Republic v. Florendo

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA) THROUGH ITS DIRECTOR GENERAL, LILIA B. DE LIMA, PETITIONER, VS. ANTONIO AND LILI FLORENDO,* RESPONDENTS.

[G.R. No. 166866, March 27, 2008]

CORONA, J.:

Facts:

Petitioner Republic of the Philippines is represented in this case by the Philippine Economic Zone Authority (PEZA), a government corporation created under RA 7916, as amended.

On April 14, 1991, the Export Processing Zone Authority, (PEZA), predecessor of PEZA, filed a complaint for the expropriation of seven parcels of land located at Barrio Ibo, Lapu-Lapu City, Cebu, owned by respondents. The purpose of the expropriation was to establish and develop an export processing zone or a part thereof on those real properties. After trial on the merits, the RTC rendered a decision ordering the expropriation of the seven parcels of land and payment of just compensation of P1,500 per sq. m. with 12% interest per annum from the time petitioner took possession. During the pendency of petitioner’s appeal for the correctness of valuation, both parties reached an amicable settlement and agreed for the payment as fixed by RTC; as well as presentation by respondents of clean titles of all the subject properties before payment by petitioner.

Accordingly, the parties executed a deed of absolute sale dated June 25, 2001 which set out the terms and conditions of their settlement, the transfer of ownership from respondents to petitioner and the execution by the parties of the corresponding deed of absolute sale for the remaining six lots as soon as respondents could settle or clear the encumbrances or other problems affecting them. Petitioner prepared a joint motion to dismiss the expropriation case but respondent Antonio Florendo refused to sign because there were still three lots which had not yet been paid. Respondents could not clear these properties of their encumbrances and liens as there were pending cases filed by third party claimants over them. Instead, they proposed that a partial compromise agreement be executed to cover the four lots that had already been sold and transferred to PEZA. Petitioner, however, found the proposal unacceptable and contrary to their compromise agreement.

Issue:

Whether or not there was a perfected compromise agreement between the parties.

Ruling:

The compromise agreement the parties executed was in the form of a contract of sale. The elements of a valid contract of sale are: (a) consent or meeting of the minds; (b) determinate subject matter and (c) price certain in money or its equivalent. All the elements are present here. The parties agreed on the sale of a determinate object and the price certain. The contention of the respondent that there was no meeting of mind because the condition relating to the delivery of clean titles was not fulfilled is wrong. The delivery of clean titles was not a condition imposed on the perfection of the contract of sale but a condition imposed on petitioner's obligation to pay the purchase price of these lots. As ruled in the case of Jardine Davies Inc. vs CA, the court distinguished between a condition imposed on the perfection of a contract and a condition imposed merely on the performance of an obligation. While failure to comply with the first condition results in the failure of a contract, non-compliance with the second merely gives the other party options and/or remedies to protect its interest.