G.R. No.

L-11827 July 31, 1961

GAITE vs. FONACIER

FACTS:

Fonacier, owner of 11 iron lode mineral claims (Dawahan Group) in Camarines Norte,
constituted a "Deed of Assignment, and appointed Gaite as his true and lawful attorney-in-
fact to enter into a contract for its exploration and development on a royalty basis.

Gaite executed a general assignment to the Larap Iron Mines owned solely by him. However,
Fonacier decided to revoke the authority granted which he assented. Said revocation
included the transfer to Fonacier the rights and interests over the "24,000 tons of iron ore,
more or less" already extracted for a certain consideration.

A balance has to be paid. To secure it, Fonacier delivered to Gaite a surety bond. When it
expired, no payment had been made by Fonacier on the theory that they had lost right to
make use of the period when their bond expired.

Gaite filed a complaint in court for its payment. The lower court ruled the obligation was
one with a term and that the obligation became due and demandable under Article 1198 of
the New Civil Code.

Hence, the defendants jointly filed an appeal.

ISSUES:

1. WON the lower court erred in holding that the obligation of Fonacier to pay Gaite is
one with a period or term and that the term has already expired.

2. WON the lower court erred in not holding that there were lesser tons of iron ore in
the stockpiles sold to Fonacier.

HELD:

On Issue No. 1

No.

If the suspensive condition does not take place, the parties would stand as if the conditional
obligation had never existed. The parties did not intend such state. The words of the
contract expressed that obligation to pay and intended Gaite to be paid.
The sale of the ore to Fonacier was a sale on credit, not an aleatory contract. For their
failure to renew the bond, the appellant have forfeited the right to compel Gaite to wait for
the sale of the ore before receiving payment of the balance.

Under paragraphs 2 and 3 of Article 1198 of the Civil Code of the Philippines, the debtor
shall lose every right to make use of the period:
When he does not furnish to the creditor the guaranties or securities which he has
promised.
When by his own acts he has impaired said guaranties or securities after their
establishment, and when through fortuitous event they disappear, unless he
immediately gives new ones equally satisfactory.

Gaite's acceptance of the surety company's bond with full knowledge it would automatically
expire within a year was not a waiver of its renewal after the expiration date. The balance
became due and payable thereafter.

On Issue No. 2

No.

This is a case of a sale of a specific mass of fungible goods for a single price or a lump sum.
The quantity of "24,000 tons of iron ore, more or less," stated in the contract is a mere
estimate by the parties. A reasonable percentage of error should be allowed because
neither of the parties had actually measured of weighed the mass.

In addition, no provision was made in their contract for the measuring or weighing of the
ore sold in order to complete or perfect the sale, nor was the price agreed upon by the
parties based upon any such measurement. When Gaite complied with his promise to
deliver, the appellants, in turn, are bound to pay the lump price.