Kinds of ObligationsO Hong Kong and Shanghai Bank v

s Sps. Broqueza -Pure Obligations

O DBP v. Court of Appeals -Conditional Obligations

O Felix Gonzales v. Heirs of Thomas and Paula Cruz --Suspensive Conditions

O Potestative ConditionsO Vda. De Mistica v NaguiatO Hermosa v Longara

O Positive Suspensive ConditionsO Visayan Sawmill v Court of Appea

lsO Leano v Court of Appeals

O Effects of Non-Fulfillment of Suspensive ConditionO De Leon v. Ong

O QUIJADA VS. CA- Resolutory Condition in Donations

O Parks vs. Province of Tarlac- condition precedent.

HONG KONG AND SHANGHAI BANK VS SPS. BROQUEZAG.R. No. 178610 November 17, 2010

O Facts:Petitioners Gerong and [Editha] Broqueza are employees of Hongkong and Shanghai Banking Corporation (HSBC). They are also members of respondent Hongkong Shanghai Banking Corporation, Ltd. Staff Retirement Plan (HSBCL-SRP, plaintiff below). The HSBCL-SRP is a retirement plan established by HSBC through its Board of Trustees for the benefit of the employees.On October 1, 1990, petitioner [Editha] Broqueza obtained a car loan in the amount of Php175,000.00. On December 12, 1991, she again applied and was granted an appliance loan inthe amount of Php24,000.00.

On the other hand, petitioner Gerong applied and was granted an emergency loan in the amount of Php35,780.00 on June 2, 1993. These loans are paid through automatic salary deduction. Meanwhile [in 1993], a labor dispute arose between HSBC and its employees. Majority of HSBC’s employees were terminated, among whom are petitioners Editha Broqueza and Fe Gerong. The employees then filed an illegal dismissal case before the National Labor Relations Commission (NLRC) against HSBC. Because of their dismissal, petitioners were not able to pay the monthly amortizations of their respective 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.HSBCL-SRP, acting through its Board of Trustees and represented by Alejandro L. Custodio,filed Civil Case No. 52400 against the spouses Broqueza on 31 July 1996. On 19 September 1996,HSBCL-SRP filed Civil Case No. 52911 against Gerong. Both suits were civil actions for recovery and collection of sums of money.

The court of appeals reversed the rulings of the MeTC and the RTC that the contract is demandable at house and HSBC has the right to demand immediate payment., hence this petition.

Issues: The Court of Appeals erred in reversing the findings of the MeTC and the RTC .

Held:Yes. The petition is meritorious. The Supreme court agreed with the rulings of the MeTC and the RTC. Inruling, the first paragraph of Article 1179 of the Civil Code was applied:

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 court affirmed the findings of the MeTC and the RTC that there is no date of payment indicated in the Promissory Notes. 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.

O Article 1179of 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.In their Answer, the spouses Broqueza admitted that prior to Editha Broqueza’s dismissal from HSBC in December 1993, she “religiously paid the loan amortizations, which HSBC collected through payroll check-off.”

O A definite amount is paid to HSBCL-SRP on a specific date. 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.

O Moreover, the spouses Broqueza have already incurred in default in paying the monthly installments. Finally, 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. The petition is granted. The Decision of the Court of Appeals was reversed and set aside. The decisions of the Regional Trial Court of Makati, as well as the decision of the Metropolitan Trial Court of Makati City against the spouses Bienvenido and Editha Broqueza, were affirmed.

DBP V. COURT OF APPEALSG.R. No. 138703 June 30, 2006

O Facts:Sometime in March 1968, the Development Bank of the Philippines granted to respondents Philippine United Foundry and Machineries Corporation and Philippine Iron Manufacturing Company, Inc. an industrial loan in the amount of P2, 500,000 consisting of P500, 000 in cash and P2, 000,000 in DBP Progress Bonds. Subsequently, DBP granted to respondents another loan in the form of a five-year revolving guarantee amounting to P1, 700,000 which was reflected in a mortgage contract. The outstanding accounts of respondents with DBP were restructured in view of their failure to pay.

O Thus, the outstanding principal balance of the loans and advances were consolidated into a single account. Notwithstanding the restructuring, respondents were still unable to comply with the terms and conditions of the new promissory notes. As a result, respondents requested DBP to refinance the matured obligation. DBP initiated foreclosure proceedings. Before DBP could proceed with the foreclosure proceedings, respondents instituted the present suit for injunction. Respondents’ cause of action arose from their claim that DBP was collecting from them an unconscionable obligation of P62,954,473.68 out of a mere P6,200,000 loan. After trial, the court rendered a decision in favor of respondents. The Court of Appeals affirmed the decision.

O Issue:Whether or not the condition of interest in the contracts are unconscionable

O Held: The second set of promissory notes executed by respondents must govern the contractual relation of the parties for they unequivocally express the terms and conditions of the parties’ loan agreement, which are binding and conclusive between them. A mortgage is a mere accessory contract and its validity would depend on the validity of the loan secured by it. Hence, the consideration of the mortgage contract is the same as that of the principal contract from which it receives life, and without which it cannot exist as an independent contract. The debtor cannot escape the consequences of the mortgage contract once the validity of the loan is upheld.

O As correctly pointed out by PMO, the original loans alluded to by respondents had been refinanced and restructured in order to extend their maturity dates. Refinancing is an exchange of an old debt for a new debt, as by negotiating a different interest rate or term or by repaying the existing loan with money acquired from a new loan. Restructuring, as applied to a debt, implies not only a postponement of the maturity but also a modification of the essential terms of the debt in order to make the account of the debtor current. Accordingly, respondents are barred from claiming the contrary without transgressing the principle of estoppel and mutuality of contracts.

TOMIMBANG vs TOMIMBANGFacts: Petitioner and respondent are siblings. Their parents

donated to petitioner an eight- door apartment, with the condition that during the parents’ lifetime, they shall retain control over the property and petitioner shall be the administrator thereof. Petitioner failed to obtain a loan from PAG-IBIG Fund, hence, respondent offered to extend a credit line to petitioner on the following conditions: (1) petitioner shall keep a record of all the advances; (2) petitioner shall start paying the loan upon the completion of the renovation; (3) upon completion of the renovation, a loan and mortgage agreement based on the amount of the advances made shall be executed by petitioner and respondent; and (4) the loan agreement shall contain comfortable terms and conditions which petitioner could have obtained from PAG-IBIG.

O However, respondent and petitioner entered into a new agreement whereby petitioner was to start making monthly payments on her loan. Upon respondent’s demand, petitioner turned over to respondent all the records of the cash advances for the renovations. Petitioner however discontinued the renovations and her whereabouts could not be located. Respondent filed a complaint demanding the former to pay the loan plus interest. The trial court and the Court of Appeals rendered judgment in favor of the plaintiff.

O Issue:Whether or not petitioner’s obligation is due and demandable. Whether or not there was a novation of the original terms of the loan agreement.

O Held: The Court finds that the obligation was already due and demandable. The evidence on record clearly shows that after renovation of seven out of the eight apartment units had been completed, petitioner and respondent agreed that the former shall already start making monthly payments on the loan even if renovation on the last unit was still pending. She agreed and complied with respondent’s demand for her to begin paying her loan, since she believed this was in accordance with her commitment to pay whenever she was able. By her very own admission and partial performance of her obligation, there can be no other conclusion that petitioner’s obligation is already due and demandable.

Evidently, by virtue of the subsequent agreement, the parties mutually dispensed with the condition that petitioner shall only begin paying after the completion of all renovations. There was, in effect, a partial novation, of petitioner’s obligation. As can be gleaned from the foregoing, the aforementioned four essential elements and the requirement that there be total incompatibility between the old and new obligation, apply only to extinctive novation. In partial novation, only the terms and conditions of the obligation are altered, thus, the main obligation is not changed and it remains in force. Her partial performance of her obligation is unmistakable proof that indeed the original agreement between her and respondent had been novated by the deletion of the condition that payments shall be made only after completion of renovations.

FELIX GONZALES V. HEIRS OF THOMAS AND PAULA CRUZ

O 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.

O 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.

O Issue:Whether or not the condition of the contract is a precedent before the defendant is to pay the down payment

O 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.

O 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 petitioner’s 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.

Vda. De Mistica v NaguiatG.R. No. 137909. December 11,

2003O Facts: Eulalio Mistica is the owner of a parcel of land

located at Malhacan, Meycauayan, Bulacan. A portion thereof was leased to respondent Bernardino Naguiat sometime in 1970. Thereafter both parties entered into an agreement for the transfer of ownership of said property. Pursuant to said agreement, Naguiat gave a downpayment of P2,000.00. He made another partial payment of P1,000.00 on 7 February 1980. He failed to make any payments thereafter. On 4 December 1991, petitioner filed a complaint for rescission alleging that the failure and refusal of respondents to pay the balance of the purchase price constitutes a violation of the contract which entitles her to rescind the same.

O Petitioner argued as his defense that the agreement between them which involves the sale of the subject property is a potestative obligation. As a potestative obligation, the schedule of payment belongs to the will of the debtor.

O Issue:Whether or not the agreement between the parties is a potestative obligation

O Held:The transaction between Eulalio Mistica and respondents, as evidenced by the Kasulatan, was clearly a Contract of Sale. A deed of sale is considered absolute in nature when there is neither a stipulation in the deed that title to the property sold is reserved to the seller until the full payment of the price; nor a stipulation giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period

In the present case, the failure of respondents to pay the balance of the purchase price within ten years from the execution of the Deed did not amount to a substantial breach. Instead, she argues that the period cannot be extended beyond ten years, because to do so would convert the buyer’s obligation to a purely potestative obligation that would annul the contract under Article 1182 of the Civil Code. This contention is likewise untenable. The Code prohibits purely potestative, suspensive, conditional obligations that depend on the whims of the debtor, because such obligations are usually not meant to be fulfilled.[14] Indeed, to allow the fulfillment of conditions to depend exclusively on the debtor’s will would be to sanction illusory obligations. First, nowhere is it stated in the Deed that payment of the purchase price is dependent upon whether respondents want to pay it or not. Second, the fact that they already made partial payment thereof only shows that the parties intended to be bound by the Kasulatan.

HERMOSA vs LONGARAO Facts: This is an appeal by way of certiorari against a

decision of the Court of Appeals, fourth division, approving certain claims presented by Epifanio M. Longara against the testate estate of Fernando Hermosa, Sr. The claims are of three kinds, namely, P2,341.41 representing credit advances made to the intestate from 1932 to 1944, P12,924.12 made to his son Francisco Hermosa, and P3,772 made to his grandson, Fernando Hermosa, Jr. from 1945 to 1947, after the death of the intestate, which occurred in December, 1944. The claimant presented evidence and the Court of Appeals found, in accordance therewith, that the intestate had asked for the said credit advances for himself and for the members of his family “on condition that their payment should be made by Fernando Hermosa, Sr. as soon as he receive funds derived from the sale of his property in Spain.”

O Claimant had testified without opposition that the credit advances were to be “payable as soon as Fernando Hermosa, Sr.’s property in Spain was sold and he receive money derived from the sale.” The Court of Appeals held that payment of the advances did not become due until the administrative received the sum of P20,000 from the buyer of the property. Upon authorization of the probate court in October, 1947, and the same was paid for subsequently. The Claim was filed on October 2, 1948.

O Issue:Does said condition a potestative condition and thus void and unenforceable?

O Ruling:A careful consideration of the condition upon which payment of the sums advanced was made to depend, “as soon as he (intestate) receive funds derived from the sale of his property in Spain,” discloses the fact that the condition in question does not depend exclusively upon the will of the debtor, but also upon other circumstances beyond his power or control.

O Circumstances show that the intestate had already decided to sell his house lest he meant to fool his creditors. But in addition of the sale to him (the intestate-vendor), there were still other conditions that had no concur to effect the sale, mainly that of the presence of a buyer, ready, able and willing to purchase the property under the conditions demanded by the intestate. It is evident, therefore, that the condition of the obligation was not a purely protestative one, depending exclusively upon the will of the intestate, but a mixed one, depending partly upon the will of intestate and partly upon chance. The Supreme Court upheld the ruling of the lower courts.

VISAYAN SAWMILL V COURT OF APPEALS

O Facts:On May 1, 1983, herein plaintiff-appellee and defendants appellants entered into a sale involving scrap iron, subject to the condition that plaintiff appellee will open a letter of credit in the amount of P250,00.00 in favor of defendant-appellant corporation on or before May 15, 1983. On May 24, 1983, plaintiff-appellee informed defendans-appellants by telegram that the letter of credit was opened May 12, 1983 at the BPI main office in Ayala, but that transmittal was delayed. On May 26, 1983, defendants-appellants received a letter advice from the Dumaguete City Branch of BPI dated May 26, 1983, that a domestic letter of credit had been opened in favor of Visayan Sawmill Company.

O On July 19, 1983 plaintiffs then demanded that defendants comply with the deed of sale. On July 20, 1983 defendant corporation informed plaintiff’s lawyer that it is unwilling to continue with the sale due to plaintiff’s failure to comply with the essential preconditions of the contract.Private respondent prayed for judgment ordering the petitioner corporation to comply with the contract by delivering to him the scrap iron subject thereof.

O Issue: Whether or not the petitioner violated the terms and conditions of the contract.

Ruling: The petitioner corporation’s obligation to sell is unequivocally subject to a positive suspensive condition. The failure of the private respondent to comply with the positive suspensive condition cannot even be considered a breach – casual or serious – but simply an event that prevented the obligation of petitioner corporation to convey title from acquiring binding force.The letter of credit in favor of petitioner was indisputably not in accordance with the stipulation in the contract signed by the parties on at three counts: (1) it was not opened, made or indorsed by the private respondent, but by a corporation which is not a party to the contract; (2) it was not opened with the bank agreed upon and; (3) it is not irrevocable and unconditional, for it is without recourse, it is set to expire on a specific date and it stipulates certain conditions with respect to shipment.Consequently, the obligation of petitioner to sell did not arise. Therefore it cannot be compelled by specific performance to comply with its prestation.

LEANO V COURT OF APPEALS

G.R. No. 129018 November 15, 2001O Facts: Hermogenes Fernando, as vendor and

Carmelita Leano, as vendee executed a contract to sell involving a piece of land. In the contract, Leano bond herself to pay Fernando the sum of P107,750 as the total purchase price. P10,775 shall be paid at the signing of the contract;P96,975 shall be paid within 10 yrs. at a monthly amortization of P1,747.30 to begin from Dec. 7, 1985 with interest of 18% per annum; 18% per annum shall be charged if the month of grace period expires w/out the installments; should the 90 days elapse from the expiration of the grace period, Respondent was authorized to declare the contract cancelled & to dispose of the land.

O Carmelita Leano made several payments in lump sum. Thereafter she constructed a house (P800K). Last payment she made was on April 1989.Trial Court rendered decision in an ejectment case filed by Fernando. Leano filed with the RTC for specific performance with preliminary injunction and assailing that for being violative of her right to due process being contrary to R.A 6552 regarding protection to buyers of lots on installments. According to Trial Court, transaction was an absolute sale, making Leano the owner upon actual & constructive delivery thereof. Fernando divested of ownership & cannot recover the same unless rescinded under Art. 1592

O Issue:Whether or not the transaction was an absolute sale or conditional sale.

O Held:It was a conditional sale because the intention of the parties was to reserve the ownership of the land in the seller until the buyer has paid the total purchase price.Consideration:(a) Contract was subject to condition.(b) What was transferred was the possession & not ownership.(c) It was covered by Torrens title. Act of Registration was the operative act that couldtransfer ownership.What was transferred was the possession of the property, not ownership.

O In a contract to sell real property on installments, the full payment of the purchase price is a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring any obligatory force. The transfer of ownership and title would occur after full payment of the price.No proper cancellation as Leano was not given the cash surrender value. She may still reinstate the contract by updating the account during grace period & before actual cancellation.

 

DE LEON V. ONGGR No. 170405 Feb. 2, 2010

O Facts:On March 10, 1993, Raymundo S. De Leon (petitioner) sold 3 parcels of land to Benita T. Ong (respondent). The said properties were mortgaged to a financial institution; Real Savings & Loan Association Inc. (RSLAI). The parties then executed a notarized deed of absolute sale with assumption of mortgage.As indicated in the deed of mortgage, the parties stipulated that the petitioner (De Leon) shall execute a deed of assumption of mortgage in favor of Ong (respondent)after full payment of the P415,000. They also agreed that the respondent (Ong) shall assume the mortgage.

O The respondent then subsequently gave petitioner P415,000 as partial payment. On the other hand, De Leon handed the keys to Ong and De Leon wrote a letter to inform RSLAI that the mortgage will be assumed by Ong.Thereafter, the respondent took repairs and made improvements in the properties. Subsequently, respondent learned that the same properties were sold to a certain viloria after March 10, 1993 and changed the locks, rendering the keys given to her useless. Respondent proceeded to RSLAI but she was informed that the mortgage has been fully paid and that the titles have been given to the said person. Respondent then filed a complaint for specific performance and declaration of nullity of the second sale and damages.

O The petitioner contended that respondent does not have a cause of action against him because the sale was subject to a condition which requires the approval of RSLAI of the mortgage. Petitioner reiterated that they only entered into a contract to sell. The RTC dismissed the case. On appeal, the CA upheld the sale to respondent and nullified the sale to Viloria. Petitioner moved for reconsideration to the SC.

O Issue:Whether the parties entered into a contract of sale or a contract to sell.

O Held:In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfection of the contract. The non-payment of the price is a negative resolutory condition. Contract to sell is subject to a positive suspensive condition. The buyer does not acquire ownership of the property until he fully pays the purchase price.

O In the present case, the deed executed by the parties did not show that the owner intends to reserve ownership of the properties. The terms and conditions affected only the manner of payment and not the immediate transfer of ownership. It was clear that the owner intended a sale because he unqualifiedly delivered and transferred ownership of the properties to the respondent.

DE LEON V. ONGGR No. 170405 Feb. 2,

2010O Facts:On March 10, 1993, Raymundo S. De Leon (petitioner) sold 3 parcels of land to Benita T. Ong (respondent). The said properties were mortgaged to a financial institution; Real Savings & Loan Association Inc. (RSLAI). The parties then executed a notarized deed of absolute sale with assumption of mortgage.As indicated in the deed of mortgage, the parties stipulated that the petitioner (De Leon) shall execute a deed of assumption of mortgage in favor of Ong (respondent)after full payment of the P415,000. They also agreed that the respondent (Ong) shall assume the mortgage. The respondent then subsequently gave petitioner P415,000 as partial payment.

O On the other hand, De Leon handed the keys to Ong and De Leon wrote a letter to inform RSLAI that the mortgage will be assumed by Ong.Thereafter, the respondent took repairs and made improvements in the properties. Subsequently, respondent learned that the same properties were sold to a certain Viloria after March 10, 1993 and changed the locks, rendering the keys given to her useless. Respondent proceeded to RSLAI but she was informed that the mortgage has been fully paid and that the titles have been given to the said person. Respondent then filed a complaint for specific performance and declaration of nullity of the second sale and damages.

O The petitioner contended that respondent does not have a cause of action against him because the sale was subject to a condition which requires the approval of RSLAI of the mortgage. Petitioner reiterated that they only entered into a contract to sell. The RTC dismissed the case. On appeal, the CA upheld the sale to respondent and nullified the sale to Viloria. Petitioner moved for reconsideration to the SC.

O Issue:Whether the parties entered into a contract of sale or a contract to sell.

O Held: In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfection of the contract. The non-payment of the price is a negative resolutory condition. Contract to sell is subject to a positive suspensive condition. The buyer does not acquire ownership of the property until he fully pays the purchase price.

O In the present case, the deed executed by the parties did not show that the owner intends to reserve ownership of the properties. The terms and conditions affected only the manner of payment and not the immediate transfer of ownership. It was clear that the owner intended a sale because he unqualifiedly delivered and transferred ownership of the properties to the respondent.

 

QUIJADA VS. CAO 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.

O 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.

O ISSUE: Whether the deed of donation had a suspensive condition or a resolutory condition

O 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.

O 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.

O 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.

 Parks vs. Province of Tarlac

O A condition which cannot be complied with except after giving effect to the donation is not a condition precedent.

O FACTS: In 1910, Concepcion Cirer and James Hill donated parcels of land to the Municipality of Tarlac on the condition that it be used absolutely and exclusively for the erection of a central school and public parks, the work to commence within six months. The president of the Municipality of Tarlac accepted and registered the donation.

O In 1921, Cirer and Hill sold the same property to George L. Parks.

O Later on the, the municipality of Tarlac transferred their rights in the property to the Province of Tarlac.Parks filed a complaint seeking the annulment of the donation and asking that he be declared the absolute owner of the property. Parks allege that the conditions of the donation were not complied with.

O ISSUE:Whether or not the donation was coupled with a condition precedent? W/N the action to revoke has prescribed?

O HELD: No. The condition to erect a school within six months is not a condition precedent. The characteristic of a condition precedent is that the acquisiito of the right is not effected while said condition is mot complied with or is not deemed complied with. Meanwhile nothing is acquired and there is only an expectancy of a right. Consequently, when a condition is imposed, the compliance of which cannot be effected except when the right is deemed acquired, such condition cannot be a condition precedent. 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.

O The action to revoke the donation has prescribed. The prescriptive periods are: 5 years for the revocation by the subsequent birth of children, 1 year if by reason of ingratitude. If no special period is prescribed, 10 years, for an onerous donation following the law of contracts and general rules on prescriptions. The donation was made in 1910, the cause of action accrued in 1911, while the action to revoke was filed 1924, twenty three years later.