Dec 17, 2009

Civil Law 2- ObliCon- Heirs of Luis Bacus vs Court of Appeals, Spouses Faustino Duray and Victoriana Duray

This case is with regard to Art 1191 of the NCC- Reciprocal Obligations

Case of Heirs of Luis Bacus vs Court of Appeals, Spouses Faustino Duray and Victoriana Duray
G.R.No. 127695 03December2001

FACTS OF THE CASE:

On 1984 Luis Bacus leased to Faustino Duray a parcel of agricultural land with total land area of 3,002 of square meters, in Cebu. The lease was for six years ending in 1990, the contract contained an option to buy clause. Under the said option, the lessee had the exclusive and irrevocable right to buy 2,000 square meters 5 years from a year after the effectivity of the contract, at P200 per square meter. That rate shall be proportionately adjusted depending on the peso rate against the US dollar, which at the time of the execution of the contract was 14 pesos.

Close to the expiration of the contract Luis Bacus died on 1989, after Duray informed the heirs of Bacus that they are willing and ready to purchase the property under the option to buy clause. The heirs refused to sell, thus Duray filed a complaint for specific performance against the heirs of Bacus. He showed that he is ready and able to meet his obligations under the contract with Bacus. The RTC ruled in favor of the Durays and the CA later affirmed the decision.

ISSUES OF THE CASE:

Can the heirs of Luis Bacus be compelled to sell the portion of the lot under the option to buy clause?

- Yes, Obligations under an option to buy are reciprocal obligations. The performance of one obligation is conditioned on the simultaneous fulfillment of the other obligation. In other words, in an option to buy, the payment of the purchase price by the creditor is contingent upon the execution and delivery of the deed of sale by the debtor.
- When the Duray’s exercised their option to buy the property their obligation was to advise the Bacus’ of their decision and readiness to pay the price, they were not yet obliged to make the payment. Only upon the Bacus’ actual execution and delivery of the deed of sale were they required to pay.
- The Durays did not incur in delay when they did not yet deliver the payment nor make a consignation before the expiration of the contract. In reciprocal obligations, neither party incurs in delay if the other party does not comply or is not ready to comply in a proper manner with what is incumbent upon him. Only from the moment one of the parties fulfills his obligation, does delay by the other begin.

HELD:

The petition is DENIED nad the decision of the Court of Appeals is AFFIRMED.

Obligations and Contracts Terms:


Reciprocal Obligations- Those which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously such that the performance of one is conditioned upon the simultaneous fulfillment of the other

I hope this helps.

Jeff David

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