GAITE vs. FONACIER G.R. No. L-11827, July 31, 1961

Defendant decided to revoke the authority granted by him to Plaintiff to exploit and develop the mining claims, and plaintiff assented thereto subject to certain conditions. As a result, a document was executed wherein Plaintiff transferred to Defendant, for the consideration of P20,000.00, plus 10% of the royalties that Defendant would receive from the mining claims, all his rights and interests on all the roads, improvements, and facilities in or outside said claims, the right to use the business name “Larap Iron Mines” and its goodwill, and all the records and documents relative to the mines. In the same document, plaintiff transferred to Defendant all his rights and interests over the iron ore, in consideration of the sum of P75,000.00, P10,000.00 of which was paid upon the signing of the agreement, and the balance of SIXTY-FIVE THOUSAND PESOS (P65,000.00) will be paid from and out of the first letter of credit covering the first shipment of iron ores and of the first amount derived from the local sale of iron ore. To secure the payment of the said balance of P65,000.00, Defendant promised to execute in favor of Plaintiff a surety bond, and pursuant to the promise. In the subsequent year, Defendant failed to renew the bond to sureties. Plaintiff, the latter filed the present complaint against them in the Court of First Instance of Manila (Civil Case No. 29310) for the payment of the P65,000.00 balance of the price of the ore, consequential damages, and attorney’s fees.

Whether the obligation of defendants and his sureties to pay Plaintiff become due and demandable when the former failed to renew the surety bond?

Yes, the obligation becomes demandable. The provision in the contract was not a condition but a only a suspensive period or term to the payment of the balance of P65,000.00. What characterizes a conditional obligation is the fact that its efficacy or obligatory force (as distinguished from its demandability) is subordinated to the happening of a future and uncertain event; so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. That the parties to the contract did not intend any such state of things to prevail. There is no uncertainty that the payment will have to be made sooner or later; what is undetermined is merely the exact date at which it will be made. By the very terms of the contract, therefore, the existence of the obligation to pay is recognized; only its maturity or demandability is deferred. The defendant lose the right of the period when it failed to renew the surety according to ART. 1198 of the Civil Code.

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