Case Digest (G.R. No. 131784) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Felix L. Gonzales v. The Heirs of Thomas and Paula Cruz, petitioner Felix L. Gonzales, proprietor of Felgon Farms, and respondents, heirs of Thomas and Paula Cruz represented by Elena C. Talens, executed on December 1, 1983 a Contract of Lease/Purchase for a half-portion of a 12-hectare parcel with a 2-hectare accretion in Rodriguez, Rizal (TCT No. 12111). Under paragraph 1, petitioner would lease for one year at an annual rental of ₱2,500 per hectare, then purchase the property for ₱1,000,000 within two years, paying 50% down upon execution of the deed of sale and the balance in two semiannual installments, at 12% interest. Paragraph 9 obliged respondents to secure a separate Transfer Certificate of Title (TCT) over the leased portion in a period not exceeding four years, after which a new contract in the same terms would be executed. Gonzales paid the annual rent, took possession, and installed a caretaker, but did not exercise his purchase option after the one-year lease a Case Digest (G.R. No. 131784) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Contract of Lease/Purchase
- On December 1, 1983, Paula A. Cruz and the heirs of Thomas and Paula Cruz (Ricardo A. Cruz, Carmelita M. Cruz, Salome A. Cruz, Irenea C. Victoria, Leticia C. Salvador, Elena C. Talens) entered into a one-year lease with an option to purchase a 6-hectare portion (plus 2-hectare accretion) of a 12-hectare parcel in Rodriguez, Rizal (TCT No. 12111) for ₱1,000,000.00, payable over two years at 12% interest.
- Annual rental was fixed at ₱2,500.00 per hectare (₱15,000.00 total), payable upon signing.
- Paragraph 9 provided that lessors must obtain a separate and distinct Transfer Certificate of Title (TCT) over the leased portion within four years, after which a new contract on the same terms would be executed.
- Performance and Breach
- Gonzales paid the ₱15,000.00 annual rent and took possession, installing a caretaker.
- He did not exercise the purchase option after the one-year lease and did not pay further rent.
- Heirs rescinded the contract for breach, demanded vacation in March 1987; Gonzales refused. Paula A. Cruz died March 19, 1987; remaining heirs sent another demand on August 24, 1987.
- Plaintiffs filed an action on October 12, 1987 for recovery of possession, moral and compensatory damages, attorney’s fees; Gonzales answered November 23, 1987, counterclaiming for damages.
- Trial Court Decision
- Held paragraph 9 a condition precedent to sale; lessors’ failure to secure TCT prevented enforcement of purchase option.
- Found plaintiffs could neither rescind purchase contract nor terminate lease due to implied new lease.
- Dismissed complaint; awarded Gonzales ₱20,000.00 moral damages, ₱10,000.00 attorney’s fees, costs.
- Court of Appeals Decision
- Interpreted clause 9 to require purchase first, then title transfer.
- Reversed trial court: ordered Gonzales to surrender possession and pay ₱15,000.00 per annum rent from December 1, 1984, ₱15,000.00 attorney’s fees, costs.
- Supreme Court Review
- Petition for certiorari raising: conflict between paragraph 1 and 9; whether paragraph 9 is a condition precedent; whether plaintiffs could rescind or terminate after one year.
Issues:
- Whether there is a conflict between paragraph 1 (one-year lease then purchase) and paragraph 9 (title to be secured within four years).
- Whether paragraph 9 is a condition precedent before the lessee can exercise the option to purchase.
- Whether plaintiffs may rescind the lease/purchase contract or terminate the lease after the one-year period.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)