Case 93 So vs FoodFest Digest.doc

So vs FoodFest, G.R. 183268, April 7, 2010 Applicable Provision of te !ivil !ode" Article 1181 !ARP#$ %$RA&'S,  J. Facts" Food Fest Land Inc. (Food Fest) entered into a Contract of Lease with Daniel T. So (So) over a commercial space in San Antonio Village !a"ati Cit# for a period of three #ears on which Food Fest intended to operate a $ent%c"# Fried Chic"en carr# o%t &ranch. The parties entered into a preliminar# agreement the pertinent portion of which stated'

The lease shall not &ecome &inding %pon %s %nless %nless and %ntil %ntil the government government agencies concerned concerned shall a%thorie permit or license %s to open and maintain o%r &%siness at the proposed Lease remise. In s%ch case the agreement ma# &e canceled and all rights and o&ligations here%nder shall cease. *hile Food Fest was a&le to sec%re sec%re the necessar# licenses and permits permits for the first #ear(+,,,) it failed to commence commence &%siness &%siness operations. operations. For the #ear - Food Fest/s Fest/s application application for renewal of &aranga#  &%siness clearance was held in a&e#ance. Food Fest comm%nicated its intent to terminate the lease contract to So who however did not accede and instead offered to help Food Fest sec%re a%thoriation from the &aranga#. In A%g%st - Food Fest for the second time p%rportedl# informed So of its intent to terminate the lease and it in fact stopped pa#ing rent. So reiterated his offer to help it sec%re clearance from the &aranga#. Food Fest dem%rred to the offer. So demanded pa#ment of rentals from Food Fest from Septem&er - to !arch -+. Food Fest denied an# lia&ilit# however and started to remove its fi0t%res and e1%ipment from the premises. 2n April - -+ So sent Food Fest a Final 3otice of  Termination with demand to pa# and to vacate 2n April April -4 -+ So filed a complaint for e5ectment e5ectment and damages against Food Fest &efore the (!eTC) of!a"atiCit#. 6%ling of the Co%rt' !eTC rendered 5%dgment in favor of So. 2n appeal the 6egional Trial Co%rt (6TC) (6TC)  reversed the !eTC Decision. 2n petition for review the Co%rt of Appeals declared that Food Fest/s o&ligation to pa# rent was not e0ting%ished %pon its fail%re to sec%re permits to operate. Iss%e' *hether or not the ac1%isition of s%&se1%ent &%siness permits etc. is a s%spensive condition to the lease contract ma"ing the o&ligation not &inding to the parties %pon not ac1%iring s%ch doc%ments7 8eld' Food Fest claims that its fail%re to sec%re the necessar# &%siness permits and licenses rendered the impossi&ilit# and non9materialiation of its p%rpose in entering into the contract of lease in s%pport of  which it cites the earlier91%oted portion of the preliminar# agreement of the parties. It is clear that the condition set forth in the preliminar# agreement pertains to the initial application of Food Fest for the  permits licenses and a%thorit# to operate. It sho%ld not &e constr%ed to appl# to Food Fest/s s%&se1%ent applications. The ca%se or essential p%rpose in a contract of lease is the %se or en5o#ment of a thing. A part#/s motive or partic%lar p%rpose in entering into a contract does not affect the validit# or e0istence of the contract: an e0ception is when the realiation of s%ch motive or partic%lar p%rpose has &een made a condition %pon which the contract is made to depend. The e0ception does not appl# here.

Food Fest was a&le to sec%re the permits licenses and a%thorit# to operate when the lease contract was e0ec%ted. Its fail%re to renew these permits licenses and a%thorit# for the s%cceeding #ear does not however s%ffice to declare the lease  functus officio nor can it &e constr%ed as an %nforeseen event to warrant the application of Article +-4;.  Contracts once perfected are &inding &etween the contracting parties. 2&ligations arising therefrom have the force of law and sho%ld &e complied with in good faith. Food Fest cannot renege from the o&ligations it has freel# ass%med when it signed the lease contract.