Cajucom v. Manila Remnant Co.
REITERATIONFacts
The Antecedents: Te Atta Uy Vda. de Cajucom (lessee) was occupying a parcel of land in Binondo, Manila, on which she had erected a building. The lease agreement was not recorded. Manila Remnant Co., Inc. (lessor) purchased the land in April 1957 and subsequently demanded that the lessee vacate within 90 days. Procedural History: The Municipal Court of Manila dismissed the lessor's illegal detainer action. The Court of First Instance reversed this decision, ordering the lessee to vacate and remove her improvements. The Court of Appeals affirmed the decision of the Court of First Instance. The Petition: Petitioner Te Atta Uy Vda. de Cajucom filed a petition for review, arguing that a contract executed in October 1957 granted her the right to remain in possession at a monthly rental of P1,750.00 until the property was sold, and that the sale was a condition precedent for the lessor to recover possession.
Issue(s)
Whether the October 1957 contract granted the petitioner the right to remain in possession until the property was sold. Whether the lessor was entitled to demand possession of the property.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals. The petition was denied, and the petitioner was ordered to pay costs.
Ratio Decidendi
On Issue 1: The Supreme Court found the appeal untenable, holding that the stipulation in the October 1957 contract, stating that the lessee shall pay rentals until the property is sold and the price paid, referred only to the authority given to A. U. Valencia & Co. to sell the property. This right to remain in possession was considered ad interim, lasting only until the agent could make the sale or it became clear that the property could not be sold under the specified terms. Since the broker resigned and indicated an inability to sell on the agreed terms, the 1957 contract became functus officio, its objective having become impossible of attainment. Therefore, the contract's binding force terminated, and the parties reverted to their original positions. On Issue 2: The Court ruled that the impossibility of attaining the objective of the 1957 contract meant the situation reverted to that existing before the agreement. Consequently, the respondent corporation became entitled to terminate the lease of petitioner Te Atta Uy Vda. de Cajucom. Her lease was considered without a definite period and on a month-to-month basis because the rental was paid monthly, as per Article 1687 of the Civil Code. While the said article allows courts to fix a longer term for lessees on a monthly basis who have occupied for over a year, the Court of First Instance had already exercised this power by granting the petitioner three months to vacate, a period that had already elapsed.
Main Doctrine
The Supreme Court held that when the objective of a contract, such as the sale of a property through a designated agent, becomes impossible of attainment due to the agent's resignation and inability to sell on specified terms, the contract's binding force terminates. Consequently, the parties revert to their original legal positions. In this instance, the lessor regained the right to terminate the lease, which was deemed a month-to-month lease under Article 1687 of the Civil Code due to the monthly rental payments.