GONZALES V HEIRS OF THOMAS CA, reversed the decision of the RTC stating:

FACTS:
 December 1, 1983, Paula Ao Cruz together with the other respondents entered
in a contract of lease with petitioner Gonzales.
 The contract was for a period of one (1) year upon signing thereof and after
the period of the said contract lessee shall purchase the land for 1M payable
for two years.
Pertinent provision of the contract:
9. The LESSORS hereby commit themselves and shall undertake to obtain a separate
and distinct T.C.T. over the herein leased portion to the LESSEE within a reasonable
period of time which shall not in any case exceed four (4) years, after which a new
Contract shall be executed by the herein parties which shall be the same in all respects
with this Contract of Lease/Purchase insofar as the terms and conditions are
concerned.
 The trial court, in its decision interpreted the ninth provision of the Contract
of Lease/Purchase to mean that before the appellee exercises his option to
purchase the property by paying the 50% plus interest on the P1,000,000.00
purchase price, the appellants must first transfer the title to the property in the
appellees name.
ISSUE: WON the statement appearing in par. 9 of the contact was a condition
precedent before the obligation to purchase arises?
HELD:
In the interpretation of paragraph 9, the clear intention of which was for the
respondents to obtain a separate TCT under their names.
- This was necessary to enable them to show ownership, absent any title
in their names they could not have sold the property

 However, Gonzales did not exercise his right to purchase immediately after Court ruled the 9th clause in the said contract was a condition precedent.
the expiration of the contract of lease. Thus, he remained in possession of the
land.
 The obligation of the petitioner to buy the land cannot be enforced unless
 A letter was sent by one of the respondents informing him of their decision
respondents comply with the suspensive condition that they acquire first a
to rescind the contract of lease and demanding him to vacate the premises.
separate and distinct TCT in their names.
 Petitioner Gonzales refused to vacate.
 Meanwhile the property was currently a subject of Extra Judicial partition for
the title of the property remains in the respondents’ predecessors-in-interest

The respondents filed a complaint for recovery of possession of the property with
damages.

Petitioner filed his answer praying for dismissal of the complaint filed against him

RTC, rendered decision:

Interpreting paragraph 9: The respondents shall obtain a Transfer Certificate of Title

in their name before a deed of sale can be entered between the parties.

 The parties are under a conditional obligation. Therefore, when one of the
parties fails to comply with the condition, the obligation cannot be enforced
against the other.
 The failure of the plaintiffs to secure the Transfer Certificate of Title, as
provided for in the contract, does not entitle them to rescind the contract.
- The power to rescind obligations is implied in reciprocal ones, in
case one of the obligors should not comply with what is incumbent
upon him.