#183 - SM Investments v. Posadas - Naungayan

#183 G.R. No.
200901, December 07, 2015

SM INVESTMENTS CORPORATION, Petitioner, v. ESTELA MARFORI POSADAS,
MARIA ELENA POSADAS AND AIDA MACARAIG POSADAS. Respondents.
DECISION
Judge: Perez
Jo O. Naungayan
Doctrine:
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the
fixing of a period.
This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.
Facts:
Respondents Estela Marfori Posadas, Maria Elena Posadas and Aida Macaraig
Posadas are the owners of several parcels of land with a total area of 27.6 hectares, more
or less, and covered by Transfer Certificates of Title Nos. S-37656, 158291 and 158292 of
the Register of Deeds of Makati City.
On 08 August 1995, SMIC, through its President, Henry Sy, Jr. (Mr. Sy), sent
respondents a written offer for a joint venture for the development of the Subject
Property with a 60/40 partnership share in favor of the respondents and agreed on
P80,000,000.00 goodwill money as demanded by the petitioners.
On 02 December 1995, complying with what it considered as a perfected contract
for the joint venture, sent respondents four (4) drawings of the proposed mall and its
location within the Subject Property.
However, on December 6, 1995, after receiving the aforementioned drawings,
respondents sent SMIC a letter informing it that they had received several other offers
for the Subject Property and that the time in between their last letter and the submission
of the drawings were taken by the respondents as lack of interest on the part of the
Petitioner. They demanded that SMIC better the said offers, before they submit their
comments on the drawings.
On February 27, 1996, the Petitioner sent another letter raising the goodwill
money to P140,000,000.00 on top of the 60/40 Joint venture share in favor of the
respondents.
Thereafter, on 21 August 1996, SMIC, through counsel, sent respondents a letter
reminding them to respect the joint venture agreement for the development of the
Subject Property.
When it appeared that the respondents were not willing to comply, the petitioner
on 21 April 1997, filed Civil Case No. 97-832, a case for Specific Performance and
Damages with Prayer for Temporary Restraining Order and Writ of Preliminary
Injunction against respondents.
The respondents refuted the aforestated assignment of errors, and contended
that the exchange of correspondences between SMIC and respondents, in fact, shows
that no joint venture agreement for the development of the Subject Property was
perfected.
Issue:
Does SMIC have the right to demand the compliance of the respondents by virtue of a
completed joint Venture Contract?
Ruling:
Yes.
In relation to the foregoing, Articles 1318 to 1320 of the Civil Code states the
necessary requisites of a contract, to wit:
Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Art. 1319.
Consent is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The offer must be certain and
the acceptance absolute. A qualified acceptance constitutes a counter-offer,
Based on the above-mentioned provisions of law, we concur with the findings of

the Trial Court that the facts in this particular case show that a contract for a joint
venture between the parties has, in fact, been perfected.
At this point, following the above-quoted provisions of the Civil Code,
particularly Articles 1318 and 1319 thereof, we agree with the finding of the Trial Court
that a joint venture agreement between the parties has been perfected, in that (i) there is
consent, or a meeting of the minds, (ii) there is an object certain, which is the joint
venture, and (iii) there is a cause and/or consideration, which are the goodwill money
and specific sharing scheme.
Under Article 1191 of the Civil Code of the Philippines, “The injured party may
choose between the fulfillment and the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible.”
In this case, the Petitioner who is the injured party demands that the obligation
of the respondents be fulfilled
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.
Indeed, the letter of SMIC of 27 February 1996 on the increased goodwill money
was a post perfection matter, and clearly, was for the purpose of having the issue of
breach of the perfected contract settled without further ado.
In view of the foregoing, we affirm the finding of the Trial Court that there is a
perfected joint venture agreement between the parties for the development of the
Subject Property. Therefore, the said perfected joint venture agreement still stands. In
this jurisdiction, obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.
In view of the foregoing, we affirm the finding of the Trial Court that there is a
perfected joint venture agreement between the parties for the development of the
Subject Property. Therefore, the said perfected joint venture agreement still stands. In
this jurisdiction, obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith

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#183 G.R. No.

200901, December 07, 2015

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established.

Based on the above-mentioned provisions of law, we concur with the findings of

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