Title of the Case: FERNANDO A. GAITE v.
ISABELO FONACIER
Date of the Case and Case No.: G.R. No. L-11827 July 31, 1961
Source of the Case: https://lawphil.net/judjuris/juri1961/jul1961/gr_l-11827_1961
Facts
Defendant-appellant Fonacier was the owner/holder of the Dawahan Group, a group of 11 iron
lode mineral claims in Camarines Norte. Respondent constituted and appointed
plaintiff-appellee Gaite as attorney-in-fact to enter into contracts for the exploration and
development of the abovementioned mining rights on the basis of the Deed of Assignment.
Petitioner executed a general assignment conveying the claims to the Larap Iron Mines, which
he owns and controls. Following that, he went through development and exploitation for the
mining claims, which he estimates to be worth around 24 metric tons of iron ore. However,
Fonacier decided to revoke Gaite's authority, whereas the respondent agreed under specific
conditions. As a result, a revocation of Power of Attorney and Contract was signed,
surrendering P20,000 plus royalties from the mining claims, all rights and interests in the road
and other developments completed, as well as the right to use the business name, goodwill,
records, and mine-related papers. The transfer also included the rights and interests in the
24,000 tons of iron ore that had been extracted. Lastly, the remaining P65,000 was intended to
cover the first shipment of iron ores. Respondent executed a surety bond with himself as
principal and the Larap Mines and Smelting Co. and its stockholders as sureties to secure the
payment of P65,000. However, the petitioner refused. A complaint about payment of the amount
and other damages was filed in the CFI of Manila. The Trial Court ruled in the plaintiff's favor
and ordered the defendant to pay the remaining P65,000 plus interest. The respondent then
filed an appeal, and various motions were presented for resolution: a motion for contempt; two
motions to dismiss the appeal for becoming moot and academic; and appellee Gaite's petition
for a new trial.
Issues
1. Whether the Lower Court erred in treating appellant Fonacier's obligation to pay appellee
Gaite the remaining P65,000 as a period or term obligation rather than a suspensive
condition, and that the term expired in December 1955.
2. Whether the Lower Court erred in not holding that there were lesser tons of iron ore in
the stockpiles sold to Fonacier
Rulings
First issue: No. There was no error found, and as such the lower court's decision was affirmed.
Gaite was within his rights in demanding payment and bringing this action one year after the
contract was signed, either because the appellant debtors had impaired the original securities
and thus forfeited any further time to pay; or because the term of payment was originally only
one year, and the balance of P65,000 became due and payable thereafter. The Lower Court
was correct in holding that perhaps the shipment or sale of the iron ore was just a suspensive
period or term, not a condition or suspensive to the payment of the balance of P65,000. The
efficacy or obligatory force of a conditional obligation, as distinguished to its demandability, is
subordinated to the occurrence of a future and unpredictable event, so that if the suspensive
condition does not occur, the parties will be treated as if the conditional obligation never existed.
The sale of the ore to Fonacier was a credit sale, not an aleatory contract, in which the
transferor, Gaite, would assume the risk of not being paid at all; and that the previous sale or
shipment of the ore was not a suspensive condition for the payment of the balance of the
agreed price, but was merely intended to set the payment date in the future. While as to
Fonacier's right to insist that Gaite should wait until the ore is sold or shipped before getting
payment; or, in other words, whether or not they are entitled to take full advantage of the
payment period allowed to them. Because the appellant failed to renew the Far Eastern Surety
Company's bond or replace it with a comparable guarantee, they had forfeited their right to
require Gaite to wait for the sale of the ore before receiving payment of the balance of
P65,000.00. The bonding company's undertaking expired on December 8, 1955, significantly
reducing the security of the vendor's rights as a creditor for the unpaid P65,000.00, security that
Gaite considered essential and insisted upon when he executed the deed of sale of the ore to
Fonacier (first bond). Under paragraphs 2 and 3 of Article 1198 of the Civil Code of the
Philippines: ART.1198. The debtor shall lose every right to make use of the period: ―(2) When
he does not furnish to the creditor the guaranties or securities which he has promised. (3) When
by his own acts he has impaired said guarantees or securities after their establishment, and
when through the fortuitous event they disappear, unless he immediately gives new ones
equally satisfactory.
Second Issue: No. This is a case of a single price or lump-sum sale of a specific mass of
fungible items. The contract's stated quantity of "24,000 tons of iron ore, more or less" is merely
an estimate by the parties. Because neither party has actually measured or weighed the mass,
an acceptable margin of error should be given. Furthermore, their contract contained no
provision for the measuring or weighing of the ore sold in order to complete or perfect the sale,
and the price agreed upon by the parties was not dependent on any such measurement. The
appellants are obligated to pay the lump sum amount because Gaite fulfilled his promise to
deliver.
