G.R. No. 270449 - F.F. CRUZ & COMPANY, INC., VS. NMC CONTAINER LINES, INC..

Ruling

accordingly directing petitioner F.F. Cruz & Company, Inc. (F.F. Cruz) to execute a deed of sale of the subject property in favor of respondent NMC Container Lines, Inc. (NMC); and 2) Resolution [3] dated September 29, 2023, denying the motion for reconsideration of F.F. Cruz. Antecedents On August 28, 2003, NMC and F.F. Cruz entered into a contract of lease (the first lease contract) over the property of F.F. Cruz in Mandaue City denominated as Lot 5-A, a portion of Lot 5 and covered by Transfer Certificate of Title No. 37629. The lease was for five years and two months, or from September 1, 2003 until October 31, 2008. [4] Section 11 of the first lease contract (the subject provision) provided NMC a "lease-purchase option," viz.: 11. LEASE-PURCHASE OPTION. [NMC] shall have the first option to purchase Lot 5-A and/or Lot 5-B at any time but such option/s to be declared not later than 2 years before the intended date of purchase. Price is fixed at [Eleven Thousand Pesos (PHP 11,000.00)] per square meter inclusive of VAT. Downpayment shall be 20% and the balance payable in 20 quarterly payments with 10% interest per annum on the diminishing balance. Title to the property shall be issued or transferred in the name of [NMC] after completion of payment. Twenty (20) percent of the total lease payment received shall be credited to [NMC] as part of the downpayment of the purchase cost. The documentary stamp tax (DST) and transfer fee shall be for [NMC's] account. Capital gains tax and VAT shall be for [F.F. Cruz's] account. [5] According to NMC, the subject provision gave it the option to purchase Lot 5-A and/or Lot 5-B (the subject property), which it should exercise not later than two years before the intended date of purchase. [6] Purportedly as consideration for the said option to purchase, F.F. Cruz was granted the right to choose which improvements to appropriate for itself by the end of the lease. Section 4 of the first lease contract stated, viz.: 4. IMPROVEMENTS. At the end of the lease[,] all improvements introduced by [NMC] shall be removed from the premises by [NMC] unless [F.F. Cruz] desires some structures to be left as is. [7] On January 19, 2008, or before the expiration of the first lease contract, the parties entered into a second contract of lease of even date (the second lease contract), extending the lease for another 10 years or from March 1, 2008 until February 28, 2018. [8] The second lease contract contained the following whereas clause, viz.: WHEREAS, both parties agree that all other provisions/agreements in the existing contract be upheld and will remain in effect except for the following changes in [ ] terms and conditions herein enumerated below[.] [9] In its Letter [10] dated May 5, 2015, NMC gave F.F. Cruz notice that it was exercising its option to purchase the subject property, at the agreed purchase price, on May 4, 2017, or two years thereafter. [11] By Letter [12] dated June 1, 2015, F.F. Cruz, through its Chief Exec