Case Digest (G.R. No. L-11827)
Case Digest (G.R. No. L-11827)
Facts:
Fernando A. Gaite v. Isabelo Fonacier, George Krakower, Larap Mines & Smelting Co., Inc., Segundina Vivas, Francisco Dante, Pacifico Escandor and Fernando Ty, G.R. No. L-11827, July 31, 1961, the Supreme Court En Banc, Reyes, J., writing for the Court.Plaintiff-appellee Fernando A. Gaite was originally granted authority by defendant Isabelo Fonacier over eleven iron lode mineral claims (the Dawahan Group) by a Deed of Assignment dated September 29, 1952 (Exhibit 3). By that instrument Fonacier empowered Gaite to contract for the exploration and development of the claims on a royalty basis. On March 19, 1954 Gaite assigned his development and exploitation rights to his single-proprietorship, Larap Iron Mines, and proceeded to develop the claims and to extract what he estimated to be some 24,000 metric tons of iron ore.
On December 8, 1954 Fonacier revoked Gaite’s authority and, in the document titled "Revocation of Power of Attorney and Contract" (Exhibit A), Gaite transferred to Fonacier his rights in the roads, improvements, business name and, specifically, his rights to the approximately 24,000 tons of ore in consideration of P75,000 (P10,000 paid upon signing; the P65,000 balance to be paid "from and out of the first letter of credit covering the first shipment of iron ores and/or the first amount derived from the local sale of iron ore made by the Larap Mines & Smelting Co., Inc."). To secure the P65,000, Fonacier delivered a bond (Exhibit A-1) and, at Gaite’s insistence, a second bond (Exhibit B) that included the Far Eastern Surety and Insurance Co.; the latter bond provided that the surety’s liability would attach only upon an actual sale by Larap of not less than P65,000 and that its liability would expire on December 8, 1955. Both bonds were attached to Exhibit A.
Also on December 8, 1954 Fonacier executed a "Contract of Mining Operation" conveying development rights and the title to the approximately 24,000 tons of ore to Larap Mines & Smelting Co., Inc., with the company and its stockholders underwriting surety bonds. No sale of the ore occurred before December 8, 1955, and the P65,000 remained unpaid. Gaite then demanded payment; when defendants failed to pay he filed suit in the Court of First Instance of Manila (Civil Case No. 29310) for the P65,000, consequential damages and attorney’s fees.
Defendants (except Francisco Dante) pleaded that payment depended on the first shipment or local sale called for in Exhibit A and thus was not yet due; Fonacier also counterclaimed, alleging short delivery and counterclaims exceeding P200,000. The parties limited trial evidence to two issues: (1) whether the obligation to pay P65,000 became due and demandable when the Far Eastern Surety bond (Exhibit B) expired on December 8, 1955; and (2) whether the estimated 24,000 tons actually existed in the stockpiles when Exhibit A was executed.
The Court of First Instance held that the P65,000 obligation was a payment-term obligation (a dies ad quem) rather than one subject to a suspensive condition, and that the failure to replace the expiring surety bond forfeited defendants’ right to the period under Article 1198 of the Civil Code; it also found that approximately 24,000 tons existed. Judgment ordered defendants to pay P65,000 with 6% interest from December 9, 1955 and costs. Defendants appealed directly to the Supreme Court (the appeal having been taken directly from the Court of First Instance because the aggregate claims exceeded P200,000). Several incidental motions were filed during the appeal; the Court found the contempt motion unmeritorious and deemed resolution of some appellee motions unnecessary in light of the Court’s ultimate disposition.
Issues:
- Was the defendants’ obligation to pay the P65,000 a suspensive-condition obligation (payable only upon sale or shipment) or merely one with a term (dies ad quem), and did the obligation become due when the Far Eastern Surety bond expired on December 8, 1955?
- Was there a short-delivery of the approximately 24,000 tons of iron ore sold to defendants such that defendants are entitled to damages?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)