TOPIC Purchase Agreement

TITLE Bayla vs. Silang Traffic, Co., 73 PHIL 557 (1942)

DOCTRINE

NATURE OF
CASE

 Petitioners purchased the following:

Sofronio T. Bayla ....... 8 shares P360
Venancio Toledo ........ 8 shares P375
Josefa Naval .............. 15 shares P675
Paz Toledo ................ 15 shares P675

 Purchase price to be paid 5% upon the execution of the contract

and the remainder in installments of 5%, payable within the 1st
month of each and every quarter starting July 1, 1935, w/ interest
on deferred payments at 6%/annum until paid.
 They also agreed to forfeit in favor of seller in case of default w/o
court proceedings.
FACTS  BOD resolution Aug 1, 1937: rescinding the agreement
 Petitioners filed an action in the CFI against Silang Traffic Co. Inc
to recover certain sum of money w/c they had paid severally to the
corp. on account of shares of stock they indiv. agreed to take and
pay for under certain conditions.
 Defenses:
That the resolution is not applicable to the petitioners Sofronio T. Bayla,
Josefa Naval, and Paz Toledo because on the date thereof "their
subscribed shares of stock had already automatically reverted to the
defendant, and the installments paid by them had already been forfeited"
that said resolution of August 1, 1937, was revoked and cancelled by a
subsequent resolution.

 RTC: absolved defendant. BOD resolution cancelled.

 Petitioners appealed.
Stand/Contention Rationale
Petitioner

Respondent Stand/Contention Rationale

 Whether under the contract between the parties, the failure of the
ISSUE/S purchaser to pay any of the quarterly installments on the purchase price
(Primary) automatically gave rise to the forfeiture of the amounts already paid and
the reversion of the shares to the corporation.
(Secondary, if
applicable)

NO.
 The provision regarding interest on deferred payments would not
have been inserted if it had been the intention of the parties to
provide for automatic forfeiture and cancelation of the contract.
 Contract did not expressly provide that the failure of the purchaser
to pay any installment would give rise to forfeiture and cancelation
without the necessity of any demand from the seller.
RULING  Based on Article 1100 of the Civil Code, persons obliged to deliver
or do something are not in default until the moment the creditor
demands of them judicially or extrajudicially the fulfillment of their
obligation, unless
1. the obligation or the law expressly provides that demand shall
not be necessary in order that default may arise.
2. by reason of the nature and circumstances of the obligation it
shall appear that the designation of the time at which that thing
was to be delivered or the service rendered was the principal
inducement to the creation of the obligation.
Stand/Contention Rationale
Petitioner

Stand/Contention Rationale
Respondent

NOTES
Legal
Basis/Provisions
Related
Comparison to
preceding/succeedi
ng case assigned (if
applicable

Others