Litton, et. al. vs Luzon Surety, Inc., 90 Phil 783
Subject: Obligations and Contracts
Facts
On April 18, 1941, the three Gibbs, father and sons, sold the land and
the building to Raymundo F. Navarro and R. F. Navarro & Co., Inc., for the
sum of $125,000, United States currency, payable in ten installments, to secure
which a deed of mortgage was executed on the same property under certain
conditions.
On August 12, 1941, Raymundo F. Navarro and R. F. Navarro & Co., Inc.
in turn sold the property to Eulogio Rodriguez Sr. for the sum of P40,000, the
latter assuming the obligation to pay the balance of the purchase price which
then amounted to $101,250 and the fulfillment of the other conditions
stipulated in the deed of sale executed in favor of the original owners. The
transfer was made with the conformity of the Gibbs.
On December 16, 1941, Eulogio Rodriguez Sr. assigned his right and
interest in the property to Luzon Surety Co., Inc. for P42,000, the latter
assuming the mortgage liability in favor of the original owners. This
assignment was also made with the conformity of the Gibbs. As a result of these
transfers, a new transfer certificate of title was issued in the name of Luzon
Surety Co., Inc., with the necessary annotation of the mortgage in favor of the
mortgagees.
WAR CAME, and while being held at Fort Santiago, Eulogio Rodriguez Sr.
met George Litton.
After the release of the defendant from Fort Santiago, the Japanese
Military Administration threaten that the failure for payment of the obligation
owing by the Gibbs would lead to the confiscation of the property. To raise
funds for the payment, the company then resolved to sell the property for
P300,000. Accordingly, the property was advertised for sale and one of the
offers received was that of George Litton who, as already stated, became
acquainted with Rodriguez at Fort Santiago.
Three days after the offer had been accepted, the Luzon Surety Co., Inc.
wrote a letter to the Japanese Military Administration informing the latter
that the company was already in a position to pay the mortgage obligation of
the Gibbs and asked for authority to deposit the money in the name of the Gibbs
in the Philippine National Bank and to secure from them the corresponding
release of the mortgage. This letter was returned to the Luzon Surety Co,, Inc.
without any reply. After the return of this letter, the Luzon Surety Co., Inc.
sent another letter to the Japanese Military Administration informing the
latter of the offer made by George Litton and his wife and reiterating the
request that the transfer be approved and they be allowed to secure the release
of the mortgage.
Litton when shown copy of the resolution expressed the opinion that such
approval was not necessary, and as there was doubt on the matter, the Luzon
Surety Co., Inc. wrote on June 7, 1943, a letter to the Japanese Military
Administration asking for instructions as to the best procedure to be followed
to effectuate the sale and secure the cancellation of the mortgage from the
Gibbs.
On September 14, 1943, Litton and his wife filed this action in court
against the defendants for specific performance.
Issue
WON
he is still bound to sell.
Ruling
Under
the law (Art 1183), impossible conditions, those contrary to good customs or
public policy and those prohibited by law shall annul the obligation which
depends upon them. If the obligation is divisible, that part thereof which is
not affected by the impossible or unlawful condition shall be valid. The
condition not to do an impossible thing shall be considered as not having been
agreed upon.
In
this case, the condition has become impossible.
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