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    Slc-Law: Megaworld Properties and Holdings, Inc. V. Majestic Finance and Investment Co., Inc

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    Jomar Teneza
    1) Megaworld Properties and Holdings, Inc. and Majestic Finance and Investment Co., Inc. entered into a joint venture agreement to develop a residential subdivision. 2) Under the agreement, the parties had reciprocal obligations where each was dependent on the other performing their obligations. These included Megaworld developing the land and Majestic providing compensation. 3) The Supreme Court ruled that Megaworld should not be ordered to maintain security on the property. As the obligations were reciprocal, Megaworld's obligation to provide security was conditional on Majestic also performing its obligations under the agreement.

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    Slc-Law: Megaworld Properties and Holdings, Inc. V. Majestic Finance and Investment Co., Inc

    Uploaded by

    Jomar Teneza
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    1) Megaworld Properties and Holdings, Inc. and Majestic Finance and Investment Co., Inc. entered into a joint venture agreement to develop a residential subdivision. 2) Under the agreement, the parties had reciprocal obligations where each was dependent on the other performing their obligations. These included Megaworld developing the land and Majestic providing compensation. 3) The Supreme Court ruled that Megaworld should not be ordered to maintain security on the property. As the obligations were reciprocal, Megaworld's obligation to provide security was conditional on Majestic also performing its obligations under the agreement.

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    OBLICON_DIGEST(2)10_MEGAWORLD_PROPERTIES_AND_HOLDINGS_INC-V-MAJESTIC_FINANCE_AND_INVESTMENT_CO_2P_RECIPROCAL_OBLIGATIONS

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    1) Megaworld Properties and Holdings, Inc. and Majestic Finance and Investment Co., Inc. entered into a joint venture agreement to develop a residential subdivision. 2) Under the agreement, the parties had reciprocal obligations where each was dependent on the other performing their obligations. These included Megaworld developing the land and Majestic providing compensation. 3) The Supreme Court ruled that Megaworld should not be ordered to maintain security on the property. As the obligations were reciprocal, Megaworld's obligation to provide security was conditional on Majestic also performing its obligations under the agreement.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2K views2 pages

    Slc-Law: Megaworld Properties and Holdings, Inc. V. Majestic Finance and Investment Co., Inc

    Uploaded by

    Jomar Teneza
    1) Megaworld Properties and Holdings, Inc. and Majestic Finance and Investment Co., Inc. entered into a joint venture agreement to develop a residential subdivision. 2) Under the agreement, the parties had reciprocal obligations where each was dependent on the other performing their obligations. These included Megaworld developing the land and Majestic providing compensation. 3) The Supreme Court ruled that Megaworld should not be ordered to maintain security on the property. As the obligations were reciprocal, Megaworld's obligation to provide security was conditional on Majestic also performing its obligations under the agreement.

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    © All Rights Reserved
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    of 2

    OBLIGATIONS AND CONTRACTS SLC-LAW

    DIGEST: MEGAWORLD PROPERTIES AND HOLDINGS, INC. v. MAJESTIC FINANCE AND INVESTMENT CO., INC.
    TOPIC: Reciprocal Obligations

    G.R. No. 169694 December 9, 2015.


    PETITIONER: MEGAWORLD PROPERTIES AND HOLDINGS, INC., EMPIRE EAST LAND HOLDINGS, INC., and
    ANDREW L. TAN
    RESPONDENTS: MAJESTIC FINANCE AND INVESTMENT CO., INC., RHODORA LOPEZ-LIM, and PAULINA CRUZ,

    FACTS:

    Megaworld Properties and Holdings, Inc. (Megaworld) and Majestic Finance and Investment Co., Inc., (Majestic) entered
    into a Joint Venture Agreement (JVA) for the development of a residential subdivision located in General Trias, Cavite.
    The JVA provided that Majestic would compensate Megaworld in the form of saleable residential subdivision lots, that
    the development of the land would be on the sole account of Megaworld, that Megaworld would advance all the costs
    of relocation and resettlement of the occupants of the property, subject to reimbursement by Majetic, and that
    Megaworld would deposit an amount of Php 60,000,000.00 for said resettlement.

    Majestic, however, filed for specific performance with damages against Megaworld bases on the failure of the latter to
    comply woth their obligations under the JVA, including the obligation to maintain a strong security force to safeguard
    the property from illegal entrants and occupants.

    The Regional Trial Court (RTC) issued its order directing Megaworld to provide sufficient round-the-clock security for the
    protection of the property. On appeal, the Court of Appeals (CA) affirmed the decision of the RTC. The CA further stated
    that the settled rule that “contracts are the laws between contracting parties, and if their terms are clear and leave no
    room for doubt as to their intentions, the contracts are obligatory no matter what their forms may be, whenever the
    essential requisites for their validity are present." Thus, unless the existence of this particular obligation - i.e., to secure
    the joint venture property — is challenged, petitioners are bound to respect the terms of the Agreement and of his
    obligation as the law between them and Majestic.

    ISSUE:

    Whether or not petitioner Megaworld should be ordered to maintain a strong security force within the property.

    HELD:

    No. Megaworld should not be ordered to maintain a strong security force within the property.

    The obligations of the parties under the JVA were unquestionably reciprocal. Reciprocal obligations are those that arise
    from the same cause, and in which each party is a debtor and a creditor of the other at the same time, such that the
    obligations of one are dependent upon the obligations of the other. They are to be performed simultaneously, so that
    the performance by one is conditioned upon the simultaneous fulfillment by the other.

    The activities under the JVA fell into seven major categories, specifically (1) the relocation of the occupants; (2) the
    completion of the development plan; (3) the securing of exemption and conversion permits; (4) the obtention of the
    development permits from government agencies; (5) the development of the subject land; (6) the issuance of titles for
    the subdivided lots; and (7) the selling of the subdivided lots and the reimbursement of the advances. In each activity,
    the obligation of each party was dependent upon the obligation of the other. Although their obligations were to be
    performed simultaneously, the performance of an activity obligation was still conditioned upon the fulfillment of the
    continuous obligation of developing the land and earning from such developed land. Should either party cease to
    perform a continuous obligation, the other's subsequent activity obligation would not accrue. Conversely, if an activity
    obligation was not performed by either party, the continuous obligation of the other would cease to take effect. The
    performance of the continuous obligation was subject to the resolutory condition that the precedent obligation of the
    other party, whether continuous or activity, was fulfilled as it became due. Otherwise, the continuous obligation would
    be extinguished.

    The common cause of the parties in entering into the joint venture was the development of the joint venture property
    into the residential subdivision as to eventually profit therefrom. Consequently, all of the obligations under the JVA were
    subject to the happening of the complete development of the joint venture property, or if it would become indubitable
    that the completion would not take place, like when an obligation, whether continuous or activity, was not performed.
    Should any of the obligations, whether continuous or activity, be not performed, all the other remaining obligations
    would not ripen into demandable obligations while those already performed would cease to take effect.

    Page 1 of 2 © Prepared by: LABITA


    OBLIGATIONS AND CONTRACTS SLC-LAW
    It appears that upon the execution of the JVA, the parties were performing their respective obligations until
    disagreement arose between them that affected the subsequent performance of their accrued obligations. Being
    reciprocal in nature, their respective obligations as the owner and the developer were dependent upon the performance
    by the other of its obligations; hence, any claim of delay or nonperformance against the other could prosper only if the
    complaining party had faithfully complied with its own correlative obligation.

    Page 2 of 2 © Prepared by: LABITA

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