170. MORTEL v KASSCO INC.
, RULING OF RTC and CA: Dismissed Mortels complaint
Topic: Rights and Obligations of the Vendee : Sale of Real Property :
Maceda Law : RA 6552
PETITIONER: Reynaldo Mortel
RESPONDENT: KASSCO Inc, Oscar Santos
FACTS:
KASSCO Inc is a registered owner of the lot and building (Kassco
Building) standing thereon located in Sta Cruz Manila.
To secure a loan obtained from PNB, which was renting the 1st
floor of the building, KASSCO mortgaged such property to PNB
KASSCO applied for the conversion of the Kassco Building into a
condominium which application was approved the Human
Settlement Regulator Commission
KASSCO wrote PNB to secure its approval of the said conversion
and the partial release or cancellation of the mortgage over the
fully paid units
1985, KASSCO, represented by Oscar Santos, entered into an
Agreement with Reynaldo Mortel, which provides that:
o KASSCO offered to sell the 2nd floor of the bldg to Mortel
o Title shall pass only and a Deed of Absolute Sale shall
only be executed in favor of Mortel upon securing the
individual Condominium Certificate of Title (CCT) over the
Kassco Building
o Pending the delivery of the title to Mortel and payment to
KASSCO, a contract of lease for 1 year from the date of
the agreement is constituted
The period of the Agreement however expired without KASSCO
securing and delivering the CCT to Mortel
A 2nd agreement was made with the same terms and conditions,
however it again lapsed without obtaining the release of mortgage
with PNB and the CCT
Mortel remained in the premises as lessee; and later KASSCO
asked Mortel to vacate and pay additional rental fees
In response, Mortel demanded the delivery of the CCT over the
property and execution of Deed of Absolute Sale, which prompted
KASSCO to file an unlawful detainer suit.
Mortel, in turn, instituted this present case for specific
performance and damages against KASSCO
PETITIONERS CONTENTIONS:
o Since the agreements were in the nature of a contract to
sell a condominium, then the pertinent provisions of the
Condominium Law, P.D. 957 and the Law on Sale of Real
Estate on Installment, R.A. 6581, shall apply such that he
may recover whatever he has paid as partial payment and
monthly rental fees under said agreements and likewise be
reimbursed the value of the improvements he has
introduced to the subject property.
ISSUE: Whether or not the laws cited by petitioner are applicable
HELD: No.
The first contract was a Contract to Sell, subject to a suspensive
condition which is the acquisition of individual CCT over the
building. When KASSCO failed to fulfill the condition from which
the effectivity of the Contract depends, it stands as if the
conditional obligation had never existed.
Consequently, the laws invoked by Mortel, PD 957 and RA 6581,
find no application to the present case because said laws
presuppose the existence of a valid and effective contract to sell a
condominium.
As to the allegation of bad faith and misrepresentation KASSCO
It is well-settled that bad faith cannot be presumed and must be
established by clear and convincing evidence. And the person
who seeks damages due to the acts of another has the burden of
proving that the latter acted in bad faith or with ill-motive.
In the case Mortel failed to show bad faith on the part KASSCO
o Mortel is a sales manager of PHILAMLIFE Co. and it is
expected that a person holding such a position will not
readily enter into a contract without exercising ordinary
care by checking the title covering the property.
o Mortel testified that he learned of the mortgage in the
middle of the year when the first agreement was in
operation. If this was so, plaintiff should have asked for
explanation about the said mortgage or protested the
same. This, he did not do.
FALLO: Petition is DENIED for lack of merit. CA decision affirmed.