OF LOWER COURT: COMPLAINT DISMISSED.
2.
WON PAR 9 IS A CONDITION PRECEDENT BEFORE DOWNPAYMENT? YES.
i. PAR 9 indicates CRUZ to obtain TCT for GONZALES within 4 years.
1. Thus, before a deed of Sale can be entered into between the plaintiffs and the
defendant, the plaintiffs have to obtain TCT in favor of GONZALES
2.
WON CRUZ can rescind the Contract of Lease/Purchase NO.
i. Failure of the plaintiffs to secure TCT, as provided for in the contract, does not entitle them
to rescind the contract
1. ART 1191: Power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him. The injured party may
choose between the fulfillment of the obligation, with the payment of damages in either
case. He may seek rescission, even after he has chosen fulfillment, if the latter should
become impossible. The power to rescind is given to the injured party.
2. Where the plaintiff is the party who did not perform, he is not entitled to insist upon the
performance of the contract by the defendant or recover damages by reason of his own
breach
ii. CRUZ failed to comply with the conditions precedent after 2-1/2 years from the execution
of the contract so as to entitle them to rescind the contract. Although the contract
stated that the same be done within 4 years from execution, still, the defendant has to
be assured that the land subject of the case will be transferred in his name without any
encumbrances
1. The failure to secure the Transfer Certificate of Title in favor of the defendant entitles not
the plaintiffs but, rather, the defendant to either rescind or to ask for specific
performances.
3.
WON CRUZ can terminate the Contract of Lease. NO
i. Article 1670 of the New Civil Code states that:
1. If at the end of the contract the lessee should continue enjoying the thing leased for
fifteen days with the acquies[c]ence of the lessor and unless a notice to the contrary by
either party has previously been given, it is understood that there is an implied new
lease

10. CA REVERSED TRIAL COURT DECISION.

1.
Transfer of title to the property cannot be interpreted as a condition
precedent to the payment of the agreed purchase price because such interpretation IS
COUNTER-EXPLICIT and CONTRARY TO NORMAL COURTS OF SALE OF REAL PROPERTIES.
2.
Normal course: There must first be payment of the agreed purchase
price before transfer of title to the vendees name can be made.
3.
Reason for this four (4) year period is [that] title to the property still
remains in the name of the original owners, the predecessors-in-interest of the herein
appellants and [transferring] the title to their names and eventually to the lesseepurchaser, appellee herein, would take quite some time.
4.
GONZALES wanted to have the title to the property transferred in his
name first before he exercises his option to purchase allegedly in accordance with the
ninth provision of the contract. But the ninth provision does not give him this right:
i. 4-year period asked for by the appellants within which to have title to the property
transferred in the appellees name will only start to run when the appellee exercises his
option to purchase.
5.
Since the appellee never exercised his option to purchase, then appellee is
not entitled to have the title to the property transferred in his name.
ISSUES:
WON CA has gravely erred and committed grave abuse of discretion in the
interpretation of [the] law between the parties.
WON CA committed serious mistakes in the finding of facts which resulted [in] departing
from the usual course of judicial proceedings.
For these issues to be resolved, petitioner asks this Court to answer the following
questions:
Is there a conflict between the statement in paragraph 1 of the Lease/Purchase Contract
and that [in] paragraph No. 9 thereof?
Is paragraph 9 of the Lease/Purchase Contract a condition precedent before petitioner
could exercise his option to buy the property?
Can plaintiff rescind or terminate the Contract of Lease after the one-year period?

HELD:
PETITION GRANTED; appealed decision is REVERSED and SET ASIDE.
The Decision of the trial court is REINSTATED, but the award of moral damages and
attorneys fees is DELETED for lack of basis. No costs.
1.

WON CA has gravely erred and committed grave abuse of discretion in the
interpretation of [the] law between the parties. YES.
1.
CA relied on a literal interpretation to the effect that the TCT should be
obtained in the name of the petitioner-vendee.
i. It reasoned that the title could be transferred to the name of the buyer only after the
completion of the purchase. Thus, petitioner should first purchase the property before
respondents could be obliged to transfer the TCT to his name.
2.
WE DISAGREE. PAR 9 does not say that the TCT should be obtained in the
name of the lessee.
i. In fact, PAR 9 requires respondents to obtain a TCT over the herein leased portion to the
LESSEE, thereby showing that the crucial phrase to the LESSEE adverts to the
leased portion and not to the name which should appear in the new TCT.

ii. If GONZALES should purchase the property first before the title can be transferred to his
name, why should there be a waiting period of four years before the parties can execute
the new contract evidencing the sale? Why should the petitioner still be required to pay
rentals after it purchases and pays for the property?
3.
PAR 9 can only mean that the respondents should first obtain a TCT in
their names, after which petitioner is given time to purchase and pay for the property.
4.
RECORDS SHOW THAT the land in question respondents predecessors-ininterest.
i. No showing whether respondents were the only heirs.
ii. They admit that extrajudicial proceedings were still ongoing.
iii. Hence, when the Contract of Lease/Purchase was executed, there was no assurance that
the respondents were indeed the owners of the specific portion of the lot that petitioner
wanted to buy, and if so, in what concept and to what extent.
iv. Thus, the clear intent of the ninth paragraph was for respondents to obtain a separate and
distinct TCT in their names.
1. This was necessary to enable them to show their ownership of the stipulated portion of
the land and their concomitant right to dispose of it.
2. Absent any title in their names, they could not have sold the disputed parcel of land.
5.
Because the property remained registered in the names of their
predecessors-in-interest, private respondents could validly sell only their undivided
interest in the estate of predecessor, the extent of which was however not shown in the
records.
6.
There being no partition of the estate thus far, there was no guarantee as
to how much and which portion would be adjudicated to respondents.
7.
They could not deliver ownership or title to a specific portion of the yet
undivided property.
8.
Parties under PAR 9 wanted the specific portion of the land to be
segregated, identified and specifically titled.
i. Hence, by the said Contract, the respondents as sellers were given a maximum of four
years within which to acquire a separate TCT in their names, preparatory to the
execution of the deed of sale and the payment of the agreed price in the manner
described in PAR 9.
1. P50,000 advance given by GONZALES is proof of helping them expedite the transfer of
the TCT to their names.
2. Ineluctably, intention of the parties was to have the title transferred first to respondents
names as a condition for the completion of the purchase.
2.
WON CA committed serious mistakes in the finding of facts which resulted [in]
departing from the usual course of judicial proceedings.
1.
PAR 9 required respondents to obtain a separate and distinct TCT in their
names and not in the name of petitioner
i. Logically follows that it was condition precedent to the latters obligation to purchase and
pay for the land.
ii. CONDITION: every future and uncertain event upon which an obligation or provision is
made to depend.
1. It is a future and uncertain event upon which the acquisition or resolution of rights is
made to depend by those who execute the juridical act.
2.
Without it, the sale of the property under the contract cannot be
perfected, and petitioner cannot be obliged to purchase the property.

3.

When obligation assumed by a party to a contract is expressly subjected

to a condition, the obligation cannot be enforced against him unless the condition is
complied with.
i. Obligatory force of a conditional obligation is subordinated to the happening of a future
and uncertain event, so that if that event does not take place, the parties would stand
as if the conditional obligation had never existed.
3.
Can plaintiff rescind or terminate the Contract of Lease after the one-year
period? NO. BECAUSE THEY HAVE NOT CAUSED TRANSFER OF TCT TO THEIR NAMES.
1.
There can be no rescission (or more properly, resolution) of an obligation
as yet non-existent, because the suspensive condition has not happened.

CORONEL V. CA (October 07, 1996)

FACTS:
Coronel et al. consummated the sale of his property located in Quezon City to respondent Alcaraz. Since
the title of the property was still in the name of the deceased father of the Coronels, they agreed to
transfer its title to their name upon payment of the down payment of 50K. and thereafter an absolute deed
of sale will be executed.
Alcarazs mother paid the down payment in behalf of her daughter and as such, Coronel made the
transfer of title to their name. Notwithstanding this fact, Coronel sold the property to petitioner Mabanag
and rescinded its prior contract with Alcaraz.
ISSUE:
WON the rescission of the first contract between Coronel and Alcaraz is valid.
HELD:
The case is a contract of sale subject to a suspensive condition in which consummation is subject only to
the successful transfer of the certificate of title from the name of petitioners' father, to their names. Thus,
the contract of sale became obligatory.
With regard to double sale, the rule that the first in time, stronger in right should apply. The contention of
the petitioner that she was a buyer in good faith because the notice of lis pendens in the title was
annotated after she bought the property is of no merit. In case of double sale, what finds relevance and
materiality is not whether or not the second buyer was a buyer in good faith but whether or not said
second buyer registers such second sale in good faith, that is, without knowledge of any defect in the title
of the property sold.
The ruling should be in favor of Alcaraz because Mabanag registered the property two months after the
notice of lis pendens was annotated in the title and hence, she cannot be a buyer in good faith

Coronel vs. CA/Alcaraz

Coronel vs. CA/Alcaraz

G.R. No. 103577 Oct. 7, 1996
FACTS:
CORONEL: ISSUED RECEIPT OF DOWN PAYMENT TO ALCARAZ
Conditions:
i.
1,240,000
total amount
ii.
50,000
down payment
iii.
1,190,000
balance
iv.
received by Ramona Alcaraz
v.
Coronel to bind themselves in transferring of names (from deceased father), transfer
certificate of title immediate to down payment, deed of absolute sale immediate upon payment of balance.
2. ALCARAZ:
a.
Conditions:
i.
Ramona will pay down payment
ii.
Coronel will transfer names
iii.
Upon transfer, issue absolute deed of sale; Ramona will pay remaining balance.
1.
a.

3.
a.
b.

Mother of Ramona paid the down payment.

Following month, Coronel transferred name to Alcaraz.
Suddenly sold property to CATALINA MABANAG for 1,580,000 after Catalina paid for 300,000.
i.
Cancelled contract of Ramona, deposited back the down payment to Ramonas
account.
c.
Filed complaint against the Coronels.
4.
a.
b.

CATALINA filed annotation of notice of adverse claim.

Coronel executed deed of absolute sale to Catalina
Title was issued to Catalina

5.
a.
b.
c.

LOWER COURT sided with Alcaraz

Pay whole 1,190,000
Mabanag deed cancelled
Coronel to vacate property and deliver possession to Alcaraz, plus damages and attorney fees.

6.

CORONEL: appealed but denied

ISSUE:
Receipt of down payment offered on both Alcaraz and Mabanag.
1. Article 1305: A contract is meeting of minds whereby one binds himself to give something/render service.
2. Coronel should insist that document is executor contract to sell, subject to suspensive conditions
a.
Because of Ramonas absence (went to US), contract could not ripen to contract of absolute sale.
b.
SALE should be a consensual contract:
i.
Requisites:

Consent
Determinate subject matter
Price certain/equivalent
ii.
In case at hand, CONSENT or MEETING OF THE MINDS is lacking.

a.
b.

a.
a.
b.
a.
CCS:

c.
a.

b.

3. CONTRACT TO SELL IS DIFFERENT FROM CONTRACT OF SALE:

CONTRACT TO SELL: seller explicitly reserves right to transfer title to prospective buyer.
Therefore, seller does not agree until happening of event.
CASE AT HAND: full payment of purchase price is the happening of event and the SUSPENSIVE
CONDITION.
i.
Hence, fulfillment of SUSPENSIVE CONDITION (full payment) makes the obligation to
sell demandable.
4. CONTRACT TO SELL IS DIFFERENT FROM CONDITIONAL CONTRACT TO SELL
SIMILARITIES:
Both are bilateral contracts:
i.
Seller reserves ownership of subject property
ii.
Buyer binds himself exclusively upon fulfillment of condition.
DIFFERENCES:
CS:
may not be considered conditional contract to sell
seller may reserve subject property UNTIL fulfillment of suspensive condition.
1ST CONDITION MUST BE PRESENT.
If suspensive condition not fulfilled, sale is abated.
If suspensive condition fulfilled, automatic transfer of ownership
CASE AT HAND: OWNERSHIP NOT AUTOMATIC EVEN IF PROPERTY IS DELIVERED: THERE HAS TO BE A
TITLE.
CS:
i.
3rd person (MABANAG) cant be buyer of bad faith even if suspensive condition
fulfilled.
ii.
Prospective buyer (Alcaraz) can not seek reconveyance = no double sale.
iii.
Transfer of title to buyer.
iv.
No defect in owner-seller title although owner (CORONEL) can be sued for
damages by intending buyer.
CCS:
i.
Sale has to become absolute/ affect sellers title upon fulfillment of suspensive
condition.
ii.
If there is a previous delivery of subject property, automatic transfer of title
to buyer. Seller has no more title for 3rd party.
iii.
3rd party, if with knowledge, considered in bad faith. First buyer may seek
reconveyance.
HELD:
INSTANT PETITION DISMISSED/ APPEALED JUDGMENT AFFIRMED.
DOUBLE SALE: Mabanag could not be in good faith or without knowledge.
Notice of lis pendens (Alcaraz) is Feb 1985. Notice of lis pendense (Mabanag) is April 1985.
First in time, stronger in right: PRIUS TEMPORE, POTIOR JURE.
DOUBLE SALE EXCEPTIONS: Second buyer registers ahead of first buyer (good faith).
No inscription of either two buyers (when 2nd buyer in good faith acquires possession ahead of first)
IMMOVABLE PROPERTY:
ownership to first registered in Registry of Property.
No question to conceptions authority to represent Ramona.
Condition was fulfilled when new title was issued

QUIJADA VS. CA- Resolutory

Condition in Donations
When a person donates land to another on a condition. The condition imposed is not a condition
precedent or a suspensive condition but a resolutory one.

FACTS:
Petitioners are the children of the late Trinidad Quijada. Trinidad and her siblings executed a
deed of donation of a two-hectare lot in favor of the Municipality of Talacogon (Agusan del Sur),
exclusively for the purpose of constructing the proposed provincial high school. However,
possession remained with Trinidad. She subsequently sold the two hectares on two separate
occasions to Regalado Mondejar, who sold it to different persons. Eventually, the Municipality,
failing to construct the high school, reverted ownership to the donors. Petitioners filed an action
for quieting of title and recovery of possession and ownership. RTC ruled in favor of petitioners,
but CA reversed.

ISSUE:
Whether the deed of donation had a suspensive condition or a resolutory condition
Whether the sale was valid

RULING:
When the donation was accepted, the ownership was transferred to the school, only subject to a
condition that a school must be constructed over the lot. Since ownership was transferred, and
failure to fulfill the condition reverts the ownership back to the donor, it is a resolutory condition.

(Not really a discussion in Property) When Trinidad sold the parcels of land to Mondejar, she
was not the owner of the land. Petitioners also did not sleep on their rights to recover the
possession and ownership over the property since they immediately filed the action when the
municipality passed the resolution, reverting the ownership of land to the donors. However, a
sale being a consensual contract, it can be perfected upon meeting of the minds, and completing
the three essential elements of a valid contract of sale. Even when Trinidad was not the owner
when the sale was perfected, tradition through delivery is only important upon the consummation
stage. Such transfer of ownership through actual or constructive delivery only happened when
the lands reverted back to petitioners. Art 1434 is applicable, stating that seller's "title passes by
operation if law to the buyer," and therefore making the sale valid. The donated lots cannot be
considered outside the commerce of man, since nowhere in the law states that properties owned
by municipality would be as such.

Quijada v. CA
Facts:
On April 5, 1956, Trinidad Quijada and her sisters executed a deed of
conditional donation in favor of the Municipality of Talacogon, the condition
being that the land shall be used exclusively for the construction of a
provincial high school. Trinidad remained in possession of the land. On July
29, 1962, Trinidad sold the land to respondent Regalado Mondejar. In 1980,
the heirs of Trinidad, herein petitioners, filed a complaint for forcible entry
against the respondent. In 1987, the proposed campus did not materialize, and
the Sangguniang Bayan enacted a resolution donating back the land to the
donor. In the meantime, respondent Mondejar conveyed portions of the land
to the other respondents. On July 5, 1988, petitioners filed a complaint for
quieting of title, recovery of possession and ownership of the land.
Issue:
Whether the sale between Trinidad and Regalado is valid considering the
capacity of the vendor to execute the contract in view of the conditional deed
of donation
Held:
The donor may have an inchoate interest in the donated property during the
time that ownership of the land has not reverted to her. Such inchoate interest
may be the subject of contracts including a contract of sale. In this case,
however, what the donor sold was the land itself which she no longer owns. It
would have been different if the donor-seller sold her interests over the

property under the deed of donation which is subject to the possibility of

reversion of ownership arising from the non-fulfillment of the resolutory
condition.
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 nonownership 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.

G.R. No. 87047

October 31, 1990

FRANCISCO LAO LIM vs. CA and BENITO VILLAVICENCIO DY

THE CASE:
CA having affirmed in toto on June 30, 1988 in CA-G.R. SP No. 13925, the decision
of the RTC of Manila, Branch XLVI in Civil Case No. 87-42719, entitled "Francisco Lao
Lim vs. Benito Villavicencio Dy," petitioner seeks the reversal of such affirmance in
the instant petition.
FACTS:
The records show that Villavicencio entered into a contract of lease with petitioner
for a period of three (3) years, that is, from 1976 to 1979. After the stipulated term
expired, Villavicencio refused to vacate the premises, hence, petitioner filed an

ejectment suit against the former in the City Court of Manila, docketed therein as
Civil Case No. 051063-CV.
The case was terminated by a judicially approved compromise agreement of the
parties providing in part:
3. That the term of the lease shall be renewed every 3years retroacting from
October 1979 to October 1982; after which the abovenamed rental shall be raised
automatically by 20% every three years for as long as defendant needed the
premises and can meet and pay the said increases, the defendant to give notice of
his intent to renew sixty (60) days before the expiration of the term;
By reason of said compromise agreement the lease continued from 1979 to 1982,
then from 1982 to 1985. On April 17, 1985, petitioner advised Villavicencio that he
would no longer renew the contract effective October, 1985.
However, on August 5, 1985, Villavicencio informed petitioner in writing of his
intention to renew the contract of lease for another term, commencing November,
1985 to October, 1988. In reply to said letter, petitioner advised Villavicencio that
he did not agree to a renewal of the lease contract upon its expiration in October,
1985.
On January 15, 1986, because of Villavicencio's refusal to vacate the premises,
petitioner filed another ejectment suit, this time with the Metropolitan Trial Court of
Manila. In its decision of September 24, 1987, said court dismissed the complaint on
the grounds that:
(1) the lease contract has not expired, being a continuous one the period whereof
depended upon the lessee's need for the premises and his ability to pay the
rents; and
(2) the compromise agreement entered into in the aforesaid Civil Case No. 051063CV constitutes res judicata to the case before it.
Petitioner appealed to the RTC of Manila which, in its decision of January 28, 1988,
affirmed the decision of the lower court.
CA affirmed RTC and held that:
(1) the stipulation in the compromise agreement which, in its formulation, allows
the lessee to stay on the premises as long as he needs it and can pay rents is
valid, being a resolutory condition and, therefore, beyond the ambit of Article
1308 of the Civil Code; and
(2) that a compromise has the effect of res judicata.
ISSUE:
Was the stipulation in the compromise agreement which allows the lessee to stay on
the premises as long as he needs it and can pay rents is valid?

RULING:
No. The decision of respondent CA is REVERSED and SET ASIDE.
HELD:
The disputed stipulation "for as long as the defendant needed the premises and can
meet and pay said increases" is a 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
gives rise to a new lease, depends upon said condition. It should be noted that a
renewal constitutes a new contract of lease although with the same terms and
conditions as those in the expired lease.
It should also not be overlooked that said condition is not resolutory in nature
because it is not a condition that terminates the lease contract. The lease contract
is for a definite period of three (3) years upon the expiration of which the lease
automatically terminates.
The invalidity of a condition in a lease contract similar to the one at bar has been
resolved in Encarnacion vs. Baldomar, et al. where we ruled that in an action for
ejectment, the defense interposed by the lessees that the 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 lessees the sole power to determine
whether the lease should continue or not.
As stated therein, "(i)f this defense were to be allowed, so long as defendants
elected to continue the lease by continuing the payment of the rentals, the owner
would never be able to discontinue it; conversely, although the owner should desire
the lease to continue, the lessees could effectively thwart his purpose if they should
prefer to terminate the contract by the simple expedient of stopping payment of the
rentals. This, of course, is prohibited by the aforesaid article of the Civil Code.
The continuance, effectivity and fulfillment of a contract of lease cannot be made to
depend exclusively upon the free and uncontrolled choice of the lessee between
continuing the payment of the rentals or not, completely depriving the owner of any
say in the matter. Mutuality does not obtain in such a contract of lease and no
equality exists between the lessor and the lessee since the life of the contract is
dictated solely by the lessee.
The interpretation made by respondent court cannot, therefore, be upheld. The
compromise agreement, read and interpreted in its entirety, is actually to the effect
that the last portion thereof, which gives the Villavicencio sixty (60) days before the
expiration of the term the right to give notice of his intent to renew, is subject to the
first portion of said paragraph that "the term of the lease shall be renewed every
three (3) years," thereby requiring the mutual agreement of the parties.
The use of the word "renew" and the designation of the period of three (3) years
clearly confirm that the contract of lease is limited to a specific period and that it is
not a continuing lease. The stipulation provides for a renewal of the lease every

three (3) years; there could not be a renewal if said lease did not expire, otherwise
there is nothing to renew.
The contract of lease should be and is hereby construed as providing for a definite
period of three (3) years and that the automatic increase of the rentals by twenty
percent (20%) will take effect only if the parties decide to renew the lease. A
contrary interpretation will result in a situation where the continuation and
effectivity of the contract will depend only upon the will of the lessee, in violation of
Article 1308 of the Civil Code and the aforesaid doctrine in Encarnacion.
Moreover, 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.
A lease will not be construed to create a right to perpetual renewals unless the
language employed indicates dearly and unambiguously that it was the intention
and purpose of the parties to do so. A portion in a lease giving the lessee and his
assignee the right to perpetual renewals is not favored by the courts, and a lease
will be construed as not making such a provision unless it does so clearly.
As we have further emphasized:
It is also important to bear in mind that in a reciprocal contract like a lease, the
period of the lease must be deemed to have been agreed upon for the benefit
of both parties, absent language showing that the term was deliberately set for the
benefit of the lessee or lessor alone. We are not aware of any presumption in law
that the term of a lease is designed for the benefit of the lessee alone. . .
In addition, even assuming that the clause "for as long as the defendant needed the
premises and can meet and pay, said increases" gives Villavicencio an option to
renew the lease, the same will be construed as providing for but one renewal or
extension and, therefore, was satisfied when the lease was renewed in 1982 for
another three (3) years.
A general covenant to renew is satisfied by one renewal and will not be construed to
confer the right to more than one renewal unless provision is clearly and expressly
made for further renewals. 16Leases which may have been intended to be renewable
in perpetuity will nevertheless be construed as importing but one renewal if there is
any uncertainty in that regard.
The case of Buccat vs. Dispo et al., relied upon by respondent court, to support its
holding that respondent lessee can legally stay on the premises for as long as he
needs it and can pay the rents, is not in point. In said case, the lease contract
provides for an indefinite period since it merely stipulates "(t)hat the lease contract
shall remain in full force and effect as long as the land will serve the purpose for
which it is intended as a school site of the National Business Institute, but the
rentals now stipulated shall be subject to review every after ten (10) years by
mutual agreement of the parties." This is in clear contrast to the case at bar

wherein, to repeat, the lease is fixed at a period of three (3) years although subject
to renewal upon agreement of the parties, and the clause "for as long as defendant
needs the premises and can meet and pay the rents" is not an independent
stipulation but is controlled by said fixed term and the option for renewal upon
agreement of both parties.
Note: I did not include the 2nd issue anymore regarding res judicata. . .
WHEREFORE, the decision of respondent Court of Appeals is REVERSED and SET
ASIDE. Villavicencio is hereby ordered to immediately vacate and return the
possession of the leased premises subject of the present action to petitioner and to
pay the monthly rentals due thereon in accordance with the compromise agreement
until he shall have actually vacated the same. This judgment is immediately
executory.
SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., Concur.

Francisco Lao Lim vs Court of Appeals and Benito Villavicencio Dy

G.R.No. 87047 31October1990

This case is with regard to Art 1182 of the NCC- Potestative Condition- Stipulation
dependent upon the sole will of the debtor

FACTS OF THE CASE:

Records show that Francisco Lim, entered into a contract of lease with Benito Dy for
a period of 3 years, from 1976 to 1979. After the stipulated term expired the
respondent refused to leave the premises, so Francisco Lim filed an ejectment suit
against Benito Dy. This case was then taken over by a judicially approved
compromise agreement which provides an automatic increase in rent of 20% every
3 years. On 1985 Dy, informed Lim of his intention to renew the lease up to 1988,
Lim did not agree to the renewal.
In 1987 another ejectment suit was filed by Lim after the failure of Dy to vacate the
premises. It was dismissed by the RTC and later affirmed by the CA for the following
reasons: (1) the stipulation in the compromise agreement which allows the lessee

(Benito Dy) to stay on the premises as long as he needs it and can pay rents is
valid, being a resolutory condition, and therefore beyond the ambit of art 1308 of
the NCC; and (2) the compromise agreement has the effect of res judicata.

ISSUES OF THE CASE:

Was the stipulation in the compromise agreement which allows the lessee to stay on
the premises as long as he needs it and can pay rents is valid?

- No, since the stipulation for as long as the defendant needed the premises and
can meet and pay said increases is a purely potestative condition because it leaves
the effectivity and enjoyment of leasehold rights to the sole and exclusive will of the
lessee.
- The continuance, effectivity, and fulfillment of a contract of lease cannot be made
to depend exclusively upon the free and uncontrolled choice of the lessee between
continuing payment of the rentals or not, completely depriving the owner of any say
in the matter. Mutuality does not obtain in such a contract of lease and no equality
exists between the lessor and the lessee.

HELD:

The decision of the Court of Appeals is REVERSED AND SET ASIDE. Benito Dy is
ordered to immediately vacate and return the possession of the premises and pay
the monthly rentals due thereon in accordance with the compromise agreement
until he shall have actually vacated the same. This Judgment is immediately
executory.

Obligations and Contracts Terms:

Potestative Condition- This can be found in Art 1182 of the NCC. A potestative
condition speaks of fulfillment of an obligation rests solely upon the will of the
debtor. An obligation which is subject to a suspensive potestative condition is nondemandable, hence it is void. If it is the debtor himself who determines the

fulfillment of the condition, such an agreement produces no juridical effect that can
be enforced, and thus null

CORINTHIAN REALTY, INC., petitioner, vs. HON. COURT OF APPEALS

and EMILIO MARTIN (now deceased), MATILDE MARTIN,
TEOFILO GUINTO (now deceased), DELFIN GUINTO,
PRUDENCIO GUINTO and MARGARITA GUINTO, respondents.

[G. R. No. 150240. December 26, 2002]

DECISION
CARPIO MORALES, J.:

The petition for review on certiorari at bar seeks a reversal of the Court of Appeals
July 4, 2000 Decision in CA-G. R. CV No. 61029 dismissing the appeal of petitioner,
Corinthian Realty, Inc., and the October 17, 2001 Resolution denying the Motion for
Reconsideration of the decision.
[1]

[2]

Private respondents Emilio Martin, Matilde Martin, Teofilo Guinto, Prudencio Guinto,
Margarita Guinto and Delfin Guinto, along with the heirs of spouses Tomas de Leon and
Francisca Medina, are the co-owners of a 47,737 sq. m. parcel of land situated in
Pamplona, Las Pinas, Metro Manila covered by OCT No. 0-18 of the Register of Deeds
of Rizal (the property).
On June 13, 1983, private respondents and petitioner entered into a Deed of
Conditional Sale (the deed) covering the property. While the names of co-owner
respondent Delfin Guinto and the heirs of spouses Tomas de Leon and Francisca
Medina appeared in the deed as among the vendors, they did not affix their respective
signatures thereon.
[3]

Under the deed, the following terms and conditions were stipulated:
1. The selling price of the above described realty is P 10.00 per square meter; the total
consideration of this Contract therefore is P477,370.00
2. Upon the signing of this Instrument, the VENDEE will pay unto the VENDORS a sum
equivalent to P3.00 per square meter of the above-described property, or a total
amount of P142,211.00
3. The remaining balance in the amount of P335,159.00 will be paid by the
VENDEE to the VENDORS within a period of NINETY (90) DAYS from the
execution of this Instrument;
4. If for no justifiable reason, the VENDEE fails and/or refuses to comply with this
obligation, the VENDORS, without prior notice to the VENDEE, shall forfeit-the

earnest money; but as soon as the VENDEE complied (sic) with his obligation
under this Contract, then the VENDORS shall immediately execute the
absolute deed conveying the above described property unto the VENDEE, its
executors and administrators; and, in the event the VENDORS for no justifiable
reason refuse and/or fail to execute the necessary absolute deed of sale in favor of
the VENDEE, then the VENDEE shall have every right to institute the necessary
action for the protection of its rights and interests.[4]

On separate occasions before the execution of the deed, petitioner paid the private
respondents-signatories
to
the
deed
specific
amounts
of
money
totalling P82,956.42. Thus Emilio Martin and Matilde Martin received P47,403.67 on
September 22, 1982, Teofilo Guinto and Margarita Guinto received P11,850.92 each
on April 14,1983, and Prudencio Guinto received P11,850.91 on June 2, 1983.
[5]

[6]

[7]

Petitioner did not, contrary to the stipulation in the deed, pay the balance of the
purchase price within ninety (90) days.
On January 14, 1985, petitioner instituted an action for specific performance against
private respondents before the Regional Trial Court of Makati City, alleging that they
refused to execute a deed of absolute sale as agreed upon in the deed and praying that
they be ordered to execute the same or refund the P82,956.42 already paid to them,
with interest from date of payment. The prayer for refund was later deleted in an
Amended Complaint dated November 14, 1995.
[8]

[9]

With the exception of private respondent Teofilo Guinto who died in the interim and
private respondent Delfin Guinto, private respondents countered in their Answer that it
was petitioner who failed to comply with the stipulations contained in the deed, it having
failed to pay the balance of the purchase price within 90 days, and that the initial
payments representing earnest money had been forfeited pursuant to what was agreed
upon in the deed. Additionally, they alleged that it was petitioner, through its
representative, who led them -to believe that the co-owners heirs of spouses Tomas de
Leon and Francisca Medina and private respondent Delfin Guinto had already agreed to
sell their undivided shares in the property.
[10]

In his separate Answer private respondent Delfin Guinto alleged that petitioner
had no valid cause of action against him as he was not a signatory to the deed.
[11]

Private respondents later filed a Motion to Dismiss on the ground that the
complaint stated no cause of action. Over the objection of petitioner which filed its
Opposition to the motion, Branch 139 of the Makati Regional Trial Court dismissed the
complaint by Order of August 23, 1989.
[12]

[13]

[14]

Petitioner appealed to the Court of Appeals which, by Decision of August 28, 1991,
reversed the appealed order of dismissal and remanded the case to the trial court for
further proceedings.
[15]

After trial, by Decision of July 4, 2001, the trial court dismissed the complaint, it
holding that petitioner entered into the deed with six separate vendors representing
separate interests; that it had no valid contract with private respondent Delfin Guinto;
and that the suspension by petitioner of the payment of the balance of the purchase
price was not justified, the failure of private respondent Guinto to sign the deed not
[16]

[17]

having a bearing on its contract with the other private respondents. The trial court thus
concluded that it was petitioner who violated the deed.
[18]

On petitioners appeal to the Court of Appeals where it was docketed as CA-G. R.

CV No. 61029, the decision of the trial court was affirmed. Said the Court of Appeals:

Plaintiff wants to impress upon the Court that it dealt with all defendants collectively
regarding the proposed sale of subject property. All evidence, however, point to the
fact that defendants are not one in their intention to sell.
This may be inferred from the fact that the defendants all received the downpayment
of their share in the property did so (sic) individually and not as a group ...
...This is bolstered by the fact that one defendant, that is, defendant Delfin Guinto,
never agreed to the Conditional Sale as he, in fact, refused to sign the same.
And on top of it all, the Deed of Conditional Sale was notarized on the initiative of
plaintiff, at a date much later than when payments were made (TSN, 4 September
1996, p.19.)
The fact that plaintiff viewed the property as one piece of land is not in
question. However, the fact that several persons owns (sic) the property cannot also be
denied. (Emphasis supplied).
[19]

Petitioners Motion for Reconsideration of the Court of Appeals decision having

been denied, the present petition for review on certiorari was filed, anchored on the
following assigned errors:
[20]

1. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT

THE RESPECTIVE SHARES OF THE CO-OWNERS OF THE SUBJECT
PROPERTY WHO DID NOT SIGN THE DEED OF CONDITIONAL SALE WERE
NOT AFFECTED, DESPITE THE FACT THAT PETITIONER DEALT WITH ALL THE
VENDOR CO-OWNERS COLLECTIVELY AND NOT INDIVIDUALLY;
2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT
THE OBLIGATION OF PETITIONER TO FULLY COMPLY WITH ITS
UNDERTAKING BY PAYING THE REMAINING BALANCE OF THE PURCHASE
PRICE WAS A CONDITION PRECEDENT TO THE EXECUTION BY THE VENDOR
CO-OWNERS OF THE DEED OF SALE;
3. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT
PETITIONER WAS NOT JUSTIFIED IN SUSPENDING PAYMENT OF THE
REMAINING BALANCE OF THE PURCHASE PRICE OVER THE SUBJECT
PROPERTY; [and]
4. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING
THAT THE ACTION FOR SPECIFIC PERFORMANCE WAS PROPERLY FILED BY
THE PETITIONER AGAINST PRIVATE RESPONDENTS IN THE INSTANT CASE.[21]

Petitioner contends that it was error for the Court of Appeals to hold that the sale
affected only the shares of those who signed the deed, it proffering that in the initial
negotiation leading to the final agreement to sell, private respondent Delfin Guinto was
present and agreed to sell the property.
[22]

Corollarily, petitioner avers that the provisions of the deed point to its intent to
transact with private respondents as a group rather than -as individuals with separate
interests.
At the outset, it should be noted that petitioner raises questions of facts and
arguments over appreciation of evidence which are beyond the province of a petition for
review.

It is quite obvious from the above issue and assignment of error that the instant
petition is founded on an imploration to re-examine the factual findings of the Court
of Appeals. A review of such factual findings is, however, beyond the province of a
petition for review. It has long been the doctrine that factual findings and conclusions
of the Court of Appeals, especially when in complete accord with the findings of the
trial court are given great weight and, as such, in the absence of palpable mistake,
binding and conclusive upon this Court. It is not the function of this Court, in a
petition under Rule 45, to scrutinize, weigh and analyze evidence all over again. The
jurisdiction of this Court is confined to reviewing questions of law which has been
defined as those that do not require the examination of the probative value of the
evidence presented by the parties.
[23]

Nevertheless, from an examination of the record of the case, this Court does not
find any mistake on the part of the appellate court.
Indeed, only the pro-indiviso shares in the property of the co-owners - signatories to
the deed were affected by the deed, private respondent Delfin Guinto and the heirs of
spouses Tomas de Leon and Francisca Medina who were therein named co-ownersvendors not having affixed their respective signatures.
That petitioner paid specific amounts of money to the co-owners-private
respondents-signatories to the deed and even had said -deed notarized inspite of the
absence of the signatures of the other co-owners bars the claim of petitioner that it dealt
with the co-owners of the property collectively.
Petitioners invocation of Article 1590 of the Civil Code which reads:

Art. 1590. Should the vendee be disturbed in the possession or ownership of the thing
acquired, or should he have reasonable grounds to fear such disturbance, by a
vindicatory action or a foreclosure of mortgage, he may suspend the payment of the
price until the vendor has caused the disturbance or danger to cease, unless the latter
gives security for the return of the price in a proper case, or it has been stipulated that,
notwithstanding any such contingency, the vendee shall be bound to make the

payment. A mere act of trespass shall not authorize the suspension of the payment of
the price.
to justify its suspension of the payment of the balance of the purchase price on the
basis of, so it claims, a well-grounded fear that its possession or ownership of the
property would be disturbed by a vindicatory action which private respondent Delfin
Guinto may institute against it fails. And so does its invocation of Article 1191 of the Civil
Code which provides:

ART. 1191. The power to rescind obligations is implied in reciprocal ones, in case one
of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing
the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.
For under Article 493 of the Civil Code which provides:

Article 493 Each co-owner shall have the full ownership of his part and of the
fruits and benefits pertaining thereto, and he may therefore alienate, assign or
mortgage it, and even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to
him in the division upon the termination of the co-ownership,
a co-owner has the right to sell his undivided share. If he sells the entire property
without obtaining the consent of the other co-owners, the sale is not null and void. Only
the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner
of the property.
[24]

The transferee gets only what his transferor would have been entitled to after
partition.
[25]

Even if a co-owner sells the whole property as his, the sale will affect only his own
share but not those of the other co-owners who did not consent to the sale. This is
because under the aforementioned codal provision, the sale or other disposition affects
only his undivided share and the transferee gets only what would correspond to his
grantor in the partition of the thing owned in common.
[26]

Petitioners contention that its obligation to pay the balance of the purchase price
within 90 days was not a condition precedent to the execution by the co-ownersvendors of the Deed of Absolute Sale is bereft of merit. The deed could not be any
clearer on the matter. The pertinent provisions bear restating:

3. The remaining balance in the amount of P335,159.00 will be paid by the

VENDEE to the VENDORS within a period of NINETY (90) DAYS
from the execution of this Instrument;
4. . . . as soon as the VENDEE complied (sic) with his obligation under this
Contract, then the VENDORS shall immediately execute the absolute
deed . . . (Emphasis supplied).
And the Civil Code provides that:

Art. 1181. In 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.
In fine, petitioners compliance with its obligation to pay the balance of the purchase
price was thus a condition precedent to the execution by private respondentssignatories of an absolute sale. Since it failed to comply with such obligation, the
obligation of private respondent-signatories to execute a deed of absolute sale had not
arisen.

Where one of the parties to a contract do[es] not perform the undertaking which he
[is] bound by its terms, he is not entitled to insist upon the performance of the other
party.
[27]

WHEREFORE, the petition is hereby DENIED.

SO ORDERED.