Case Summary (G.R. No. 169694)
Petitioner
Megaworld Properties and Holdings, Inc.; Empire East Land Holdings, Inc. (assignee); and Andrew L. Tan, collectively charged with performing developer obligations under the joint venture agreement (JVA).
Respondent
Majestic Finance and Investment Co., Inc.; Rhodora Lopez-Lim; and Paulina Cruz, who sought specific performance and interim relief when the developer allegedly failed to maintain round-the-clock security.
Key Dates
• September 23, 1994: JVA executed.
• September 24, 1994: Addendum increasing relocation deposit.
• October 27, 1994: Assignment to Empire East.
• February 29, 2000: Complaint for specific performance filed in RTC Pasig.
• November 5, 2002: RTC orders 24-hour security.
• May 19, 2003: RTC denies motion for reconsideration.
• April 27, 2005: CA dismisses certiorari petition.
• September 12, 2005: CA denies reconsideration.
• December 9, 2015: Supreme Court decision promulgated.
• October 24, 2016: Reported at 775 Phil. 34.
Applicable Law
1987 Philippine Constitution principles on contractual freedom; Civil Code provisions on reciprocal obligations (Articles 1184–1185); Rules of Court on provisional remedies, injunctive relief (Rule 58), and status quo orders.
Joint Venture Agreement Structure and Obligations
The JVA imposed continuous obligations—developer to secure the property from squatters, owner to deliver possession and documents, both to pay taxes—and sequenced activity obligations covering relocation of occupants, development planning, permit acquisition, land development, titling, and lot sales. Each party’s duty was conditioned on the other’s correlative performance.
Dispute and Lower Court Proceedings
When the owner alleged that the developer dismissed security personnel since 1997, it sought interim security relief during pre-trial settlement talks. The developer opposed on grounds of prematurity and the principle of reciprocal obligations. The RTC nonetheless directed ongoing security, and both courts below refused to reconsider.
RTC’s Interim Order and CA’s Ruling
The RTC’s November 5, 2002 order compelled “round-the-clock security” as a preliminary measure. The CA affirmed, finding that the developer’s security obligation arose upon JVA execution and was already demandable; it characterized the order as a justified interim measure unrelated to negotiations or simultaneous performance doctrine.
Supreme Court’s Legal Analysis on Reciprocity of Obligations
The Supreme Court held that the JVA’s duties were reciprocal and subject to simultaneous performance: “neither party incurs delay if the other is not ready to comply.” Owner obligations (e.g., surrendering possession, approving expenses) had not all ripened into demandable undertakings; absent proof of complete owner performance,
...continue readingCase Syllabus (G.R. No. 169694)
Facts of the Case
- On September 23, 1994, Megaworld Properties and Holdings, Inc. (developer) and Majestic Finance and Investment Co., Inc. (owner) executed a Joint Venture Agreement (JVA) to develop 215 hectares in General Trias, Cavite, into a residential subdivision.
- Under the JVA, the developer would bear all development costs and, upon completion, receive saleable subdivision lots; the owner would reimburse certain relocation and permit expenses.
- The developer advanced PHP 10,000,000 for relocation and permit expenses; an addendum on September 24, 1994 increased this deposit to PHP 60,000,000.
- On October 27, 1994, Megaworld assigned all its JVA rights and obligations to Empire East Land Holdings, Inc.; Andrew L. Tan was joined as co-obligor.
- On February 29, 2000, the owner filed a complaint for specific performance and damages in RTC Pasig (Civil Case No. 67813), alleging petitioners failed to maintain round-the-clock security as required by Article III(j) of the JVA.
- During pre-trial, parties attempted settlement; negotiations stalled and the owner filed a motion on September 16, 2002 for an order compelling security measures.
- The petitioners argued the motion was premature and that mutual-reciprocal obligations barred enforcement because the owner had not yet honored its own duties.
Procedural History
- November 5, 2002: RTC Branch 67 issued an order directing petitioners to provide 24-hour security pending resolution of the case.
- May 19, 2003: RTC denied petitioners’ motion for reconsideration of the security order.
- August 4, 2003: Petitioners filed a petition for certiorari in the Court of Appeals (CA), alleging grave abuse