GR 166462; (October, 2012) (Digest)
G.R. No. 166462 ; October 24, 2012
P.L. UY REALTY CORPORATION, Petitioner, vs. ALS MANAGEMENT AND DEVELOPMENT CORPORATION and ANTONIO S. LITONJUA, Respondents.
FACTS
Petitioner P.L. Uy Realty Corporation (PLU) and respondent ALS Management and Development Corporation (ALS) executed a Deed of Absolute Sale with Mortgage on September 3, 1980. The contract stipulated that PLU, as vendor, was obligated to clear the property of informal settlers. A subsequent Agreement dated December 23, 1980, explicitly provided that the accrual of interest and the due dates for installment payments would be deferred and extended until the date the squatters vacated the property. Title was transferred to ALS in January 1981. After ALS failed to pay the second installment, PLU filed a complaint for foreclosure of mortgage in August 1982.
The Regional Trial Court dismissed the complaint on the ground of prematurity, a decision affirmed by the Court of Appeals. The courts found that the obligation of ALS to pay the installments had not yet become due because the suspensive condition—the complete eviction of the squatters—had not been fulfilled. PLU filed a Petition for Review on Certiorari, arguing that the condition was potestative and that ALS, having taken title and possession, was already in delay.
ISSUE
Whether the Court of Appeals erred in affirming the dismissal of PLU’s complaint for foreclosure on the ground of prematurity.
RULING
The Supreme Court denied the petition and affirmed the rulings of the lower courts. The legal logic centers on the nature of the parties’ agreement as a conditional obligation. The December 23, 1980 Agreement clearly established that the payment of installments and accrual of interest were contingent upon the fulfillment of a suspensive condition: the vacation of the squatters from the property. This condition was not potestative, as it depended not on the will of PLU alone but on the successful conclusion of legal eviction proceedings against third parties, a process outside the sole control of either party.
Consequently, the obligation of ALS to pay the succeeding installments had not yet arisen because the condition precedent had not been met. There can be no delay or default in the performance of an obligation that is not yet due. The Court emphasized that the parties, by their clear stipulation, intended to defer performance until the property was cleared. Therefore, PLU’s action for foreclosure was prematurely filed, as no demandable obligation existed at the time of filing. The dismissal of the complaint was proper.