G.R. No. L‑2835

FACTS
– On 1 June 1903 the plaintiffs, Feliciano Alfonso y Ramos and the heirs of Estanislao Yoingco (Isabel Carlos and Alberta Yoingco), sold the coasting vessel Sta. Maria to defendant Ramon Lagda‑meo for ₱7,000.
– The deed required the sellers to furnish, within 60 days, either a judicial declaration of the Yoingco heirs or any proof establishing their right to inherit the deceased’s share. If such proof could not be produced, the buyer would pay only ₱3,000 after the period, the balance of ₱4,000 to become due upon delivery of the required proof.
– The buyer took possession on the contract date and paid ₱3,000 (Sept 1903) and ₱200 (Oct 1903).
– Plaintiffs instituted special proceedings for “perpetuation of testimony” (April 1904) to prove that Estanislao Yoingco died intestate and that Isabel Carlos and Alberta Yoingco were his sole heirs. The same proceedings later declared them the lawful heirs, albeit “without prejudice to the interests of third persons with better rights.”
– After securing the testimony, plaintiffs demanded the remaining ₱3,800. Defendant refused, prompting an action for rescission and mutual restitution under Art. 1124 Civil Code. The trial court ruled for plaintiffs; defendant appealed and filed a bill of exceptions alleging manifest error.

ISSUE
Whether the plaintiffs fulfilled their contractual obligation to deliver a valid declaration of heirs (or equivalent proof) of Estanislao Yoingco, thereby conditioning the defendant’s liability for the balance of the purchase price.

RULING
The Supreme Court held that the “declaration of heirs” obtained in the perpetuation‑of‑testimony proceedings is null and void because:

1. Improper Procedure Section 370 of the Code of Civil Procedure allows only the preservation of witness testimony; it does not authorize a judicial declaration of heirs. The proper mode is under Section 753, which requires an inventory, appraisal, settlement of debts, and a formal declaration after the estate’s settlement.
2. Lack of Legal Effect Since the declaration was not made pursuant to the statutory procedure, it has no legal effect and cannot satisfy the contractual condition.

Consequently, the plaintiffs did not comply with the condition precedent to the buyer’s obligation to pay the residual price. The contract’s breach is on the part of the sellers, not the buyer. The Supreme Court reversed the trial court’s judgment, dismissed the plaintiff’s action, and remanded the case for execution of the dismissal. No costs were awarded.