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  • MEGAWORLD vs. MAJESTIC

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    Agatha Granado
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    The Supreme Court ruled that Megaworld Properties and Holdings, Inc. and other petitioners were not obligated to provide security for a property under a joint venture agreement with Majestic Finance and Investment Co., as the obligations of both parties were reciprocal. Reciprocal obligations must be performed simultaneously, with one party's performance dependent on the other's. As development of the property did not occur, fulfilling remaining obligations under the agreement was no longer required. The Court nullified lower court orders and directed resumption of proceedings.

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    The Supreme Court ruled that Megaworld Properties and Holdings, Inc. and other petitioners were not obligated to provide security for a property under a joint venture agreement with Majestic Finance and Investment Co., as the obligations of both parties were reciprocal. Reciprocal obligations must be performed simultaneously, with one party's performance dependent on the other's. As development of the property did not occur, fulfilling remaining obligations under the agreement was no longer required. The Court nullified lower court orders and directed resumption of proceedings.

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    81 views3 pages

    MEGAWORLD vs. MAJESTIC

    Uploaded by

    Agatha Granado
    The Supreme Court ruled that Megaworld Properties and Holdings, Inc. and other petitioners were not obligated to provide security for a property under a joint venture agreement with Majestic Finance and Investment Co., as the obligations of both parties were reciprocal. Reciprocal obligations must be performed simultaneously, with one party's performance dependent on the other's. As development of the property did not occur, fulfilling remaining obligations under the agreement was no longer required. The Court nullified lower court orders and directed resumption of proceedings.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 3

    MEGAWORLD vs.

    MAJESTIC
    G.R. No.169694, Dec. 09, 2015

    DOCTRINE/PRINCIPLES: Obligations: Reciprocal Obligations --- are those that arise from
    the same cause, and in which each party is a debtor and a creditor of the other at the same time,
    such that the obligations of one are dependent upon the obligations of the other. --- They are to
    be performed simultaneously, so that the performance of one is conditioned upon the
    simultaneous fulfillment of the other. In reciprocal obligations, neither party incurs in delay if the
    other does not comply or is not ready to comply in a proper manner with what is incumbent upon
    him. From the moment one of the parties fulfills his obligation, delay by the other begins (Article
    1169 of the Civil Code). In reciprocal obligations, before a party can demand the performance of
    the obligation of the other, the former must also perform its own obligation.

    FACTS:
    Megaworld Properties and Holdings, Inc. (developer) entered into a Joint Venture
    Agreement (JVA) with Majestic Finance and Investment Co., Inc. (owner) for the development
    of the residential subdivision located in Brgy. Alingaro, General Trias, Cavite. According to the
    JV A, the development of the 215 hectares of land belonging to the owner (joint venture
    property) would be for the sole account of the developer and that upon completion of the
    development of the subdivision, the owner would compensate the developer in the form of
    saleable residential subdivision lots. The JV A further provided that the developer would
    advance all the costs for the relocation and resettlement of the occupants of the joint venture
    property, subject to reimbursement by the owner and that the developer would deposit the initial
    amount of P10,000,000.00 to defray the expenses for the relocation and settlement, and the costs
    for obtaining from the Government the exemptions and conversion permits, and the required
    clearances. The developer and owner agreed, through the addendum to the JV A, to increase the
    initial deposit for the settlement of claims and the relocation of the tenants from P10,000,000.00
    to P60,000,000.00. The developer, by deed of assignment, transferred, conveyed and assigned to
    Empire East Land Holdings, Inc. (developer/assignee) all its rights and obligations under the JV
    A including the addendum.
    The owner filed before the RTC a complaint for specific performance with damages
    against the developer, the developer/assignee and respondent Andrew Tan, who are now the
    petitioners herein. The complaint was mainly based on the failure of the petitioners to comply
    with their obligations under the JVA.

    ISSUE:
    W/N the petitioners are obligated to perform their obligations under the JVA, including
    that of providing round-the-clock security for the subject property, despite respondents' failure or
    refusal to acknowledge or perform their reciprocal obligations there?
    RULING:
    The SC held that the petitioners are not obligated to perform their obligations under the
    JVA such as that of providing round-the-clock security for the subject property since the
    obligations of the parties therein were unquestionably reciprocal.
    Reciprocal obligations are those that arise from the same cause, and in which each party
    is a debtor and a creditor of the other at the same time, such that the obligations of one are
    dependent upon the obligations of the other. They are to be performed simultaneously, so that the
    performance by one is conditioned upon the simultaneous fulfillment by the other.
    It appears that upon the execution of the JVA, the parties were performing their
    respective obligations until disagreement arose between them that affected the subsequent
    performance of their accrued obligations. Being reciprocal in nature, their respective
    obligations as the owner and the developer were dependent upon the performance by the other of
    its obligations; hence, any claim of delay or non-performance against the other could prosper
    only if the complaining party had faithfully complied with its own correlative obligation.
    The SC further held that all of the obligations under the JVA were subject to the
    happening of the complete development of the joint venture property, or if it would become
    indubitable that the completion would not take place, like when an obligation, whether
    continuous or activity, was not performed. Should any of the obligations, whether continuous
    or activity, be not performed, all the other remaining obligations would not ripen into
    demandable obligations while those already performed would cease to take effect. This is
    because every single obligation of each party under the JVA rested on the common cause of
    profiting from the developed subdivision.
    According to Article 1184 of the Civil Code, the condition that some event happen at a
    determinate time shall extinguish the obligation as soon as the time expires, or if it has become
    indubitable that the event will not take place. Here, the common cause of the parties in entering
    into the joint venture was the development of the joint venture property into the residential
    subdivision as to eventually profit therefrom. Consequently, all of the obligations under the JVA
    were subject to the happening of the complete development of the joint venture property, or if it
    would become indubitable that the completion would not take place, like when an obligation,
    whether continuous or activity, was not performed. Should any of the obligations, whether
    continuous or activity, be not performed, all the other remaining obligations would not ripen into
    demandable obligations while those already performed would cease to take effect. This is
    because every single obligation of each party under the JVA rested on the common cause of
    profiting from the developed subdivision.
    WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES
    and SETS ASIDE the decision promulgated on April 27, 2005 and the resolution promulgated
    on September 12, 2005; NULLIFIES the orders issued on November 5, 2002 and May 19, 2003
    in Civil Case No. 67813 by the Regional Trial Court, Branch 67, in Pasig City; DIRECTS the
    Regional Trial Court, Branch 67, in Pasig City to resume the proceedings in Civil Case No.
    67813 with dispatch; and ORDERS the respondents to pay the costs of suit.

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