Escolar Documentos
Profissional Documentos
Cultura Documentos
PUNO, J.:
Petitioner bank seeks the review of the decision, dated October 15, 1992,
of the Court of Appeals 1 in CA G.R. CV No. 27195, the dispositive portion
of which reads as follows:
SO ORDERED.
The parties do not dispute the facts as laid down by respondent court in its
impugned decision, viz.:
(a) The BANK reserves the right to increase the interest rate within the
limits allowed by law at any time depending on whatever policy it may
adopt in the future; Provided, that the interest rate on this accommodation
shall be correspondingly decreased in the event that the applicable
maximum interest is reduced by law or by the Monetary Board. In either
case, the adjustment in the interest rate agreed upon shall take effect on
the effectivity date of the increase or decrease in the maximum interest
rate.
The Promissory Note, in turn, authorized the PNB to raise the rate of
interest, at any time without notice, beyond the stipulated rate of 12% but
only "within the limits allowed by law."
3. The PNB to pay moral and exemplary damages as well as the costs of
suit; and
The Bank reserves the right to increase the interest rate within the limits
allowed by law at any time depending on whatever policy it may adopt in
the future and provided, that, the interest rate on this accommodation shall
be correspondingly decreased in the event that the applicable maximum
interest rate is reduced by law or by the Monetary Board. In either case, the
adjustment in the interest rate agreed upon shall take effect on the
effectivity date of the increase or decrease in maximum interest rate.
This clause is authorized by Section 2 of Presidential Decree (P.D.)
No. 1684 which further amended Act No. 2655 ("The Usury Law"), as
amended, thus:
Section 2. The same Act is hereby amended by adding a new section after
Section 7, to read as follows:
Section 1 of P.D. No. 1684 also empowered the Central Bank's Monetary
Board to prescribe the maximum rates of interest for loans and certain
forbearances. Pursuant to such authority, the Monetary Board issued
Central Bank (C.B.) Circular No. 905, series of 1982, Section 5 of which
provides:
Sec. 5. Section 1303 of the Manual of Regulations (for Banks and Other
Financial Intermediaries) is hereby amended to read as follows:
Sec. 1303. Interest and Other Charges. — The rate of interest, including
commissions, premiums, fees and other charges, on any loan, or
forbearance of any money, goods or credits, regardless of maturity and
whether secured or unsecured, shall not be subject to any ceiling
prescribed under or pursuant to the Usury Law, as amended.
P.D. No. 1684 and C.B. Circular No. 905 no more than allow contracting
parties to stipulate freely regarding any subsequent adjustment in the
interest rate that shall accrue on a loan or forbearance of money, goods or
credits. In fine, they can agree to adjust, upward or downward, the interest
previously stipulated. However, contrary to the stubborn insistence of
petitioner bank, the said law and circular did not authorize either party
to unilaterally raise the interest rate without the other's consent.
It is basic that there can be no contract in the true sense in the absence of
the element of agreement, or of mutual assent of the parties. If this assent
is wanting on the part of the one who contracts, his act has no more
efficacy than if it had been done under duress or by a person of unsound
mind.6
. . . The unilateral action of the PNB in increasing the interest rate on the
private respondent's loan violated the mutuality of contracts ordained in
Article 1308 of the Civil Code:
Art. 1308. The contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them.
In order that obligations arising from contracts may have the force or law
between the parties, there must be mutuality between the parties based on
their essential equality. A contract containing a condition which makes its
fulfillment dependent exclusively upon the uncontrolled will of one of the
contracting parties, is void . . . . Hence, even assuming that
the . . . loan agreement between the PNB and the private respondent gave
the PNB a license (although in fact there was none) to increase the interest
rate at will during the term of the loan, that license would have been null
and void for being violative of the principle of mutuality essential in
contracts. It would have invested the loan agreement with the character of
a contract of adhesion, where the parties do not bargain on equal footing,
the weaker party's (the debtor) participation being reduced to the
alternative "to take it or leave it" . . . . Such a contract is a veritable trap for
the weaker party whom the courts of justice must protect against abuse
and imposition. (Citation omitted.)
Private respondents are not also estopped from assailing the unilateral
increases in interest rate made by petitioner bank. No one receiving a
proposal to change a contract to which he is a party, is obliged to answer
the proposal, and his silence per se cannot be construed as an
acceptance.7 In the case at bench, the circumstances do not show that
private respondents implicitly agreed to the proposed increases in interest
rate which by any standard were too sudden and too stiff.
IN VIEW THEREOF, the instant petition is DENIED for lack of merit, and
the decision of the Court of Appeals in CA-G.R. CV No. 27195, dated
October 15, 1992, is AFFIRMED. Costs against petitioner.
SO ORDERED.
DECISION
The facts in this case, as found by the Court of Appeals and adopted by
petitioner Cathay Pacific Airways, Ltd., (hereinafter Cathay) are as follows:
For their return flight to Manila on 28 September 1996, they were booked
on Cathays Flight CX-905, with departure time at 9:20 p.m. Two hours
before their time of departure, the Vazquezes and their companions
checked in their luggage at Cathays check-in counter at Kai Tak Airport
and were given their respective boarding passes, to wit, Business Class
boarding passes for the Vazquezes and their two friends, and Economy
Class for their maid. They then proceeded to the Business Class
passenger lounge.
When boarding time was announced, the Vazquezes and their two friends
went to Departure Gate No. 28, which was designated for Business Class
passengers. Dr. Vazquez presented his boarding pass to the ground
stewardess, who in turn inserted it into an electronic machine reader or
computer at the gate. The ground stewardess was assisted by a ground
attendant by the name of Clara Lai Han Chiu. When Ms. Chiu glanced at
the computer monitor, she saw a message that there was a seat change
from Business Class to First Class for the Vazquezes.
Ms. Chiu approached Dr. Vazquez and told him that the Vazquezes
accommodations were upgraded to First Class. Dr. Vazquez refused the
upgrade, reasoning that it would not look nice for them as hosts to travel in
First Class and their guests, in the Business Class; and moreover, they
were going to discuss business matters during the flight. He also told Ms.
Chiu that she could have other passengers instead transferred to the First
Class Section. Taken aback by the refusal for upgrading, Ms. Chiu
consulted her supervisor, who told her to handle the situation and convince
the Vazquezes to accept the upgrading. Ms. Chiu informed the latter that
the Business Class was fully booked, and that since they were Marco Polo
Club members they had the priority to be upgraded to the First Class. Dr.
Vazquez continued to refuse, so Ms. Chiu told them that if they would not
avail themselves of the privilege, they would not be allowed to take the
flight. Eventually, after talking to his two friends, Dr. Vazquez gave in. He
and Mrs. Vazquez then proceeded to the First Class Cabin.
In their complaint, the Vazquezes alleged that when they informed Ms.
Chiu that they preferred to stay in Business Class, Ms. Chiu obstinately,
uncompromisingly and in a loud, discourteous and harsh voice threatened
that they could not board and leave with the flight unless they go to First
Class, since the Business Class was overbooked. Ms. Chius loud and
stringent shouting annoyed, embarrassed, and humiliated them because
the incident was witnessed by all the other passengers waiting for
boarding. They also claimed that they were unjustifiably delayed to board
the plane, and when they were finally permitted to get into the aircraft, the
forward storage compartment was already full. A flight stewardess
instructed Dr. Vazquez to put his roll-on luggage in the overhead storage
compartment. Because he was not assisted by any of the crew in putting
up his luggage, his bilateral carpal tunnel syndrome was aggravated,
causing him extreme pain on his arm and wrist. The Vazquezes also
averred that they belong to the uppermost and absolutely top elite of both
Philippine Society and the Philippine financial community, [and that] they
were among the wealthiest persons in the Philippine[s].
Cathay also asserted that its employees at the Hong Kong airport acted in
good faith in dealing with the Vazquezes; none of them shouted,
humiliated, embarrassed, or committed any act of disrespect against them
(the Vazquezes). Assuming that there was indeed a breach of contractual
obligation, Cathay acted in good faith, which negates any basis for their
claim for temperate, moral, and exemplary damages and attorneys
fees. Hence, it prayed for the dismissal of the complaint and for payment
of P100,000 for exemplary damages and P300,000 as attorneys fees and
litigation expenses.
During the trial, Dr. Vazquez testified to support the allegations in the
complaint. His testimony was corroborated by his two friends who were
with him at the time of the incident, namely, Pacita G. Cruz and Josefina
Vergel de Dios.
For its part, Cathay presented documentary evidence and the testimonies
of Mr. Yuen; Ms. Chiu; Norma Barrientos, Comptroller of its retained
counsel; and Mr. Robson.Yuen and Robson testified on Cathays policy of
upgrading the seat accommodation of its Marco Polo Club members when
an opportunity arises. The upgrading of the Vazquezes to First Class was
done in good faith; in fact, the First Class Section is definitely much better
than the Business Class in terms of comfort, quality of food, and service
from the cabin crew. They also testified that overbooking is a widely
accepted practice in the airline industry and is in accordance with the
International Air Transport Association (IATA) regulations. Airlines
overbook because a lot of passengers do not show up for their flight. With
respect to Flight CX-905, there was no overall overbooking to a degree that
a passenger was bumped off or downgraded. Yuen and Robson also
stated that the demand letter of the Vazquezes was immediately acted
upon. Reports were gathered from their office in Hong Kong and
immediately forwarded to their counsel Atty. Remollo for legal advice.
However, Atty. Remollo begged off because his services were likewise
retained by the Vazquezes; nonetheless, he undertook to solve the
problem in behalf of Cathay. But nothing happened until Cathay received a
copy of the complaint in this case. For her part, Ms. Chiu denied that she
shouted or used foul or impolite language against the Vazquezes. Ms.
Barrientos testified on the amount of attorneys fees and other litigation
expenses, such as those for the taking of the depositions of Yuen and
Chiu.
In its decision[1] of 19 October 1998, the trial court found for the Vazquezes
and decreed as follows:
e) Costs of suit.
SO ORDERED.
According to the trial court, Cathay offers various classes of seats from
which passengers are allowed to choose regardless of their reasons or
motives, whether it be due to budgetary constraints or whim. The choice
imposes a clear obligation on Cathay to transport the passengers in the
class chosen by them. The carrier cannot, without exposing itself to liability,
force a passenger to involuntarily change his choice. The upgrading of the
Vazquezes accommodation over and above their vehement objections was
due to the overbooking of the Business Class. It was a pretext to pack as
many passengers as possible into the plane to maximize Cathays
revenues. Cathays actuations in this case displayed deceit, gross
negligence, and bad faith, which entitled the Vazquezes to awards for
damages.
However, the Court of Appeals was not convinced that Ms. Chiu shouted
at, or meant to be discourteous to, Dr. Vazquez, although it might seemed
that way to the latter, who was a member of the elite in Philippine society
and was not therefore used to being harangued by anybody. Ms. Chiu was
a Hong Kong Chinese whose fractured Chinese was difficult to understand
and whose manner of speaking might sound harsh or shrill to Filipinos
because of cultural differences. But the Court of Appeals did not find her to
have acted with deliberate malice, deceit, gross negligence, or bad faith. If
at all, she was negligent in not offering the First Class accommodations to
other passengers. Neither can the flight stewardess in the First Class Cabin
be said to have been in bad faith when she failed to assist Dr. Vazquez in
lifting his baggage into the overhead storage bin.There is no proof that he
asked for help and was refused even after saying that he was suffering
from bilateral carpal tunnel syndrome. Anent the delay of Yuen in
responding to the demand letter of the Vazquezes, the Court of Appeals
found it to have been sufficiently explained.
Cathay seasonably filed with us this petition in this case. Cathay maintains
that the award for moral damages has no basis, since the Court of Appeals
found that there was no wanton, fraudulent, reckless and oppressive
display of manners on the part of its personnel; and that the breach of
contract was not attended by fraud, malice, or bad faith. If any damage had
been suffered by the Vazquezes, it was damnum absque injuria, which is
damage without injury, damage or injury inflicted without injustice, loss or
damage without violation of a legal right, or a wrong done to a man for
which the law provides no remedy. Cathay also invokes our decision
in United Airlines, Inc. v. Court of Appeals[3]where we recognized that, in
accordance with the Civil Aeronautics Boards Economic Regulation No. 7,
as amended, an overbooking that does not exceed ten percent cannot be
considered deliberate and done in bad faith. We thus deleted in that case
the awards for moral and exemplary damages, as well as attorneys fees,
for lack of proof of overbooking exceeding ten percent or of bad faith on the
part of the airline carrier.
On the other hand, the Vazquezes assert that the Court of Appeals was
correct in granting awards for moral and nominal damages and attorneys
fees in view of the breach of contract committed by Cathay for transferring
them from the Business Class to First Class Section without prior notice or
consent and over their vigorous objection. They likewise argue that the
issuance of passenger tickets more than the seating capacity of each
section of the plane is in itself fraudulent, malicious and tainted with bad
faith.
The key issues for our consideration are whether (1) by upgrading the seat
accommodation of the Vazquezes from Business Class to First Class
Cathay breached its contract of carriage with the Vazquezes; (2) the
upgrading was tainted with fraud or bad faith; and (3) the Vazquezes are
entitled to damages.
The only problem is the legal effect of the upgrading of the seat
accommodation of the Vazquezes. Did it constitute a breach of contract?
We note that in all their pleadings, the Vazquezes never denied that they
were members of Cathays Marco Polo Club. They knew that as members
of the Club, they had priority for upgrading of their seat accommodation at
no extra cost when an opportunity arises. But, just like other privileges,
such priority could be waived. The Vazquezes should have been consulted
first whether they wanted to avail themselves of the privilege or would
consent to a change of seat accommodation before their seat assignments
were given to other passengers. Normally, one would appreciate and
accept an upgrading, for it would mean a better accommodation. But,
whatever their reason was and however odd it might be, the Vazquezes
had every right to decline the upgrade and insist on the Business Class
accommodation they had booked for and which was designated in their
boarding passes. They clearly waived their priority or preference when they
asked that other passengers be given the upgrade. It should not have been
imposed on them over their vehement objection. By insisting on the
upgrade, Cathay breached its contract of carriage with the Vazquezes.
Bad faith and fraud are allegations of fact that demand clear and
convincing proof. They are serious accusations that can be so conveniently
and casually invoked, and that is why they are never presumed. They
amount to mere slogans or mudslinging unless convincingly substantiated
by whoever is alleging them.
Bad faith does not simply connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of a wrong,
a breach of a known duty through some motive or interest or ill will that
partakes of the nature of fraud.[8]
Neither was the transfer of the Vazquezes effected for some evil or devious
purpose. As testified to by Mr. Robson, the First Class Section is better
than the Business Class Section in terms of comfort, quality of food, and
service from the cabin crew; thus, the difference in fare between the First
Class and Business Class at that time was $250.[9]Needless to state, an
upgrading is for the better condition and, definitely, for the benefit of the
passenger.
Sec 3. Scope. This regulation shall apply to every Philippine and foreign air
carrier with respect to its operation of flights or portions of flights originating
from or terminating at, or serving a point within the territory of the Republic
of the Philippines insofar as it denies boarding to a passenger on a flight, or
portion of a flight inside or outside the Philippines, for which he holds
confirmed reserved space. Furthermore, this Regulation is designed to
cover only honest mistakes on the part of the carriers and excludes
deliberate and willful acts of non-accommodation. Provided, however, that
overbooking not exceeding 10% of the seating capacity of the aircraft shall
not be considered as a deliberate and willful act of non-accommodation.
It is clear from this section that an overbooking that does not exceed ten
percent is not considered deliberate and therefore does not amount to bad
faith.[10] Here, while there was admittedly an overbooking of the Business
Class, there was no evidence of overbooking of the plane beyond ten
percent, and no passenger was ever bumped off or was refused to board
the aircraft.
Article 2220. Willful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract
where the defendant acted fraudulently or in bad faith.
In this case, we have ruled that the breach of contract of carriage, which
consisted in the involuntary upgrading of the Vazquezes seat
accommodation, was not attended by fraud or bad faith. The Court of
Appeals award of moral damages has, therefore, no leg to stand on.
The deletion of the award for exemplary damages by the Court of Appeals
is correct. It is a requisite in the grant of exemplary damages that the act of
the offender must be accompanied by bad faith or done in wanton,
fraudulent or malevolent manner.[15] Such requisite is absent in this case.
Moreover, to be entitled thereto the claimant must first establish his right to
moral, temperate, or compensatory damages.[16] Since the Vazquezes are
not entitled to any of these damages, the award for exemplary damages
has no legal basis. And where the awards for moral and exemplary
damages are eliminated, so must the award for attorneys fees.[17]
The most that can be adjudged in favor of the Vazquezes for Cathays
breach of contract is an award for nominal damages under Article 2221 of
the Civil Code, which reads as follows:
Article 2221. Nominal damages are adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him.
Worth noting is the fact that in Cathays Memorandum filed with this Court, it
prayed only for the deletion of the award for moral damages. It deferred to
the Court of Appeals discretion in awarding nominal damages; thus:
Nonetheless, considering that the breach was intended to give more benefit
and advantage to the Vazquezes by upgrading their Business Class
accommodation to First Class because of their valued status as Marco Polo
members, we reduce the award for nominal damages to P5,000.
Before writing finis to this decision, we find it well-worth to quote the apt
observation of the Court of Appeals regarding the awards adjudged by the
trial court:
We are not amused but alarmed at the lower courts unbelievable alacrity,
bordering on the scandalous, to award excessive amounts as damages. In
their complaint, appellees asked for P1 million as moral damages but the
lower court awarded P4 million; they asked for P500,000.00 as exemplary
damages but the lower court cavalierly awarded a whooping P10 million;
they asked for P250,000.00 as attorneys fees but were awarded P2 million;
they did not ask for nominal damages but were awarded P200,000.00. It is
as if the lower court went on a rampage, and why it acted that way is
beyond all tests of reason. In fact the excessiveness of the total award
invites the suspicion that it was the result of prejudice or corruption on the
part of the trial court.
The presiding judge of the lower court is enjoined to hearken to the
Supreme Courts admonition in Singson vs. CA (282 SCRA 149
[1997]), where it said:
and in Alitalia Airways vs. CA (187 SCRA 763 [1990], where it was held:
No pronouncement on costs.
SO ORDERED.
G.R. No. L-11668 April 1, 1918
JOHNSON, J.:
This action was instituted by the plaintiff for the purpose of requiring the
defendant to comply with a certain "contract of option" to purchase a
certain piece or parcel of land described in said contract and for damages
for a noncompliance with said contract. After the close of the trial the
Honorable James A. Ostrand, judge, rendered a judgment the dispositive
part of which is as follows:
Wherefore, it is hereby ordered and adjudged that the defendant, within the
period of thirty days from the date upon which this decision becomes final,
convey to the plaintiff a good and sufficient title in fee simple to the land
described in decrees Nos. 13909 and 13919 of the Court of Land
Registration, upon payment or legal tender of payment by said plaintiff of
the sum of thirty thousand pesos (P30,000) in cash, and upon said plaintiff
giving security approved by this court for the payment within the term of 6
years from the date of the conveyance for the additional sum of forty
thousand pesos (P40,000) with interest at the rate of 6 per cent per annum.
It is further ordered and adjudged that in the event of the failure of the
defendant to execute the conveyance as aforesaid, the plaintiff have and
recover judgment against him, the said defendant, for the sum of twenty
thousand pesos (P20,000), with interest at the rate of six per cent (6 per
cent per annum from the date upon which the conveyance should have
been made). It is so ordered.
From that judgment the defendant appealed and made several assignment
of error.
It appears from the record that on the 15th day of November, 1912, the
defendant and the plaintiff entered into the following "contract of option:"
(EXHIBIT A.)
CONTRACT OF OPTION.
I declare that Antonio Enriquez is the sole person who has, and shall have,
during the period of this option, the right to purchase the property above-
mentioned.
I likewise declare that Antonio Enriquez shall be free to resell the said
property at whatever price he may desire, provided that he should comply
with the stipulations covenanted with me.
(EXHIBIT B.)
DEAR SIR: I have the honor to inform you that, in conformity with the letter
of option in my favor of even date, I will buy your coconut plantation in
Pitogo, containing one hundred hectares, together with all the coconut and
nipa-palm trees planted thereon, under the following conditions:
1. I shall send a surveyor to survey the said property, and to apply to the
Government for a Torrens title therefore, and, if the expenses incurred for
the same should not exceed P1,000, I shall pay the P500 and you the other
P500; Provided, however, that you shall give the surveyor all necessary
assistance during his stay at the hacienda.
2. I shall pay the purchase price to you in conformity with our letter of
option of this date, and after the Torrens title shall have been officially
approved.
Yours respectfully,
(Sgd.) A. ENRIQUEZ
It appears from the record that soon after the execution of said contract,
and in part compliance with the terms thereof, the defendant presented two
petitions in the Court of Land Registration (Nos. 13909 and 13919), each
for the purpose of obtaining the registration of a part of the "Hacienda de
Pitogo." Said petitions were granted, and each parcel as registered and a
certificate of title was issued for each part under the Torrens system to the
defendant herein. Later, and pretending to comply with the terms of said
contract, the defendant offered to transfer to the plaintiff one of said
parcels only, which was a part of said "hacienda." The plaintiff refused to
accept said certificate for a part only of said "hacienda" upon the ground (a)
that it was only a part of the "Hacienda de Pitogo," and (b) under the
contract (Exhibits A and B) he was entitled to a transfer to him all said
"hacienda."
The theory of the defendant is that the contract of sale of said "Hacienda
de Pitogo" included only 100 hectares, more or less, of said "hacienda,"
and that by offering to convey to the plaintiff a portion of said "hacienda"
composed of "100 hectares, more or less," he thereby complied with the
terms of the contract. The theory of the plaintiff is that he had
purchased all of said "hacienda," and that the same contained, at least, 100
hectares, more or less. The lower court sustained the contention of the
plaintiff, to wit, that the sale was a sale of the "Hacienda de Pitogo" and not
a sale of a part of it, and rendered a judgment requiring the defendant to
comply with the terms of the contract by transferring to the plaintiff, by
proper deeds of conveyance, all said "hacienda," or to pay in lieu thereof
the sum of P20,000 damages, together with 6 per cent interest from the
date upon which said conveyance should have been made.
After issue had been joined between the plaintiff and defendant upon their
pleadings, they entered into the following agreement with reference to the
method of presenting their proof:
The attorneys for the parties in this case make the following stipulations:
1. Each of the litigating parties shall present his evidence before Don Felipe
Canillas, assistant clerk of the Court of First Instance of Manila, who, for
such purpose, should be appointed commissioner.
2. Said commissioner shall set a day and hour for the presentation of the
evidence above-mentioned, both oral and documentary, and in the
stenographic notes shall have record entered of all objections made to the
evidence by either party, in order that they may afterwards be decided by
the court.
3. The transcription of the stenographic notes, containing the record of the
evidence taken, shall be paid for in equal shares by both parties.
4. At the close of the taking of the evidence, each of the parties shall file his
brief in respect to such evidence, whereupon the case as it then stands
shall be submitted to the decision of the court.
The parties request the court to approve this agreement in the part thereof
which refers to the proceedings in this case.
Approved:
Said agreement was approved by the lower court, and proof was taken in
accordance therewith. The defendant-appellant now alleges, giving several
reasons therefor, that the proof was improperly practiced, and that the
judge was without authority o decide the cause upon proof taken in the
manner agreed upon by the respective parties. The defendant-appellant
makes no contention that he was not permitted to present all the proof he
desired to present. He makes no contention that he has been prejudiced in
any manner whatsoever by virtue of the method agreed upon for taking the
testimony.
There is nothing in the law nor in public policy which prohibits the parties in
a civil litigation from making the agreement above quoted. While the law
concedes to parties litigant, generally, the right to have their proof taken in
the presence of the judge, such right is a renounceable one. In a civil action
the parties litigant have a right to agree, outside of the court, upon the facts
in litigation. Under certain conditions the parties litigant have a right to take
the depositions of witnesses and submit the sworn statements in that form
to the court. The proof, as it was submitted to the court in the present case,
by virtue of said agreement, was, in effect, in the form of a deposition of the
various witnesses presented. Having agreed to the method of taking the
proof, and the same having been taking in compliance with said
agreement, it is now too late, there being no law to the contrary, for them to
deny and repudiate the effect of their agreement. (Biunas vs. Mora, R. G.
No. 11464, March 11, 1918; Behr vs. Levy Hermanos, R. G. No 12211,
March 19, 1918.1)
Not only is there no law prohibiting the parties from entering into an
agreement to submit their proof to the court in civil actions as was done in
the present case, but it may be a method highly convenient, not only to the
parties, but to busy courts. The judgment of the lower court, therefore,
should not be modified or reversed on account of the first assignment of
error.
In the second assignment of error, the appellant alleges (a) that the lower
court committed an error in declaring the contract (Exhibits A and B) a valid
obligation, for the reason that it not been admitted in evidence, and (b) that
the same was null for a failure of consideration. Upon the first question, an
examination of the proof shows that said contract (Exhibits A and B) was
offered in evidence and admitted as proof without objection. Said contract
was, therefore, properly presented to the court as proof. Not only was the
contract before the court by reason of its having been presented in
evidence, but the defendant himself made said contract an integral part of
his pleadings. The defendant admitted the execution and delivery of the
contract, and alleged that he made an effort to comply with its terms. His
only defense is that he sold to the plaintiff a part of the "hacienda" only and
that he offered, in compliance with the terms of the contract, to convey to
the plaintiff all of the land which he had promised to sell.
Upon the other hand, suppose that the defendant had complied with his
part of the contract and had tendered the deeds of transfer of the
"Hacienda de Pitogo" in accordance with its terms and had demanded the
payments specified in the contract, and the plaintiff refused to comply —
what then would have been the rights of the defendant? Might he not have
successfully maintained an action for the specific performance of the
contract, or for the damages resulting from the breach of said contract?
When the defendant alleged that he had complied with his part of the
contract (par. 3 of defendant's answer) and demanded that the plaintiff
should immediately comply with his part of the same, he evidently was
laying the foundation for an action for damages, the nullification or a
specific compliance with the contract.
The appellant contends that the contract which he made was not with the
plaintiff but with Rosenstock, Elser and Co. That question was not
presented in the court below. The contract in question shows, upon its face,
that the defendant made the same with the plaintiff, Not having raised the
question in the court below, and having admitted the execution and delivery
of the contract in question with the plaintiff, we are of the opinion that his
admission is conclusive upon that question (par. 1 of special defense of
defendant's answer) and need not be further discussed.
The appellant further contends that the action was premature, for the
reason that the plaintiff had not paid nor offered to pay the price agreed
upon, under the conditions named, for the land in question. That question
was not raised in the court below, which fact, ordinarily, would be a
sufficient answer to the contention of the appellant. It may be added,
however, that the defendant could not demand the payment until he had
offered the deeds of conveyance, in accordance with the terms of his
contract. He did not offer to comply with the terms of his contract. True it is
that he offered to comply partially with the terms of the contract, but not
fully. While the payment must be simultaneous with the delivery of the
deeds of conveyance, the payment need not be made until the deed of
conveyance is offered. The plaintiff stood ready and willing to perform his
part of the contract immediately upon the performance on the part of the
defendant. (Arts. 1258 and 1451 of Civil Code.)
In the fifth assignment of error the appellant contends that the lower court
committed an error in not declaring that the defendant was not obligated to
sell the "Hacienda de Pitogo" to the plaintiff "por incumplimiento, renuncia
abandono y negligencia del mismo demandante, etc." (For nonfulfillment,
renunciation, abandonment and negligence of plaintiff himself, etc.) That
question was not presented to the court below. But even though it had
been the record shows that the plaintiff, at all times, insisted upon a
compliance with the terms of the contract on the part of the defendant,
standing ready to comply with his part of the same.
The appellant contends in his sixth assignment of error that the plaintiff had
not suffered the damages complained of, to wit, in the sum of P20,000. The
only proof upon the question of damages suffered by the plaintiff for the
noncompliance with the terms of the contract in question on the part of the
defendant is that the plaintiff, in contemplation of the compliance with the
terms of the contract on the part of the defendant, entered into a contract
with a third party to sell the said "hacienda" at a profit of P30,000. That
proof is not disputed. No attempt was made in the lower court to deny that
fact. The proof shows that the person with whom the plaintiff had entered
into a conditional sale of the land in question had made a deposit for the
purpose of guaranteeing the final consummation of that contract. By reason
of the failure of the defendant to comply with the contract here in question,
the plaintiff was obliged to return the sum deposited by said third party with
a promise to pay damages. The record does not show why the plaintiff did
not ask for damages in the sum of P30,000. He asked for a judgment only
in the sum of P20,000. He now asks that the judgment of the lower court be
modified and that he be given a judgment for P30,000. Considering the fact
that he neither asked for a judgment for more than P20,000 nor appealed
from the judgment of the lower court, his request now cannot be granted.
We find no reason for modifying the judgment of the lower court by virtue of
the sixth assignment of error.
In the seventh assignment of error the appellant contends that the contract
of sale was not in effect a contract of sale. He alleges that the contract was,
in fact, a contract by virtue of which the plaintiff promised to find a buyer for
the parcel of land in question; that the plaintiff was not in fact the
purchaser; that the only obligation that the plaintiff assumed was to find
some third person who would purchase the land from the defendant. Again,
it would be sufficient to say, in answer to that assignment of error, that no
contention of that nature was presented in the court below, and for that
reason it is improperly presented now for the first time. In addition,
however, it may be added that the defendant, in his answer, admitted that
he not only sold the land in question, but offered to transfer the same to the
plaintiff, in compliance with the contract. (See answer of defendant.)
In the eighth assignment of error the appellant contends that the lower
court committed an error in its order requiring him to convey to the plaintiff
the "Hacienda de Pitogo," for the reason that the plaintiff had not
demanded a transfer of said property, and for the additional reason that a
portion of said "hacienda" had already been sold to a third person. With
reference to the first contention, the record clearly shows that the plaintiff
was constantly insisting upon a compliance with the terms of the contract,
to wit, a conveyance to him of the "Hacienda de Pitogo" by the defendant.
Naturally, he refused, under the contract, to accept a conveyance of a part
only of said "hacienda." With reference to the second contention, it may be
said that the mere fact that the defendant had sold a part of the "hacienda"
to other persons, is no sufficient reason for not requiring a strict compliance
with the terms of his contract with the plaintiff, or to answer in damages for
his failure. (Arts. 1101 and 1252 of the Civil Code.)
In view of the foregoing, and after a consideration of the facts and the law
applicable thereto, we are persuaded that there is no reason given in the
record justifying a modification or reversal of the judgment of the lower
court. The same is, however, hereby affirmed, with costs. So ordered.
AVANCEÑA, J.:
The plaintiff demands from the defendant payment of the sum of P10,000,
together with legal interest thereon from the date of the filing of the
complaint. The defendant, in a counterclaim, demands from the plaintiff
payment of the sum of P6,791.75 and legal interest thereon from March 28,
1914.
On May 5, 1913, the plaintiff purchased from the defendant several parcels
of land for the price of P45,000 (Exhibit X). In the contract the defendant
acknowledged receipt of the sum of P10,000, as a part of this price, the
contracting parties stipulating that the rest should be paid as follows:
P7,000 in September of the same year, P10,000 in May, 1914, and
P18,000 in 1915. By virtue of this contract the plaintiff took possession of
the lands purchased. On March 28, 1914, the plaintiff and the defendant,
by virtue of another contract (Exhibit Z), agreed to consider the previous
contract as rescinded and of no value. As a result of this second
agreement, the plaintiff returned to the defendant the lands together with all
the documents pertaining thereto. The defendant, on his part, instead of
returning the price received by him, subscribed in favor of the plaintiff
another document (Exhibit A) in which the acknowledges that he owes the
plaintiff the sum of P12,000, of which P2,000, the amount of the interest on
P10,000 for one year, was to be paid on or before the 31st of May of the
following year, 1915, and, as to the remaining P10,000, it was agreed that
the date of their payment would be fixed upon payment of the P2,000.
On May 28, 1915, the defendant paid the plaintiff the P2,000 in accordance
with the contract, Exhibit A. Upon this payment being made no time was
fixed for the payment of the other P10,000.
Subsequently, the plaintiff filed against the defendant an action in the Court
of First Instance of Tarlac (Civil Case No. 792), wherein he demanded of
the defendant the payment of the P10,000. Before this case was decide,
the plaintiff and the defendant stipulated that, in the event that the court
should find that the defendant's obligation was not due, they should move
the court merely to fix the period in which this sum should be paid, with the
understanding that, if it be not paid within the period fixed by the court, the
plaintiff might bring an action against the defendant for its collection,
without prejudice to the defenses which the defendant might set up. It
appears that this agreement was taken into account by the court, for the
recover shows that on September 13,1915, it rendered judgment in that
case merely fixing a period of three months, counting from October 1,
1915, for the payment of this sum of P10,000 by the defendant.
There is no dispute over the fact that the defendant owes the plaintiff the
P10,000 claimed by the latter. The question raised by this appeal is one
that relates to the defendant's counterclaim. The sum demanded in this
counterclaim is the value of the product of the lands, collected by the
plaintiff during the time he was in possession of them. by virtue of the
contract Exhibit X, specifically, from May 5, 1913, until the plaintiff returned
the lands to the defendant, on March 28, 1914.
The plaintiff contends that the judgment rendered by the Court in Civil Case
No. 792 had resolved all the issues then in controversy between the
plaintiff and the defendant, and among them that of the counterclaim which
is now presented in the instant case. We believe, however, that this
contention is unfounded. The judgment rendered by the court in that Civil
Cae, No. 792, undoubtedly was rendered in consideration of the agreement
between the plaintiff and the defendant to move the court merely to fix the
period within which the defendant should be obliged to pay to the plaintiff
the P10,000, without prejudice to the defenses the defendant might set up
with respect to this obligation. Withal, we are of the opinion that the plaintiff
should be absolved from this counterclaim, for the very reason that we shall
presently set forth.
The question is this: the plaintiff, on account of having purchased the lands
form the defendant on May 15, 1913, according to Exhibit X, took
possession of the same and collected their product. On March 28, 1914,
the plaintiff and the defendant dissolved that contract of sale and, as a
result thereof, the plaintiff returned the lands to the defendant, and the
defendant in turn, bound himself to return to the plaintiff the part of the price
that the latter had paid. Is the plaintiff obliged to return to the defendant the
products to the lands that the plaintiff collected during his possession?
The defendant invokes article 1295 of the Civil code, which prescribes that
the rescission obliges the return of the things which were the objects of the
contract, with their fruits and the price with interest. He maintains that
pursuant to this provision, the plaintiff is obliged to return the fruits collected
by him. But the rescission mentioned in the contract Exhibit Z is not the
rescission referred to in this article 1295. Although the plaintiff and the
defendant employed the word rescind, it has not, in the contract executed
by them, either the scope or the meaning of the words rescission to which
article 1295 refers and which takes place only in the cases mentioned in
the preceding articles, 1291 and 1292. rescission, in the light of these
provisions, is a belief which the law grants, on the premise that the contract
is valid, for the protection of one of the contracting parties and third persons
from all injury and damage the contract may cause, or to protect some
incompatible and preferent right created by the contract. Article 1295 refers
to contract that are rescindible in accordance with law in the cases
expressly fixed thereby, but it does not refer to contracts that are rescinded
by mutual consent and for the mutual convenience of the contracting
parties. The rescission in question was not originated by any of the causes
specified in articles 1291 and 1292 nor is it any relief for the purposes
sought by these articles. It is simply another contract for the dissolution of a
previous one, and its effects, in relation to the contract so dissolved, should
be determined by the agreement made by the parties, or by application of
the other legal provisions to which we shall refer later on, but not by article
1295, which is not applicable.
The defendant alleges that, upon the execution of the contract of
rescission, Exhibit Z, the plaintiff verbally agreed to return the fruits collect
by him. The plaintiff denies this absolutely. As the contract of rescission
was drawn up in writing, it must be presumed that the document wherein
this contract appears contains all the agreements stipulated by the parties.
Although the defendant was permitted to introduce oral evidence to
establish that, besides what is set forth in the written contract, the plaintiff
also agreed verbally, to return the fruits collected, the plaintiff, on his part,
presented other evidence in rebuttal. Examining the evidence adduced by
both parties on this point, we can say that there is no preponderance in
favor of the proof presented by the defendant. In such conditions, the
presumption that the written contract contains all the agreements should
prevail and, consequently, the defendant's contention that such a verbal
agreement made by the plaintiff existed should be rejected.
The defendant argues that , as he bound himself to pay, and in fact did
pay, interest on the P10,000 which he received from the plaintiff as [a part
of] the price of the land, it should be understood that the plaintiff,
reciprocally, also bound himself to return, on his part, the fruits which he
collected from these lands. This argument would be valid if the interest paid
by the defendant has been paid for the time preceding the rescission, that
is, from May 5, 1913, when the contract of purchase and sale was
executed, until March 28, 1914, when it was rescinded. The record shows,
however, that this interest was paid for the time subsequent to the
rescission. It will be recalled that the defendant received from the plaintiff
P10,000 as a part of the price of the lands; that, on rescinding the sale in
March, 1914, the plaintiff returned the lands; and that the defendant, on his
part, instead of returning the part of the price, P10,000, received by him,
executed in favor of the plaintiff the Exhibit A, binding himself to pay the
sum of P12,000, with interest, one year afterwards, that is, on May 31,
1915. Both parties agree that P2,000 of these P12,000 is the interest on
the P10,000 for one year, at the rate of 20 per cent per annum. According
to that, after the defendant had been in receipt of the P10,000 for two
years, he bound himself to pay interest only for one year. This necessarily
supposes that this sum did not earn interested for the other year. If it is
admitted that this interest pertains to the first year previous to the
rescission, then it had accrued and was due when this contract of
rescission was executed; however, it was not deemed to be due on that
date, inasmuch as the defendant did not bind himself to pay it until after the
second year. Furthermore, if it is considered that this interest corresponds
to the first year prior to the rescission, the year in which no interest was due
would be the following year. Thus the result would be that, while the plaintiff
returned the lands, the defendant did not return the price, and if he did not
even bind himself to pay interest on this unreturned price, the transaction
would lack the same reciprocity which the defendant invokes to sustain the
contrary. We accept the conclusion that the interest which the defendant
bound himself to pay, and in fact did pay, to the plaintiff, was for the time
subsequent to the rescission. Consequently the defendant did not bind
himself to pay, nor did he pay, interest on the P10,000 for the time prior to
the rescission. Applying, by inversion, the defendant's argument, we
believe that we ought to conclude that the plaintiff could not have bound
himself to return to the defendant the fruits of the land that the plaintiff
collected during his possession, inasmuch as the defendant did not pay,
nor bind himself to pay, interest during the same time for the part of the
price which he received.
But the plaintiff held the lands by reason of his having purchased them from
the defendant. On this account, his possession, until the contract of
purchase and sale was dissolved and the lands were returned by him, was
in good faith. As such possessor in good, faith, the fruits collected by him
become his own (art. 451, Civil Code) and he is not obliged to return them
to the defendant. In the absence of any covenant, this provisions should be
applied to the instant case.
Aside from the foregoing considerations, equity also lies on the plaintiff's
side, because, as the record shows, for the improvement of the land and in
order to produce the fruits which he collected, he incurred expenses in an
amount such that the products collected by him may, reasonably, be
considered equivalent to the interest for tone year on the P10,000 which he
had paid to the defendant.
Therefore, the judgment appealed from is affirmed, with the costs against
the appellant. So ordered.
DECISION
PANGANIBAN, J.:
While we agree with the general proposition that a contract of sale is valid
until rescinded, it is equally true that ownership of the thing sold is not
acquired by mere agreement, but by tradition or delivery. The peculiar facts
of the present controversy as found by this Court in an earlier relevant
Decision show that delivery was not actually effected; in fact, it was
prevented by a legally effective impediment. Not having been the owner,
petitioner cannot be entitled to the civil fruits of ownership like rentals of the
thing sold. Furthermore, petitioners bad faith, as again demonstrated by the
specific factual milieu of said Decision, bars the grant of such
benefits. Otherwise, bad faith would be rewarded instead of punished.
The Case
Filed before this Court is a Petition for Review[1] under Rule 45 of the Rules
of Court, challenging the March 11, 1998 Order[2] of the Regional Trial
Court of Manila (RTC), Branch 8, in Civil Case No. 97-85141. The
dispositive portion of the assailed Order reads as follows:
Also questioned is the May 29, 1998 RTC Order[4] denying petitioners
Motion for Reconsideration.
The Facts
The main factual antecedents of the present Petition are matters of record,
because it arose out of an earlier case decided by this Court on November
21, 1996, entitled Equatorial Realty Development, Inc. v. Mayfair Theater,
Inc.[5] (henceforth referred to as the mother case), docketed as GR No.
106063.
Two years later, on March 31, 1969, Mayfair entered into a second
Contract of Lease with Carmelo for the lease of another portion of the
latters property -- namely, a part of the second floor of the two-storey
building, with a floor area of about 1,064 square meters; and two store
spaces on the ground floor and the mezzanine, with a combined floor area
of about 300 square meters. In that space, Mayfair put up another movie
house known as Miramar Theater. The Contract of Lease was likewise for
a period of 20 years.
The controversy reached this Court via GR No. 106063. In this mother
case, it denied the Petition for Review in this wise:
The foregoing Decision of this Court became final and executory on March
17, 1997. On April 25, 1997, Mayfair filed a Motion for Execution, which the
trial court granted.
Equatorial questioned the legality of the above CA ruling before this Court
in GR No. 136221 entitled Equatorial Realty Development, Inc. v. Mayfair
Theater, Inc. In a Decision promulgated on May 12, 2000,[8] this Court
directed the trial court to follow strictly the Decision in GR No. 106063, the
mother case. It explained its ruling in these words:
Meanwhile, on September 18, 1997 -- barely five months after Mayfair had
submitted its Motion for Execution before the RTC of Manila, Branch 7 --
Equatorial filed with the Regional Trial Court of Manila, Branch 8, an action
for the collection of a sum of money against Mayfair, claiming payment of
rentals or reasonable compensation for the defendants use of the subject
premises after its lease contracts had expired. This action was the
progenitor of the present case.
In its Complaint, Equatorial alleged among other things that the Lease
Contract covering the premises occupied by Maxim Theater expired on
May 31, 1987, while the Lease Contract covering the premises occupied by
Miramar Theater lapsed on March 31, 1989.[10] Representing itself as the
owner of the subject premises by reason of the Contract of Sale on July 30,
1978, it claimed rentals arising from Mayfairs occupation thereof.
As earlier stated, the trial court dismissed the Complaint via the herein
assailed Order and denied the Motion for Reconsideration filed by
Equatorial.[11]
The lower court debunked the claim of petitioner for unpaid back rentals,
holding that the rescission of the Deed of Absolute Sale in the mother case
did not confer on Equatorial any vested or residual proprietary rights, even
in expectancy.
In granting the Motion to Dismiss, the court a quo held that the critical issue
was whether Equatorial was the owner of the subject property and could
thus enjoy the fruits or rentals therefrom. It declared the rescinded Deed of
Absolute Sale as void at its inception as though it did not happen.
The subject Deed of Absolute Sale having been rescinded by the Supreme
Court, Equatorial is not the owner and does not have any right to demand
backrentals from the subject property. x x x.[12]
The trial court added: The Supreme Court in the Equatorial case, G.R. No.
106063, has categorically stated that the Deed of Absolute Sale dated July
31, 1978 has been rescinded subjecting the present complaint to res
judicata.[13]
Issues
A.
The basis of the dismissal of the Complaint by the Regional Trial Court not
only disregards basic concepts and principles in the law on contracts and in
civil law, especially those on rescission and its corresponding legal effects,
but also ignores the dispositive portion of the Decision of the Supreme
Court in G.R. No. 106063 entitled Equatorial Realty Development, Inc. &
Carmelo & Bauermann, Inc. vs. Mayfair Theater, Inc.
B.
The Regional Trial Court erred in holding that the Deed of Absolute Sale in
favor of petitioner by Carmelo & Bauermann, Inc., dated July 31, 1978,
over the premises used and occupied by respondent, having been deemed
rescinded by the Supreme Court in G.R. No. 106063, is void at its inception
as though it did not happen.
C.
The Regional Trial Court likewise erred in holding that the aforesaid Deed
of Absolute Sale, dated July 31, 1978, having been deemed rescinded by
the Supreme Court in G.R. No. 106063, petitioner is not the owner and
does not have any right to demand backrentals from the subject property,
and that the rescission of the Deed of Absolute Sale by the Supreme Court
does not confer to petitioner any vested right nor any residual proprietary
rights even in expectancy.
D.
The issue upon which the Regional Trial Court dismissed the civil case, as
stated in its Order of March 11, 1998, was not raised by respondent in its
Motion to Dismiss.
E.
The sole ground upon which the Regional Trial Court dismissed Civil Case
No. 97-85141 is not one of the grounds of a Motion to Dismiss under Sec. 1
of Rule 16 of the 1997 Rules of Civil Procedure.
Basically, the issues can be summarized into two: (1) the substantive issue
of whether Equatorial is entitled to back rentals; and (2) the procedural
issue of whether the court a quos dismissal of Civil Case No. 97-85141 was
based on one of the grounds raised by respondent in its Motion to Dismiss
and covered by Rule 16 of the Rules of Court.
First Issue:
We hold that under the peculiar facts and circumstances of the case at bar,
as found by this Court en banc in its Decision promulgated in 1996 in the
mother case, no right of ownership was transferred from Carmelo to
Equatorial in view of a patent failure to deliver the property to the buyer.
To better understand the peculiarity of the instant case, let us begin with
some basic parameters. Rent is a civil fruit[16] that belongs to the owner of
the property producing it[17] by right of accession.[18] Consequently and
ordinarily, the rentals that fell due from the time of the perfection of the sale
to petitioner until its rescission by final judgment should belong to the
owner of the property during that period.
By a contract of sale, one of the contracting parties obligates himself to
transfer ownership of and to deliver a determinate thing and the other to
pay therefor a price certain in money or its equivalent.[19]
Ownership of the thing sold is a real right,[20] which the buyer acquires only
upon delivery of the thing to him in any of the ways specified in articles
1497 to 1501, or in any other manner signifying an agreement that the
possession is transferred from the vendor to the vendee.[21] This right is
transferred, not by contract alone, but by tradition or delivery.[22] Non nudis
pactis sed traditione dominia rerum transferantur. And there is said to be
delivery if and when the thing sold is placed in the control and possession
of the vendee.[23] Thus, it has been held that while the execution of a public
instrument of sale is recognized by law as equivalent to the delivery of the
thing sold,[24] such constructive or symbolic delivery, being merely
presumptive, is deemed negated by the failure of the vendee to take actual
possession of the land sold.[25]
Let us now apply the foregoing discussion to the present issue. From the
peculiar facts of this case, it is clear that petitioner never took actual
control and possession of the property sold, in view of respondents timely
objection to the sale and the continued actual possession of the
property. The objection took the form of a court action impugning the sale
which, as we know, was rescinded by a judgment rendered by this Court in
the mother case. It has been held that the execution of a contract of sale as
a form of constructive delivery is a legal fiction. It holds true only when
there is no impediment that may prevent the passing of the property from
the hands of the vendor into those of the vendee.[28] When there is such
impediment, fiction yields to reality - the delivery has not been effected.[29]
The question that now arises is: Is there any stipulation in the sale in
question from which we can infer that the vendor did not intend to deliver
outright the possession of the lands to the vendee?We find none. On the
contrary, it can be clearly seen therein that the vendor intended to place the
vendee in actual possession of the lands immediately as can be inferred
from the stipulation that the vendee takes actual possession thereof x x x
with full rights to dispose, enjoy and make use thereof in such manner and
form as would be most advantageous to herself. The possession referred
to in the contract evidently refers to actual possession and not merely
symbolical inferable from the mere execution of the document.
Has the vendor complied with this express commitment? she did not. As
provided in Article 1462, the thing sold shall be deemed delivered when the
vendee is placed in the control and possession thereof, which situation
does not here obtain because from the execution of the sale up to the
present the vendee was never able to take possession of the lands due to
the insistent refusal of Martin Deloso to surrender them claiming ownership
thereof. And although it is postulated in the same article that the execution
of a public document is equivalent to delivery, this legal fiction only holds
true when there is no impediment that may prevent the passing of the
property from the hands of the vendor into those of the vendee. x x x.[31]
However, the point may be raised that under Article 1164 of the Civil Code,
Equatorial as buyer acquired a right to the fruits of the thing sold from the
time the obligation to deliver the property to petitioner arose.[32] That time
arose upon the perfection of the Contract of Sale on July 30, 1978, from
which moment the laws provide that the parties to a sale may reciprocally
demand performance.[33] Does this mean that despite the judgment
rescinding the sale, the right to the fruits[34] belonged to, and remained
enforceable by, Equatorial?
Article 1385 of the Civil Code answers this question in the negative,
because [r]escission creates the obligation to return the things which were
the object of the contract, together with their fruits, and the price with its
interest; x x x. Not only the land and building sold, but also the rental
payments paid, if any, had to be returned by the buyer.
Another point. The Decision in the mother case stated that Equatorial x x x
has received rents from Mayfair during all the years that this controversy
has been litigated. The Separate Opinion of Justice Teodoro Padilla in the
mother case also said that Equatorial was deriving rental income from the
disputed property. Even herein ponentes Separate Concurring Opinion in
the mother case recognized these rentals. The question now is: Do all
these statements concede actual delivery?
The answer is No. The fact that Mayfair paid rentals to Equatorial during
the litigation should not be interpreted to mean either actual delivery or ipso
facto recognition of Equatorials title.
In short, the sale to Equatorial may have been valid from inception, but it
was judicially rescinded before it could be consummated. Petitioner never
acquired ownership, not because the sale was void, as erroneously
claimed by the trial court, but because the sale was not consummated by
a legally effective delivery of the property sold.
Furthermore, assuming for the sake of argument that there was valid
delivery, petitioner is not entitled to any benefits from the rescinded Deed of
Absolute Sale because of its bad faith. This being the law of the mother
case decided in 1996, it may no longer be changed because it has long
become final and executory. Petitioners bad faith is set forth in the following
pertinent portions of the mother case:
First and foremost is that the petitioners acted in bad faith to render
Paragraph 8 inutile.
Since Equatorial is a buyer in bad faith, this finding renders the sale to it of
the property in question rescissible. We agree with respondent Appellate
Court that the records bear out the fact that Equatorial was aware of the
lease contracts because its lawyers had, prior to the sale, studied the said
contracts. As such, Equatorial cannot tenably claim to be a purchaser in
good faith, and, therefore, rescission lies.
Thus, petitioner was and still is entitled solely to the return of the purchase
price it paid to Carmelo; no more, no less. This Court has firmly ruled in the
mother case that neither of them is entitled to any consideration of equity,
as both took unconscientious advantage of Mayfair.[38]
In the mother case, this Court categorically denied the payment of interest,
a fruit of ownership. By the same token, rentals, another fruit of ownership,
cannot be granted without mocking this Courts en banc Decision, which
has long become final.
We uphold the trial courts disposition, not for the reason it gave, but for (a)
the patent failure to deliver the property and (b) petitioners bad faith, as
above discussed.
Second Issue:
Procedurally, petitioner claims that the trial court deviated from the
accepted and usual course of judicial proceedings when it dismissed Civil
Case No. 97-85141 on a ground not raised in respondents Motion to
Dismiss. Worse, it allegedly based its dismissal on a ground not provided
for in a motion to dismiss as enunciated in the Rules of Court.
(A)
(B)
The court a quo ruled, inter alia, that the cause of action of petitioner
(plaintiff in the case below) had been barred by a prior judgment of this
Court in GR No. 106063, the mother case.
Although it erred in its interpretation of the said Decision when it argued
that the rescinded Deed of Absolute Sale was void, we hold, nonetheless,
that petitioners cause of action is indeed barred by a prior judgment of this
Court. As already discussed, our Decision in GR No. 106063 shows that
petitioner is not entitled to back rentals, because it never became the
owner of the disputed properties due to a failure of delivery. And even
assuming arguendo that there was a valid delivery, petitioners bad faith
negates its entitlement to the civil fruits of ownership, like interest and
rentals.
Under the doctrine of res judicata or bar by prior judgment, a matter that
has been adjudicated by a court of competent jurisdiction must be deemed
to have been finally and conclusively settled if it arises in any subsequent
litigation between the same parties and for the same cause.[40] Thus, [a]
final judgment on the merits rendered by a court of competent jurisdiction is
conclusive as to the rights of the parties and their privies and constitutes an
absolute bar to subsequent actions involving the same claim, demand, or
cause of action.[41] Res judicata is based on the ground that the party to be
affected, or some other with whom he is in privity, has litigated the same
matter in a former action in a court of competent jurisdiction, and should not
be permitted to litigate it again.[42]
It frees the parties from undergoing all over again the rigors of unnecessary
suits and repetitive trials. At the same time, it prevents the clogging of court
dockets. Equally important, it stabilizes rights and promotes the rule of law.
The Supreme Court in the Equatorial case, G.R. No. 106063 has
categorically stated that the Deed of Absolute Sale dated July 31, 1978 has
been rescinded subjecting the present complaint to res
judicata.[43] (Emphasis in the original)
Hence, the trial court decided the Motion to Dismiss on the basis of res
judicata, even if it erred in interpreting the meaning of rescinded as
equivalent to void. In short, it ruled on the ground raised; namely, bar by
prior judgment. By granting the Motion, it disposed correctly, even if its
legal reason for nullifying the sale was wrong. The correct reasons are
given in this Decision.
SO ORDERED.
ECOND DIVISION
SYLLABUS
DECISION
NOCON, J.:
This is a petition for review under Rule 45 of the Rules of Court of the
decision 1 of the Court of Appeals dismissing the appeal interposed by
herein petitioners.
The case at bar sprung from a complaint for reconveyance with damages
against herein petitioners Felix and Virginia Zepeda by private respondents
Leonila and Arturo Amansec. The piece of land subject of this case is a
residential lot with an area of 1,434 square meters situated at San
Francisco, Nueva Ecija registered in the name of Antonio
Santos.chanrobles.com.ph : virtual law library
On July 17, 1973, Antonio Santos mortgaged his share in the lot in
question with the Sta. Rosa Rural Bank for the amount of P3,000.00. The
property however was foreclosed due to the non-payment of the obligation
of Antonio Santos and the property was sold by public auction in favor of
the Bank. While the sale was annotated at the Memorandum of
Encumbrance of T.C.T. No. NT-57013 on October 8, 1974, said property
was not consolidated in the name of the Bank and no writ of possession
was issued by the Court placing the Bank in possession before the property
in question was disposed of by the Bank in favor of petitioner spouses Felix
Zepeda and Virginia Rena Zepeda on March 12, 1981.
As borne out from the records, on January 13, 1981, Leonila Amansec and
the Bank Manager came into an agreement that the property in question
may be redeemed for the price of Twelve Thousand (P12,000.00) Pesos,
the Six Thousand (P6,000.00) Pesos to be deposited that same date or
within one (1) week and the other Six Thousand (P6,000.00) Pesos to be
paid within one (1) year from January 13, 1981.
That same date or on January 13, 1981, Leonila Amansec gave Five
Thousand (P5,000.00) Pesos as deposit to the Bank which amount was
evidenced by Official Receipt No. 36012. (Exhibit "C") This agreement 2
was confirmed and ratified on January 22, 1981 by the Board of Directors
of the said Bank.
Hence, the instant complaint filed before Branch 37, Regional Trial Court of
Nueva Ecija, and docketed as Civil Case No. SD-831. After trial on the
merits, judgment 4 was rendered ordering the reconveyance of the property
to private respondents, the dispositive portion of which
reads:jgc:chanrobles.com.ph
2. Ordering the defendant, the Sta. Rosa (N.E.) Rural Bank, Inc., to
reimburse the sum of P14,000.00 which the defendants spouses Felix
Zepeda and Virginia Reña-Zepeda paid as consideration of the sale of the
property in question, which is in effect declared unenforceable, with interest
at 14% per annum from March 20, 1981, up to the time it is paid.
3. Ordering the defendant, the Sta. Rosa (N.E.) Rural Bank, Inc., to pay the
plaintiffs the sum of P5,000.00 as exemplary damages and the sum of
P2,000.00 as attorney’s fees.
SO ORDERED." 5
Herein petitioners and the Bank appealed to the Court of Appeals, but their
respective appeals were dismissed for lack of merit. Hence, this appeal
by certiorari by the spouses Zepeda.
First, the right to redeem being contended by private respondents has long
lapsed and prescribed, the property in question having been publicly
auctioned on July 17, 1973 and the certificate of sale inscribed at the back
of the title.
Second, the agreement between the Branch Manager of the bank and
private respondents, was merely an offer by the latter to buy the subject
property on a direct sale and not in redemption because the same has
been an acquired asset of the Bank and which offer was still subject to the
approval of the Board of Directors of the Bank.chanrobles virtual lawlibrary
Third, private respondents did not make good their promise to go back to
the Bank and deposit the balance of P1,000 to complete their initial deposit,
hence there is no valid cause of action against them.
Lastly, there is good faith on the part of herein petitioners and being the
first to register the sale, they have a preferential right over the property in
question than private respondents.
We disagree.
Clearly, as the records will show, the one year period of redemption as
provided under Section 30, Rule 39 of the Rules of Court had long lapsed
and whatever agreement that took place between the Branch Manager of
the bank and private respondents partook of the nature of a direct sale. As
stated by the appellate court, to which We agree:jgc:chanrobles.com.ph
". . . The one year period of redemption foreclosed (sic) and sold at public
auction start from the date of the registration of the sheriff’s certificate of
sale in the office of the Register of Deeds. (Verseles v. Court of First
Instance, G.R. No. 62219, 28 February 1989). There is therefore, nothing
which can be extended by agreement of the parties therein. Secondly, the
appellees are not among those mentioned under Section 29, Rule 39 of the
Rules of Court who may redeem property sold on execution." 6
We concur with the trial court in its finding that the fact that private
respondents were not able to tender the remaining balance of P1,000.00
within one (1) week from the time the sum of P5,000.00 was paid on
January 13, 1981 to the Bank to complete the P6,000.00 advanced deposit
or partial payment of the consideration of the redemption of the property in
question in the amount of P12,000.00, is not a substantial and serious
breach that would defeat the very object of the agreement and cause heavy
damage to the Bank, and a ground to rescind the contract. At the trial,
Leonila Amansec revealed that she went to the Bank to pay the P1,000.00
but unfortunately, the Bank Manager was on leave. 8
The general rule is that rescission of a contract will not be permitted for a
slight or casual breach, but only for such substantial and fundamental
breach as would defeat the very object of the parties in making the
agreement. 9
"Even assuming but without admitting that the plaintiffs were not able to
tender the P1,000.00 within one (1) week from the time the sum of
P5,000.00 was paid on January 13, 1981 to the defendant Bank to
complete the P6,000.00 advanced deposit or partial payment of the
consideration of the redemption of the property in question for P12,000.00,
this is not to the mind of the Court a substantial and serious breach that
would defeat the very object of the agreement and would cause heavy
damage on the part of the Bank, and would be justifiable factor to ignore or
rescind the contract. But the evidence introduced by the plaintiffs which
was not controverted by the Bank, reveals that the plaintiffs went to the
Bank to deposit or pay the P1,000.00 within the stipulated period but the
Manager of the Bank was on leave of absence and no one attended to the
plaintiff. Furthermore, the period which the property in question is to be
redeemed is fixed to be within the year of 1981. (Exhibit "D")." 10
"Contracts are perfected by mere consent, and from the moment the
parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature,
may be in keeping with good faith, usage and law."cralaw virtua1aw library
Article 1475 further provides:jgc:chanrobles.com.ph
"The defense of the defendants spouses Felix Zepeda and Virginia Reña,
that they are buyers in good faith, and have no knowledge on the
transactions between the plaintiffs and the defendant Bank before they
purchased the property in question is not supported by convincing
evidence, it cannot likewise be sustained.
"The inherent weakness of the defendant’s (Mrs. Zepeda) defense that she
was not aware or informed by the Manager and lawyer of the Bank about
the actual condition of the property being sold to her when she went to the
Bank in the month of January, 1981, to check and verify what the actual
status of the property is become evident, (sic) if one bears in mind that from
the record or title of the land she can readily find out for herself that the lot
was still registered in the name of Antonio Santos under T.C.T. No. NT-
57013; that there has been no yet (sic) consolidation of the property in
favor of the Bank; and that no writ of possession authorizing the bank to
legally take over the possession of the parcel of land mortgaged was
issued (Barrameda v. Gontong 19 SCRA 387).
"The defense of good faith based upon the claim of Mrs. Zepeda that she
has knowledge of the plaintiffs’ existing contract because the Manager of
the Bank and its attorney, Mr. Hector F. Dysangco, with whom she had
negotiated to buy the property, concealed or did not divulge to them the
existence of such contract between the Bank and the plaintiffs, wherein the
former agreed to the latter for them to redeem the property for P12,000.00,
is not only uncorroborated by other evidence but highly improbable for said
officers of the bank to hide such kind of transaction. It may be noted on this
point that Mrs. Zepeda’s version does not coincide with the stand of the
Bank that the Manager sold this property to her because they considered it
as an acquired asset of the Bank and can lawfully do it.
"Being an intelligent and business oriented person who owns and manages
two big stores and a factory in Metro Manila, who came to St. Domingo,
Nueva Ecija, for three times, talked to many persons, her cousins, and to
the bank’s officers, it would be unbelievable for Mrs. Zepeda to fail to
discover that the plaintiffs are interested to redeem the property of their
brother Antonio Santos.chanrobles.com.ph : virtual law library
"It may be noted too that when she came to the Bank for the first time she
was greeted by the Manager of the Bank ‘so it was you whom she was able
to find’", an expression indicating that she was a prospective buyer willing
to buy the lot in question with better terms and condition already revealed
to her. It is also significant to note that the agreed price in the contract
between the Bank and the plaintiffs is P12,000.00, and the term of payment
is by installment for one year from January 13, 1981; while the defendant
Zepedas offered P14,000.00, or P2,000.00 more than the price agreed
upon by the plaintiffs, and in cash.
"The Bank’s reason for disposing the property to the Zepedas is because
Mrs. Zepeda’s offer was for cash basis and for more (P14,000.00), while
that of Amansec (plaintiff) is for installment and for P12,000.00 (Exh. "E"), a
clear indication that Mrs. Zepeda is aware of this, because she was
apprised of the transaction between the Bank and the Plaintiffs, but tried to
over bid them in order to be able to buy the property. The Zepedas never
assailed this reason.
"Furthermore, why the defendants Zepedas did not file a cross claim, it if
was true that the Manager and the lawyer of the Bank concealed to them
the actual situation or status of the property in question? And if it is true that
said officers of the bank assured them that the property has no legal
infirmity and the bank would answer for any legal defects or flaw before it
was conveyed to her?" 11
To strengthen the observance of the Zepedas’ bad faith, the appellate court
said:jgc:chanrobles.com.ph
"The lower court’s accurate observation from the records that confronted
with the foregoing, the Zepedas did not inquire into the condition of the
property and/or failed to discover the bank’s previous transaction with
appellees despite their entrepreneurial status and acumen; that their
protestations of good faith are, at best, insufficient and uncorroborated; that
appellant Bank’s Manager intimated to them about its earlier agreement
with the plaintiffs (TSN, 24 August 1982, pp. 34-35); and, over and above
the foregoing considerations, that the spouses did not file a cross-claim
against the appellant Bank despite the latter’s alleged non-disclosure of its
previous agreement are, sufficient badges of bad faith as would defeat their
claim. Finally, the Zepedas’ harping over the lower court’s apparent
misapprehension of their relation to Tarcilla Santos, Plaintiff-Appellee
Leonila Amansec’s sister-in-law is inconsequential. (Defendants-Appellants
Zepeda’s Appeal Brief, p. 8)." 12
Petitioners miserably failed to prove good faith on their part. There is
therefore no reason for Us to disturb the findings and conclusions made by
the Court of Appeals.
SO ORDERED.
G.R. No. 101262 September 14, 1994
BELLOSILLO, J.:
Tomas Hingco, a widower, originally owned Lot 209 of the Dingle Cadastre,
Iloilo. He married Consolacion Rondael, a widow, who had a daughter
Magdalena Rondael. In 1947 he donated one half (1/2) of Lot 209 to his
stepdaughter Magdalena subject to the condition that she could not sell,
transfer or cede the same. When he died, Consolacion inherited the
remaining half of Lot 209 which, in turn, was inherited by Magdalena upon
the death of Consolacion. Consequently, the entire Lot 209 was registered
in the name of Magdalena Rondael, married to Lorenzo Daguro, under
Transfer Certificate of Title No.
T-13089.
In 1976 Lorenzo Daguro died. Magdalena then filed before the Court of
First Instance of Iloilo a petition to cancel the lien prohibiting her from
disposing of Lot 209-A because she needed money for her subsistence
and medical expenses as she was then in her 80's. Besides, she was
sickly. 1 He deposition on oral examination in connection with her petition
was taken on 24 January 1979. 2
Magdalena had two (2) daughters but only one is still living, Coloma
Daguro, married to Alberto Garrido, the spouses being the petitioners
herein. They were based in Davao City and would visit Magdalena only on
occasions. In February 1984, Alberto Garrido visited the Suplementos in
the house where Magdalena used to live. 7 He wanted to find out if the
taxes on the house were being paid. In reply, respondents showed him the
Deed of Absolute Sale signed by his parents-in-law and it was only then
that he came to know that Lot 209-A no longer belonged to his in-laws.
On appeal, respondent Court of Appeals affirmed the ruling of the Iloilo trial
court in its decision of 27 February 1991 10 and denied reconsideration on
29 July 1991. 11
Petitioners contend that the appellate court erred in holding that they have
no personality to assail the Absolute Deed of Sale and the genuineness of
the signature of Magdalena Rondael.
Petitioners assert that the issue raised in the trial court was whether
Magdalena Rondael could sell the property despite the prohibition in the
deed of donation. In ruling that they were incapacitated to question the non-
observance of the condition, respondent court went beyond the issue,
hence, exceeded its jurisdiction.
Petitioners also submit that the finding of the appellate court that the
signature of Magdalena Rondael in the Deed of Absolute Sale is genuine
has been overtaken by events. In a letter dated 1 August 1991, the
Regional Director of the NBI, Iloilo City, furnished the Iloilo City Prosecutor
with a copy of NBI Questioned Document Report No. 413-791 dated 23
July 1991, purporting to show that the questioned signature as well as the
standard/sample signatures of the deceased Magdalena Rondael were not
written by one and the same person, 13 hence, a forgery.
Admittedly, the NBI report was never adduced before the lower courts; in
fact, it is presented for the first time and only before this Court. Obviously,
this is not a newly discovered evidence within the purview of Sec. 1, par.
(b), Rule 37, of the Rules of Court. Petitioners should have thought of
having the signature of Magdalena Rondael on the deed of sale examined
when the case was still with the trial court. Nothing would have stopped
them from doing so. Hence, it is now late, too late in fact, to present it
before this Court.
Petitioners' reliance on the NBI report as basis for new trial on the ground
of "newly discovered evidence" is a mistake. In the first place, the rule is
explicit that a motion for new trial should be filed before the trial court and
within the period for appeal. In the second place, in order that a particular
piece of evidence may be properly regarded as "newly discovered" for the
purpose of granting new trial, the following requisites must concur: (a) the
evidence had been discovered after trial; (b) the evidence could not have
been discovered and produced during trial even with the exercise of
reasonable diligence; and, (c) the evidence is material and not merely
corroborative, cumulative or impeaching and is of such weight that if
admitted would probably alter the result. 14 At the pitch of these
requirements is that what is essential is not so much the time when the
evidence offered first sprang into existence nor the time when it first came
to the knowledge of the party now submitting it; rather, that the offering
party had exercised reasonable diligence in producing or locating such
evidence before or during trial but had nonetheless failed to secure it. The
NBI report does not qualify as newly discovered evidence because the
second requirement was not complied with. Petitioners did not exercise
reasonable diligence in procuring such evidence before or during trial. By
their own admission, the Fiscal sought NBI assistance only after the trial of
the case. They could have done so themselves when their case was tried.
Besides, when the City Prosecutor requested the NBI for a handwriting
examination in connection with petitioners' criminal complaint for
falsification against respondents, the initial response of the NBI was: "no
definite opinion can be rendered on the matter due to lack of sufficient
basis necessary for a scientific comparative examination." 15 From there it
can be deduced that petitioners did not submit adequate documents before
the NBI at the first instance, thus showing their want of reasonable
diligence in procuring the evidence they needed for a new trial.
DECISION
QUISUMBING, J.:
The facts, as found by the trial court and affirmed by the Court of Appeals,
are as follows:
Eligio Herrera, Sr., the father of respondent, was the owner of two parcels
of land, one consisting of 500 sq. m. and another consisting of 451 sq. m.,
covered by Tax Declaration (TD) Nos. 01-00495 and 01-00497,
respectively. Both were located at Barangay San Andres, Cainta, Rizal.[3]
On January 3, 1991, petitioner bought from said landowner the first parcel,
covered by TD No. 01-00495, for the price of P1,000,000, paid in
installments from November 30, 1990 to August 10, 1991.
On March 12, 1991, petitioner bought the second parcel covered by TD No.
01-00497, for P750,000.
Contending that the contract price for the two parcels of land was grossly
inadequate, the children of Eligio, Sr., namely, Josefina Cavestany, Eligio
Herrera, Jr., and respondent Pastor Herrera, tried to negotiate with
petitioner to increase the purchase price. When petitioner refused, herein
respondent then filed a complaint for annulment of sale, with the RTC of
Antipolo City, docketed as Civil Case No. 92-2267. In his complaint,
respondent claimed ownership over the second parcel, which is the lot
covered by TD No. 01-00497, allegedly by virtue of a sale in his favor since
1973. He likewise claimed that the first parcel, the lot covered by TD No.
01-00495, was subject to the co-ownership of the surviving heirs of
Francisca A. Herrera, the wife of Eligio, Sr., considering that she died
intestate on April 2, 1990, before the alleged sale to petitioner. Finally,
respondent also alleged that the sale of the two lots was null and void on
the ground that at the time of sale, Eligio, Sr. was already incapacitated to
give consent to a contract because he was already afflicted with senile
dementia, characterized by deteriorating mental and physical condition
including loss of memory.
On November 14, 1994, the Regional Trial Court handed down its decision,
the dispositive portion of which reads:
WHEREFORE, in view of all the foregoing, this court hereby orders that:
1. The deeds of sale of the properties covered by Tax Dec. Nos. 01-00495
and 01-00497 are declared null and void;
SO ORDERED.[4]
SO ORDERED.[5]
Petitioner contends that the Court of Appeals erred when it ignored the
basic distinction between void and voidable contracts. He argues that the
contracts of sale in the instant case, following Article 1390[7] of the Civil
Code are merely voidable and not void ab initio. Hence, said contracts can
be ratified. Petitioner argues that while it is true that a demented person
cannot give consent to a contract pursuant to Article 1327,[8] nonetheless
the dementia affecting one of the parties will not make the contract void per
se but merely voidable. Hence, when respondent accepted the purchase
price on behalf of his father who was allegedly suffering from senile
dementia, respondent effectively ratified the contracts. The ratified
contracts then become valid and enforceable as between the parties.
Respondent counters that his act of receiving the purchase price does not
imply ratification on his part. He only received the installment payments on
his senile fathers behalf, since the latter could no longer account for the
previous payments. His act was thus meant merely as a safety measure to
prevent the money from going into the wrong hands. Respondent also
maintains that the sales of the two properties were null and void. First, with
respect to the lot covered by TD No. 01-00497, Eligio, Sr. could no longer
sell the same because it had been previously sold to respondent in
1973. As to lot covered by TD No. 01-00495, respondent contends that it is
co-owned by Eligio, Sr. and his children, as heirs of Eligios wife. As such,
Eligio, Sr. could not sell said lot without the consent of his co-owners.
We note that both the trial court and the Court of Appeals found that Eligio,
Sr. was already suffering from senile dementia at the time he sold the lots
in question. In other words, he was already mentally incapacitated when he
entered into the contracts of sale. Settled is the rule that findings of fact of
the trial court, when affirmed by the appellate court, are binding and
conclusive upon the Supreme Court.[9]
Coming now to the pivotal issue in this controversy. A void or inexistent
contract is one which has no force and effect from the very beginning.
Hence, it is as if it has never been entered into and cannot be validated
either by the passage of time or by ratification. There are two types of void
contracts: (1) those where one of the essential requisites of a valid contract
as provided for by Article 1318[10] of the Civil Code is totally wanting; and
(2) those declared to be so under Article 1409[11] of the Civil Code. By
contrast, a voidable or annullable contract is one in which the essential
requisites for validity under Article 1318 are present, but vitiated by want of
capacity, error, violence, intimidation, undue influence, or deceit.
Article 1318 of the Civil Code states that no contract exists unless there is a
concurrence of consent of the parties, object certain as subject matter, and
cause of the obligation established. Article 1327 provides that insane or
demented persons cannot give consent to a contract. But, if an insane or
demented person does enter into a contract, the legal effect is that the
contract is voidable or annullable as specifically provided in Article 1390.[12]
In the present case, it was established that the vendor Eligio, Sr. entered
into an agreement with petitioner, but that the formers capacity to consent
was vitiated by senile dementia. Hence, we must rule that the assailed
contracts are not void or inexistent per se; rather, these are contracts that
are valid and binding unless annulled through a proper action filed in court
seasonably.
Nor can we find for respondents argument that the contracts were void as
Eligio, Sr., could not sell the lots in question as one of the properties had
already been sold to him, while the other was the subject of a co-ownership
among the heirs of the deceased wife of Eligio, Sr. Note that it was found
by both the trial court and the Court of Appeals that Eligio, Sr., was the
declared owner of said lots. This finding is conclusive on us. As declared
owner of said parcels of land, it follows that Eligio, Sr., had the right to
transfer the ownership thereof under the principle of jus disponendi.
In sum, the appellate court erred in sustaining the judgment of the trial
court that the deeds of sale of the two lots in question were null and void.
SO ORDERED.