CONTRACTS; In construing a written agreement, the reason behind and the circumstances surrounding its execution are of paramount importance. The intention of the contracting parties could be made to prevail, because their agreement has the force of law between them.
FACTS: State Investment Houses, Inc. (SIHI) is the registered owner of two parcels of land at Bulacao, Cebu City. On Jan. 10, 1985, Carceller and SIHI entered into a lease contract with option to purchase over said parcels of land, at a monthly rental of P10,000.00 for a period of eighteen months beginning on August 1, 1984 until January 30, 1986. Three weeks before the expiration of the lease contract, SIHI notified Carceller of the impending termination of the lease agreement and of the short period of time left within which he could still validly exercise the option. On Jan. 15. 1986. Carceller requested for a six month extension of the lease contract in order to raise sufficient funds to be able to exercise the option. However, SIHI notified Carceller that his request was disapproved. On Feb. 18, 1986. Carceller notified SIHI of his decision to exercise the option to purchase the property. However, SIHI stressed that the period within which the option should have been exercised had already lapsed and asked Carceller to vacate the property within ten days from notice. Carceller filed a complaint for specific performance and damages before the RTC to compel SIHI to honor its commitment to execute the corresponding deed of sale. The RTC ruled in favor of Carceller. Thus, SIHI elevated the case to the CA which affirmed the decision of the lower court.
ISSUE: Whether or not Carceller should be allowed to exercise the option to purchase the leased property, despite the alleged delay in giving the required notice to SIHI.
HELD: The Supreme Court ruled in the affirmative. Carceller's letter to SIHI on Jan. 15, 1986 was fair notice to the latter of the former's intent to exercise the option, despite the request for the extension of the lease contract. As stated in the said letter to SIHI, Carceller was requesting for an extension of six months to allow him to generate sufficient funds in order to exercise his option to buy the subject property. Even if Carceller notified SIHI of his desire to exercise the option 18 days after the expiration of the option period, such delay was found by the CA as neither "substantial" nor "fundamental" and not amount to a breach that would defeat the intention of the parties when they executed the lease contract with option to purchase. It is well- settled in both law and jurisprudence that in construing a written agreement, the reason behind and the circumstances surrounding its execution are of paramount importance. The intention of the contracting parties could be made to prevail, because their agreement has the force of law between them. In the case at bar, judging from the subsequent acts of the parties, it is undeniable that SIHI really intended to dispose of said leased property, which petitioner indubitably intended to buy. [Carceller vs. Court of Appeals, et al; GR No. 124791; February 10,1999; SECOND DIVISION--- Quisumbing, J.]
VESTED RIGHT; A vested right is one which is absolute, complete and unconditional, to the exercise of which no obstacle exists, and which is immediate and perfect in itself and not dependent upon a contingency.
FACTS: A resolution was issued by the TLRC Executive Committee creating the Provident Fund the primary purpose of which is to augment the retirement and other fringe benefits of its employees and members. The Fund derives its capital from the members' and government's contributions and from its other earnings. On audit, TLRC Corporate Auditor Adelaida S. Flores, suspended the transfer of corporate contribution to the Provident Fund and questioned the propriety of the disbursement having no statutory basis authorizing such grant of benefits as required by the Corporate Compensation Circular No. 10. In compliance to the suspension order, TLRC Provident Fund Board of Trustees issued a resolution discontinuing the collection of contributions from the TLRC and its members and ordered immediate refund of members' contributions collected from March 1 to September 15, 1993. Subsequently, the Provident Fund was dissolved. The Board ordered the refund of the members' and government's shares paid to the TLRC provident Fund to its members. However, the Commission on Audit disallowed the distribution of the amount representing the government's share to the members. Hence, this appeal by certiorari. Petitioner contends that the dissolution of the Provident Fund does not render illegal the distribution of the government's share to the members. He avers that when TLRC made its contributions to the Provident Fund, it had divested itself of the ownership of whatever contributions it gave. Petitioner asserts that the members have a vested right, not only on their own contributions, but to the government's share as well.
ISSUE: Whether or not COA committed a grave abuse of discretion in disallowing the distribution of the government's share paid to the aborted TLRC Provident Fund to its members.
HELD: The Supreme Court ruled in the negative. The Provident Fund must be reverted to the TLRC and not be given to the employees. As correctly pointed, the government contributions were made on the condition that the same would be used to augment the retirement and other benefits of the TLRC employees. Since the purpose was not attained due to the question on the validity of the Fund, it follows then that the employees are not entitled to the government's share to the Fund. Otherwise, it would be tantamount to the use of public funds outside the specific purpose for which the funds were appropriated. Neither the members of the Provident Funds acquired a vested right over the government contributions. A vested right is one, which is absolute, complete and unconditional, to the exercise of which no obstacle exists. In the case at bar, the government contributions were subject to the condition that the funds would be used to augment the retirement and other fringe benefits of TLRC employees. However, the Provident Fund was dissolved due to lack of statutory basis. Thus, contributions made were unauthorized, if not unlawful. [Joseph H. Reyes vs. Commission on Audit; G.R. No. 125129; March 29, 1999; En Banc--- Pardo, J.]
EJECTMENT; Ejectment suits settle only the issue of physical possession; They are not barred by the pendency of an action for the annulment of the sale and for reconveyance of the disputed land.
FACTS: Private respondent, Luis Manlutac filed for the annulment of sale of a parcel of land on which he was one of the tenants on the ground of the violation of their alleged preemptive right of first refusal under P.D. 1517. The Lower court ruled in favor of Manlutac, which annulled the sale to Petitioner of the disputed parcels of land. While the decision was on appeal, petitioner filed an ejectment case against private respondent for the expiration of the oral lease, with accumulated rental arrearages. The same was favorably ruled by the court and issued an order against private respondent to vacate the premises. Private respondent moved for the dismissal of the ejectment case because of the prior annulment of the sale.
ISSUE: Whether or not the pending case on annulment of sale is a bar for the ejectment case on the same land.
HELD: The Supreme Court ruled in the negative. First, since the issue on the annulment case is still on appeal, it has no binding effect. Second, the consistent case law is that ejectment suits deal only with the issue of physical possession. They are not barred by the pendency of an action for the annulment of the sale and for reconveyance of the disputed land. In the case at bar, the private respondent's expectation of being granted the preemptive right to purchase the property neither establishes his right to possess nor justifies the dismissal of the ejectment case against him. [Solanda Ent., Inc. vs. Court of Appeals and Luis Manlutac; G. R. No. 123479; April 14, 1999; THIRD DIVISION --- Panganiban, J.]
LAND TITLES AND DEEDS; RECONSTITUTION; The phrase "any other document" that may be considered as a sufficient and proper basis for reconstitution as provided for under sec. 2(f) of R.A. 26 refers to similar documents previously enumerated therein, that is, those mentioned in sec. 2(a), (b), (c) and (d).
FACTS: Petitioners filed a petition for the reconstitution of Transfer Certificate of Title No. 75355 of the Registry of Deeds of Quezon City with the Regional Trial Court, National Capital Judicial Region, Kalookan City. During the trial, petitioners presented documentary evidence showing their compliance with the jurisdictional requirements and they adduced ex-parte testimonial and documentary evidence in support of their petition before the branch clerk of court. On January 22, 1998, the trial court rendered a decision dismissing the petition for failure to comply with the requirements of Section 2 of Act 26. Motion for reconsideration was filed but again was dismissed. On appeal, petitioners contended that Section 3 of Republic Act No. 26 and not Section 2 of the same provision should be the basis for the reconstitution. Moreover, it is petitioner's submission that under sec. 3(f) of R.A. 26, any other document may be the basis for reconstituting a lost or destroyed certificate of title, and the documents contemplated thereunder are specified in paragraph 5 of LRC Circular No. 35. Petitioners contend that after presenting their documents, the respondent court erred in not ordering the reconstitution of subject TCT No. 75355.
ISSUE: Whether or not petitioners' presentation of the documents enumerated in LRC Circular No. 35 constituted a sufficient and proper basis for reconstitution under R.A. 26.
HELD: The Supreme Court ruled in the negative. First, petitioners are correct that sec. 3 of R.A. 26 governs petitions for reconstitution of transfer certificates of tiles, while sec. 2 of the same law applies when original certificates of title are at stake. However, be that as it may, the decision of the respondent court is right, under the attendant facts and circumstances, because the basis thereof is sec. 2(f) of R.A. 26, which is the same as sec. 3 of said law. Second, par. 5 of LRC Circular No. 35 provide for merely additional documents that must accompany the petition to be forwarded to the Land Registration Commission (now Land Registration Authority). There is nothing in LRC Circular No. 35 to support petitioners' stance that the documents therein enumerated are those referred to in sec. 3(f) of R.A. 26. It has been held that when sec. 2(f) of R.A. 26 speaks of "any other document", the same must refer to similar documents previously enumerated therein, that is, those mentioned in sec. 2(a), (b), (c) and (d). Having failed to provide for a sufficient and proper basis for reconstitution, petitioners cannot assail the respondent court for dismissing their petition for reconstitution. [Heirs of Felicidad Dizon vs Discaya; G.R. No. 133502, February 15, 1999; Third Division--- Purisima, J.]
RIGHT OF FIRST REFUSAL; For the exercise of the preemptive right of first refusal granted by PD 1517, Proclamation No. 1967 requires the tenant to show that the disputed land is located within both an Urban Land Reform Zone and an Area For Priority Development.
FACTS: Private respondent Luis Manlutac was one of the tenants of the Quijano estate at Rivera St., Tondo, Manila for more than 40 years, where he had built a residential house. It was later sold to the petitioner without giving the tenants the chance to exercise their preemptive rights as accorded to them by P. D. 1517, subject lands being declared as urbanized lands. The tenants filed a complaint against petitioner and the Quijanos for the annulment of the sale. The same was decided in their favor. On appeal, the respondent court upheld the assailed decision. Claiming that the disputed land has not been declared to be within an Area for Priority Development (APD), petitioner now contends that the respondent court erred in granting the right of first refusal to private respondent.
ISSUE: Whether or not a tenant on a land within an urban zone for more than 10 years is entitled to the statutory right of first refusal absent a finding that the land is included in an Area Priority Development (APD) and Urban Land Reform Zone (ULRZ).
HELD: The Supreme Court ruled in the negative. An urban tenant's right of first refusal is set forth in P.D. 1517. However, the areas or zones wherein this preemptive right could be availed of was further delimited by Proclamation No. 1967. A close reading of Proclamation No. 1967 reveals that, before a preemptive right can be exercised, the disputed land should be situated in an area declared to be both APD and ULRZ. In the instant case, the disputed land was not included in the list of APDs in Tondo, Manila. Hence, private respondent has no preemptive right over the land. [Solanda Ent., Inc. vs. Court of Appeals and Luis Manlutac, G. R. No. 123479, April 14, 1999, THIRD DIVISION --- Panganiban, J.]