Case Digest: Felix Plaza Urban Poor Settlers Community Association, Inc. vs Lipat, Sr. 821 SCRA 12

Felix Plaza Urban Poor Settlers Community Association, Inc. vs Lipat, Sr. 821 SCRA 12 (2017)

Subject: Obligations and Contracts

This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing the Decision2 dated April 30, 2007 and Resolution3 dated March 17, 2008 of the Court of Appeals (CA) in CA-G.R. CV No. 85684 which granted the appeal of Alfredo Lipat, Sr. (Lipat Sr.) and Alfredo Lipat, Jr. (Lipat Jr.) (respondents) and accordingly dismissed the action for Specific Performance and Damages with Prayer for Preliminary Injunction filed by Felix Plazo Urban Poor Settlers Community Association, Inc. (petitioner) for lack of cause of action.

FACTS

On December 13, 1991, Lipat Sr., as represented by Lipat Jr., executed a Contract to Sell (CTS) in favor of the petitioner, as represented by its President, Manuel Tubao (Tubao), whereby the former agreed to sell to the latter two parcels of land in Naga City covered by Transfer Certificates of Title Nos. 12236 and 12237 (subject properties) for a consideration of P200.00 per square meter.

As stipulated in the CTS, the petitioner had 90 days to pay in full the purchase price of the subject properties; otherwise, the CTS shall automatically expire. The period, however, elapsed without payment of the full consideration by the petitioner.

According to the petitioner, the 90-day period provided in the CTS was subject to the condition that the subject properties be cleared of all claims from third persons considering that there were pending litigations involving the same.

After the termination of the cases involving the subject properties, however, the respondents refused to enforce the CTS on the ground that the same had expired and averred that there was no agreement to extend its term.

the petitioner filed a case for Specific Performance and Damages with Prayer for the Issuance of Preliminary Injunction against the respondents on June 10, 1997 before the Regional Trial Court (RTC) of Naga City.

For their defense, the respondents alleged that the CTS was not enforced due to the petitioner's failure to pay the P200.00 per sq m selling price before the expiration of its term.11 As a result, the members of the petitioner were required to pay rental fees corresponding to the area they occupy. Moreover, the respondents claimed that the so called "financial assistance" they received from the petitioner's members was in the nature of a loan and that it has nothing to do with the alleged extension of their CTS.

RTC of Naga City rendered a decision in favor of the petitioner directing the respondent to enforce the CTS after payment by the petitioner of the selling price in the amount of P200.00 per sq m. Aggrieved, the respondents filed an appeal to the CA to assail the RTC decision in holding that the CTS dated December 13, 1991 they entered into with the petitioner is still in force and effect

CA granted the appeal of the respondents. Accordingly, it dismissed the action for Specific Performance and Damages with Prayer for Preliminary Injunction filed by the petitioner for being premature. CA held that the petitioner cannot exact fulfillment from the respondents without itself having first complied with what is incumbent upon it under the CTS. As shown in the records, the petitioner failed to make full payment of the purchase price. Further, records do not show that the petitioner ever attempted to at least, make the proper consignation of the amounts due to the court. A Motion for Reconsideration22 was filed by the petitioner, rbut the same was denied

ISSUES

WON the CA erred in reversing the trial court’s decision that the petitioner can oblige the respondents to sell the properties covered by the CTS, the contract being still effective.

RULING

No, CA did not err in reversing the trial court’s decision.

Under the law (Art 1179), (1) every obligation whose performance does not depend upon a future or uncertain event, or upon a past event unknow to the parties; (2) every obligation which contains a resolutory condition shall be demandable, without prejudice to the effects of the happening of the event.

In this case, SC upholds the findings of the CA in dismissing the complaint for specific performance filed by the petitioner against the respondents for lack of merit. The parties are bound to the stipulations they mutually agreed upon in the CTS Indeed, the contract executed by the parties is the law between them. Consequently, from the time the contract is perfected, all parties privy to it are bound not only to the fulfillment of what has been expressly stipulated but likewise to all consequences which, according to their nature, may be in keeping with good faith, usage and law. It is undisputed that the abovementioned contract is in the nature of a CTS. As such, the obligation of the seller to sell becomes demandable only upon the occurrence of the suspensive condition. As correctly observed by the CA, the suspensive condition is the payment in full of the purchase price by the petitioner prior to the expiration of the 90-day period stipulated in their CTS, which the latter failed to do so.