G.R. No. 1698. September 26, 1905.

JULIAN BORROMEO, plaintiff-appellant, vs. JOSE FRANCO Y FRANCO, ET AL., defendants-appellees.

FACTS:
On April 29, 1902, the defendants (the Franco siblings, including Catalina Franco acting for herself and her minor child) entered into a written contract with the plaintiff, Julian Borromeo. In the contract, the defendants agreed to sell to Borromeo two frame houses with nipa roofs located on their lots in Plaza Recoletos, Cebu, for 2,500 pesos Mexican currency. Among the contract’s stipulations was clause (c), which gave Borromeo six months from the date of the contract to “arrange and complete the documents and papers relating to the said property.”

Borromeo took some steps but failed to complete the required documents within the six-month period. He subsequently demanded that the defendants execute the final deed of sale. The defendants refused, arguing that Borromeo’s failure to complete the documents within the agreed period released them from their obligation. Borromeo then filed an action in the Court of First Instance to compel the defendants to specifically perform their promise to sell. The trial court ruled in favor of the defendants, prompting Borromeo to appeal.

ISSUE:
Whether the defendants can refuse to execute the deed of sale based on the plaintiff’s failure to complete the title documents within the six-month period stipulated in clause (c) of their agreement.

RULING:
No. The Supreme Court reversed the judgment of the lower court and ordered the defendants to specifically perform their obligation to sell.

The Court ruled that the stipulation in clause (c) requiring the plaintiff to complete the documents within six months was merely an incidental or accessory obligation, not a condition subsequent that would extinguish the defendants’ principal obligation to sell. The core agreement was a valid “promise to sell” (a bilateral contract under Article 1451 of the Civil Code), where there was a meeting of minds on the object (the houses) and the price. This gave both parties the reciprocal right to demand performance.

The obligation to perfect the documents was primarily for the benefit of the plaintiff-purchaser, who expressly accepted the risk of defective titles as per the contract’s terms. His failure to fulfill this incidental obligation did not create a reciprocal right for the vendors to rescind the main contract, as the two obligations did not arise from the same cause and were not correlative. Since the plaintiff was willing to proceed with the sale despite the incomplete documents, the defendants were bound to fulfill their principal obligation to sell upon payment of the agreed price. The defendants’ remedy, if the sale could not be perfected, lay in the general provisions on obligations and contracts, not in a unilateral refusal to perform.