FACTS:
On December 1, 1983, Paula Año Cruz together with the plaintiffs heirs of Thomas and Paula Cruz entered into a contract of lease with the defendant, Felix L.
Gonzales of a half portion of a land containing an area of 12 hectares, more or less, and an accretion of 2 hectares, more or less, situated in Rodriguez Town, Province of Rizal’
and covered by Transfer Certificate of Title No. 12111. As stipulated therein:
Paragraph 9 - The LESSORS hereby commit themselves and shall undertake to obtain a separate and distinct T.C.T. over the herein leased portion to the LESSEE within a reasonable period of time which shall not in any case exceed four (4) years, after which a new Contract shall be executed by the herein parties which shall be the same in all respects with this Contract of Lease/Purchase insofar as the terms and conditions are concerned.
Under the contract, Gonzales paid the rental fees but did not choose to exercise the option of paying the one million purchase price. A letter was issued by one of the heirs to rescind the said contract following breach and ordered Gonzales to vacate the premises within ten days. Gonzales did no vacate. A few days later Paula Cruz died. A case was launched in Court by the heirs of Paula Cruz.
ISSUE:
How must paragraph nine of the contract be interpreted in enforcing the contract of lease?
RULING:
If a stipulation in a contract admits of several meanings, it shall be understood as bearing that import most adequate to render it effectual. An obligation cannot be enforced unless the plaintiff has fulfilled the condition upon which it is premised. The ninth provision was intended to ensure that respondents would have a valid title over the specific portion they were selling to petitioner. Only after the title is assured may the obligation to buy the land and to pay the sums stated in the Contract be enforced within the period stipulated. Verily, the petitioner’s obligation to purchase has not yet ripened and cannot be enforced until and unless respondents can prove their title to the property subject of the Contract. The ninth clause was the condition precedent of the contract.
Respondents cannot rescind the contract, because they have not caused the transfer of the TCT to their names, which is a condition precedent to petitioner’s obligation. This Court has held that “there can be no rescission (or more properly,
resolution) of an obligation as yet non-existent, because the suspensive condition has not happened.”
INSULAR LIFE VS YOUNG GR No. 140964. January 16, 2002 FACTS:
Respondent Robert Young obtained a short term loan of P170,000,000.00 from interbank to finance the purchase 45% equity in Insular Savings Bank. He did this under the assumption that Araneta would purchase 99.82% of the banks outsanding capital stock and consolidate all shares in Young’s name. However, Araneta backed and Young was left with a massive debt. Young entered into a Memorandum of Agreement where Insular Life and its Pension Fund whereby Insular Life would purchase shares of stock if Young would abide by certain conditions: one of them being to infuse additional capital of P50,000,000.00 into the Bank.
It was discovered that Young was pilfering funds from the bank through check kiting operations and he tendered his resignation. He also defaulted on his obligations.
His shares of stock were purchased by Insular Life in a public auction. The shares were then consolidated in its name. On January 7, 1992, Young filed a case for annulment of notarial sale, specific performance and damages.
ISSUE:
Is Insular Life entitled to ownership of majority of the Bank’s shares of stock?
RULING:
The provisions of the MOA negate the existence of a perfected contract of sale.
The MOA is merely a contract to sell since the parties therein specifically undertook to enter into a contract of sale if the stipulated conditions are met and the representation and warranties given by Young prove to be true. Here, the MOA provides that Young shall infuse additional capital of P50,000,000.00 into the Bank. Young failed to infuse
parties, the CA erred in concluding that Insular Life purchased 55% of the total shares of the Bank under the MOA.
It would be unfair on the part of Young to demand compliance by Insular Life of its obligations when he himself was remiss in his own.
DIRECT FUNDERS HOLDERS ASSOCIATION VS LAVIŇA GR No. 141851. January 16, 2002
FACTS:
The petitioners assail the decision of the CA affirming the decision of the RTC in issuing a writ of mandatory preliminary injunction despite the orders of a co-equal court in deciding that the property in question was in the lawful possession of the petitioner.
ISSUE:
Is petitioner’s contention tenable?
RULING:
The conditional sale agreement was the only document that the respondent presented during the summary hearing of the application for a temporary restraining order before the Regional Trial Court, Branch 71, Pasig City. The conditional sale agreement is officious and ineffectual. First, it was not consummated. Second, it was not registered and duly annotated on the Transfer Certificate of Title (No. 12357)
covering the subject property. Third, it was executed about eight (8) years after the execution of the real estate mortgage over the subject property.
To emphasize, the mortgagee (United Savings Bank) did not give its consent to the change of debtor. It is a fundamental axiom in the law on contracts that a person not a party to an agreement cannot be affected thereby. Worse, not only was the conditional sale agreement executed without the consent of the mortgagee-creditor, United Savings Bank, the same was also a material breach of the stipulations of the real estate mortgage over the subject property.
The petitioner as opposed to Kambiyak Chan bears a TCT, deeds of assignment, certificates of sale in its favor showing that it has a better right to possession of the disputed land.
VDA. DE MISTICA VS NAGUIAT