SECOND
DIVISION
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ELENITA C. ISHIDA
and CONTINENT JAPAN CO., INC., Petitioners, - versus - ANTUSA DE MESA-MAGNO,
FIRMO DE Respondents. |
|
G.R. No. 136260 Present: PUNO, J.,
Chairperson, SANDOVAL-GUTIERREZ, AZCUNA, and GARCIA, JJ. Promulgated: July 28, 2006 |
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D E C I S I O N
GARCIA,
J.:
Assailed and
sought to be set aside in this petition for review under Rule 45 of the Rules
of Court is the Decision[1] dated
Reviewed, the
records reveal the following factual antecedents:
Sometime in June
1987, the spouses Francisco Magno and Antusa de Mesa-Magno, the latter acting
in her own behalf and in behalves of her co-respondent brothers and sisters,
namely, Firmo de Mesa, Merced Lorenza de Mesa,
Teodoro de Mesa and Lourdes de Mesa-Mendoza, executed a Deed of Sale with Mortgage[3] in favor of petitioner Continent Japan Co., Inc., represented in the deed by
its co-petitioner Elenita Ishida.
Subject of the
deed were a fishpond, a residential lot and a horticular
land, all located in Lubao, Pampanga
and registered under three separate transfer certificates of title (TCTs) in the names of respondent Antusa
de Mesa-Magno and her co-respondents. The
consideration for the sale was Five Million, One Hundred Fifty Thousand (P5,150,000.00)
Pesos, of which Two Million, Seven Hundred Fifty Thousand (P2,750,000.00)
Pesos was paid at the time the deed was
executed, with the balance of Two Million, Four Hundred Thousand (P2,400,000.00)
Pesos being secured by a mortgage of the properties sold. As agreed, the aforesaid balance of P2,400,000.00
in the purchase price shall be paid, as follows: P500,000.00, on or
before P1,900,000.00,
on or before
Despite the sale,
titles to the properties were not immediately transferred to the
vendee-mortgagor Continent Japan Company, Inc., because its Articles of
Incorporation which is required to effect the transfer was not readily available. It was only sometime in October 1987, after
the vendee had submitted its Articles of Incorporation showing it to be a domestic
corporation, that three (3) TCTs over the properties
sold were issued in its name, to wit: TCT Nos. 249756-R, 249757-R and 2497-R.
Meanwhile, due to
the alleged failure of the respondents to immediately effect the transfer of
titles to the corporation, the latter’s alleged financial partners withdrew
their financial commitments. On account thereof, the corporation was not able
to make payments of the balance in the purchase price, by reason of which the
respondents foreclosed the mortgage in accordance with the terms and conditions
of the parties’ Deed of Sale With Mortgage. Thereafter, foreclosure proceedings
ensued. Ultimately, the respondents acquired the mortgaged properties in a
public auction and obtained new TCTs in their names.
It was against the
foregoing backdrop of events that, on
After the issues
were joined and all preliminary incidents resolved, the trial court came out
with its decision[5]
on
WHEREFORE,
by preponderance of evidence, judgment is hereby rendered declaring the
contract of sale of the fishpond property entered into by and between Sps. Francisco
Magno and Antusa de Mesa Magno and Continent Japan
Co. Inc. represented by Alenita Ishida annulled. Defendants are ordered to
return to plaintiff the amount of Four Million Five Hundred Thousand
(P4,500,000.00) Pesos plus interest at the rate of 12% per annum from
Further, defendant is hereby ordered to pay plaintiff the following:
1. The amount of One Hundred Thousand (P100,000.00) or actual and moral damages;
2. The amount of Fifty (P50,000.00) Thousand Pesos as attorney’s fees, and
3. Costs of suit.
SO ORDERED.
Therefrom, the
respondents went on appeal to the CA in CA-G.R.
CV No. 441550. As stated at the
threshold hereof, the appellate court, in its Decision[6]
dated
WHEREFORE, premises considered, the appeal is GRANTED. The decision appealed from is hereby REVERSED and SET ASIDE and new judgment is hereby rendered DISMISSING the complaint.
Counter-claim is likewise DISMISSED.
Costs against plaintiff-appellees.
SO ORDERED.
Their motion for reconsideration having been denied
by the CA in its equally challenged Resolution[7] of
October 28, 1998, petitioners are now with this Court via the present recourse,
arguing that the CA acted with patent
grave abuse of discretion -
I
XXX IN FAILING TO
RULE THAT THE TRIAL COURT CORRECTLY DECREED THE ANNULMENT OF THE
II
XXX IN FAILING TO
RULE THAT THE COMPLAINT WAS NOT RENDERED
MOOT AND ACADEMIC BY THE FORECLOSURE AND CONSOLIDATION OF THE SUBJECT
PROPERTIES BY RESPONDENTS.
III
XXX IN FAILING TO
RULE THAT THE TRIAL COURT CORRECTLY RENDERED JUDGMENT IN FAVOR OF PETITIONERS.[8]
The petition lacks
merit.
As we see it, the
forefront issue is whether, under the facts obtaining in this case, the CA
committed an error in reversing the trial court’s decision annulling the
parties’ Deed of Sale with Mortgage.
We rule and so
hold that the CA did not.
From the very
allegations of petitioners’ initiatory pleading before the trial court which
they simply styled as a Complaint without
specifying what their complaint was for, it is crystal clear that petitioners
as plaintiffs in the suit never asked the trial court to annul the subject Deed
of Sale with Mortgage. Instead, in their complaint, petitioners merely prayed for a judgment
ordering the respondents, as defendants:
1. to effect the transfer of the titles over the property to Continent Japan Co., Inc. and to deliver the same;
2. to pay actual damages in the amount of One Million Five Hundred (P1,500,000.00) Pesos which was sustained by plaintiffs due to the failure by defendants to immediately effect the transfer and delivery of the titles over the land, causing the former’s financial partners to withdraw their financial commitments;
3. to restore of the piggery property or in the alternative, the reduction of the consideration in the amount of Three Hundred Fifty Thousand (P350,000.00) Pesos;
4. to compensate the plaintiffs in the amount of One Hundred Thousand (P100,000.00) Pesos for the fruits harvested from the property as well as the fixtures removed from the property bought;
5. to compensate the plaintiffs in the amount of One Million (P1,000,000.00) Pesos for the difference in the actual number of prawns harvested from the fishpond;
6. to compensate Elenita Ishida the amount of Two Hundred Fifty Thousand (P250,000.00) Pesos as and by was of moral damages;
7. to pay exemplary damages in the amount of Two Hundred Fifty Thousand (P250,000.00) Pesos;
8. to pay attorney’s fees in the amount of Two Hundred Fifty Thousand (P250,000.00) Pesos; and
9. to pay the costs of suit.
Clear it is from
the above that petitioners never asked for the annulment of the contract of
sale with mortgage. For sure, the reliefs prayed for
are even inconsistent with what the trial court decreed, i.e., annulment of the parties’ basic contract. The Court, as did the CA before it, is thus
at a loss to understand why the trial court, instead of focusing itself to the
reliefs sought by the petitioners, proceeded to annul the basic contract
itself, a course of action which, to stress, is even inconsistent with the very
existence of the contract from whence the reliefs asked merely sprung. As aptly pointed out by the CA in the
decision under review:
A careful perusal of the complaint will show as clearly appearing in the discussion of the facts of the case that nowhere in its prayer nor in the body of the complaint did [petitioners] ask for the annulment of the contract of sale with the [respondents]. Evidence is wanting for such a relief to be granted. (Words in brackets supplied).
Evidently, in
veering away from what the complaint prayed for, the trial court was of the
view that there was no meeting of the minds of the parties vis a vis their Deed of Sale
with Mortgage. In the words of the trial court, “[E]vident is the existence of the documents executed prior to, at the
time or subsequent to the alleged transaction and agreement to sell and to buy
the subject property.”
The records indeed
show that after the execution of the Deed of Sale with Mortgage, the parties executed
an Addendum thereto (Exh. “6”),
enumerating therein certain properties within the area of the real properties
subject of the sale, which were excluded therefrom. As correctly observed by
the CA, however, the Addendum was not even necessary because the excluded
properties were already enumerated in pages 2 and 3 of the Deed of Sale with
Mortgage.
In any event, and,
again, as correctly pointed out by the CA, to which we are in full accord:
It is error for the court a quo to hold that there was no meeting of the minds between the parties. It must be borne in mind that the principal object of the contract of sale with mortgage are the three adjoining parcels of land, and that the confusion as to the exclusion of the piggery as well as the fruits harvested does not warrant the annulment of the contract. They are merely incidental to the contract.
To warrant a declaration of nullity of the contract, the doubts or obscurities must be cast upon the principal object of the contract (which in this case are three parcels of land) in such a way that the true intention of the parties cannot be known . Par. 2, Art. 1378 of the Civil Code provides:
xxx xxx xxx
If the doubts are cast upon the principal object of the contract in such a way that it cannot be known what may have been the intention or will of the parties, the contract shall be null and void.
If the doubt refers to the incidental circumstances of an onerous contract, the doubt shall be settled in favor of the greatest reciprocity. For this purpose, par. 1 of the abovecited articles provides:
When it is absolutely impossible to settle doubts by the rules established in the preceding articles, and the doubts refer to incidental circumstances of a gratuitous contract, the least transmission of rights and interests shall prevail. If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of interest.
Such a confusion merely led to the failure of the parties to express in the contract the true intention of their agreement, the proper remedy of which is reformation of the contact under Chapter 4, Title 2, Book IV (Obligations and Contracts) of the Civil Code.
This brings us
to petitioners’ second submission
that the CA committed grave abuse
of discretion in failing to rule that their complaint was not
rendered moot and academic by the foreclosure proceedings and the
resulting consolidation of titles over
the mortgaged assets in
the names of the respondents. Put differently but with
the same sense, it is petitioners’ contention that despite the
foreclosure proceedings and the consolidation of titles
in respondents’ name, the viability of their complaint was never affected.
We disagree.
First, with the
reality that the properties subject of the suit were already sold at a public
auction and titles thereto already registered in the names of the respondents there is simply no
rhyme nor reason to hold that the complaint had not
thereby been rendered moot and academic, more so in the light of the prayers therein
embodied.
Second, and as
explained by the CA in its Resolution of
xxx To ask for the annulment or rescission of the transaction between the parties at this time will be iniquitous considering that [petitioners] had a hand in the delay in the transfer of the titles to the properties in the name of the [petitioner] Continent Japan Co. Besides, as [respondent] correctly pointed out, no evidence was adduced during the proceedings before the trial court tending to prove that [petitioners] are entitled to the annulment of the contract between them as a relief.[9]
With the view we
take of this case, we find it unnecessary to address petitioners’ third lament.
WHEREFORE, the
petition is DENIED
and the assailed Decision and
Resolution of the CA in CA-G.R. CV No. 441550 are AFFIRMED.
Costs against
petitioners.
SO ORDERED.
CANCIO C. GARCIA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Associate Justice
Chairperson
|
ANGELINA SANDOVAL-GUTIERREZ Associate Justice |
RENATO C. CORONA Associate Justice |
ADOLFO S. AZCUNA
Associate Justice
A T T E S T A T I O N
I
attest that the conclusions in the above decision were reached in consultation
before the case was assigned to the writer of the opinion of the Court’s
Division.
REYNATO S .PUNO
Associate Justice
Chairperson, Second Division
C E R T I F I C A T I O N
Pursuant
to Article VIII, Section 13 of the Constitution, and the Division Chairperson's
Attestation, it is hereby certified that the conclusions in the above decision
were reached in consultation before the
case was assigned to the writer of the opinion of the Court.
ARTEMIO V. PANGANIBAN
Chief Justice
[1] Penned by Associate Justice Jose C. de la Rama (ret.) with Associate Justices Emeterio C. Cui (ret.) and Eduardo Montenegro (ret.), concurring; Rollo, pp. 43-50.
[2] Penned by Associate Justice Ramon A. Barcelona (ret.) and concurred in by Associate Justice, later a member of this Court, Arturo B. Buena (now ret.) and former Associate Justice Demetrio G. Demetria; Rollo, pp. 53-57.
[3] RTC Records, pp. 22-25.
[4] RTC Records, pp. 4-17.
[5] RTC Records, pp. 434-444.
[6] Supra note 1.
[7] Supra note 2.
[8] Rollo, pp. 11-12.
[9] Rollo, pp. 56-57.