Case:

Ernest Berg v. Magdalena Estate, Inc. (92 PHIL. 110),

October 17, 1952
FACTS

ISSUE/S

PETITIONER: Ernest Berg

RESPONDENT: Magdalena Estate
PONENTE: Bautista Angelo, J.

Ever since September 22, 1943 plaintiff, Berg and defendants under Magdalena
Estate, Inc. were co-owners of the Property, Crystal Arcade. One third of it
belonged to the plaintiff-petitioner and two thirds, to the defendant-respondent.
These parties executed a deed of sale that should either of them sell his share, the
other party will have an irrevocable option to purchase it at the sellers at the
sellers price. The two, eventually had a disagreement on what really happened
with regard to the deal.

On January. 1946, the petitioner offered his share for Php 200,000 and was
accepted by the defendant, including the stipulation that Berg was giving the
defendant a period of time which, including the extensions granted, would expire
on May 31, 1947.

The defendant claimed that, in spite of the acceptance of the offer, plaintiff refused
to accept the payment of the price and that because of this, they suffered damages
in the amount of Php 100,000 and asked for specific performance. The plaintiff
argued that this transaction, referred to by the defendant, is not supported by any
note or memorandum subscribed by the parties and that this transaction falls
under the statue of frauds and cannot be the basis of the defendants special
defense.

In an application to sell or dispose their properties, both parties filed for separate
applications regarding the subject property. In the defendants application, it
desired a license in order "to use a portion of the P400,000 requested as a loan
from the National City Bank of New York, Manila, or from any other bank in Manila,
together with funds to be collected from old and new sales of his real estate
properties, for the purchase of the one-third (1/3) of the Crystal Arcade property in
the Escolta, Manila, belonging to Mr. Ernest Berg.

The lower court found that there was no agreement reached between the parties
regarding the purchase and sale of the property in question, it granted the case in
favor of the petitioner.

Whether the term of payment stipulated in the defendants application for license
to sell/purchase, until they have obtained Php 400,000 from the National City
Bank of New York, or after it has obtained funds from other sources,is in line with
the Civil Code

LAWS

Article 1193. Obligations for whose fulfillment a day certain has been fixed, shall be
demandable only when that day comes.

Obligations with a resolutory period take effect at once, but terminate upon arrival
of the day certain.

A day certain is understood to be that which must necessarily come, although it
may not be known when.

If the uncertainty consists in whether the day will come or not, the obligation is
conditional, and it shall be regulated by the rules of
the preceding Section. (1125a)

HOLDINGS

Yes. The term of payment stipulated in the defendants application for license to
sell/purchase, until they have obtained Php 400,000 from the National City Bank
of New York, or after it has obtained funds from other sources,is in line with the
Civil Code (Art. 1125).
A day certain is understood to be that which must necessarily arrive, even though it
is unknown when. In order that an obligation may be with a term, it is, therefore,
necessary that it should arrive, sooner or later; otherwise, if its arrival is uncertain,
the obligation is conditional. To constitute a term, the period must end on a day
certain.
In considering this article as to which the defendant relies for the enforcement of
its right to buy the property, it would seem that it is not a term, but a condition.
Considering the first alternative, that is, until defendant shall have obtained a loan
from the National City Bank of New York - it is clear that the granting of such loans
is not definite and cannot be held to come within the terms "day certain" provided
for in the Civil code, for it may or it may not happen.
The loan did not materialize. And if we consider that the period given was until such
time as defendant could raise money from other sources, we also find it to be
indefinite and contingent and so it is also a condition and not a term within the
meaning of the law.
Both parties did not put the terms in their agreement clearly in writing. The lower
courts judgment is affirmed.