BERG VS.

MAGDALENA

Facts: 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.
Issue: Whether or not 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)
Held: 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.
Both parties did not put the terms in their agreement clearly in writing. The lower courts
judgment is affirmed.
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.