SECOND DIVISION
LAURENCIO C. RAMEL, G.R.
No. 133208
SOCORRO B. RAMEL and
RENE LEMAR B. RAMEL,
Petitioners,
Present:
- versus - PUNO,
J., Chairperson,
SANDOVAL-GUTIERREZ,
AZCUNA, and
DANIEL AQUINO and GARCIA, JJ.
GUADALUPE ABALAHIN,
Respondents.
Promulgated:
BENJAMIN AQUINO and
VIRGINIA AQUINO,
Respondents-Intervenors. July
31, 2006
x-----------------------------------------------------------------------------------------x
D E C I S I O N
PUNO, J.:
At bar is a Petition for Review on
Certiorari of the Decision and Resolution of the Court of Appeals in CA-G.R. CV
No. 28654 dated
The
instant case originated from a suit filed by petitioners Laurencio
C. Ramel, Socorro B. Ramel
and Rene Lemar B. Ramel
against respondent Daniel Aquino, married to
respondent Guadalupe Abalahin, for Specific
Performance with Preliminary Injunction and Damages.
Daniel
Aquino is the registered owner of Lot No. 2080, a
14.1825-hectare land situated in Tanggal, Cordon, Isabela under Transfer Certificate of Title (TCT) No.
T-36937. On P50,000.00. In 1983, the property was in
danger of being foreclosed as respondents had no means to pay for the loan.
Thus, on
Petitioners
agreed to purchase the property but the agreement was not reduced into writing.
Petitioners were to buy the 8.2030 hectares at P13,500.00 per hectare or
at a total sum of around P110,700.00. Petitioners would assume the
remaining mortgage obligation of respondents with DBP as of P85,543.00 and the balance of about P25,000.00
shall be paid to respondents on installment.[1]
On
the same day that the offer was made and accepted, petitioners gave respondents
an earnest money of P5,000.00.[2]
Further additional partial payments were made on P15,000.00[3]
and P4,800.00[4]
on
Petitioners
also made the following payments to DBP:[5]
P10,000.00 on P3,097.00
on P10,000.00 on P23,097.00.
Respondents also sold to petitioners 2,484
square meters of the southern portion of the mortgaged property for P2,700.00.
Petitioners paid the full amount on
On
P8,634.15 beginning P4,904.60 starting
on the 6th to the 10th year.[9]
On
P72,703.06. Petitioners offered to return
to respondents the said sum but the latter refused to accept the offer.
Instead, respondents told petitioners that they would return whatever they have
paid for the land, and threatened to withdraw the certificate of title of the
land from the bank. The manager of the bank accepted the money tendered by
respondents as “deposit” and gave the parties time to settle the matter on
their own, but to no avail. On P72,703.06
which they had paid to the bank.
Meanwhile,
during the pendency of the case, petitioners made the
following payments to DBP in full settlement of the loan: P30,000.00
on P50,000.00 on P5,118.42 on P108,216.00.
The DBP then deposited the Release of Mortgage to the Clerk of Court.
Respondent
spouses alleged that petitioners agreed to pay them P35,000.00, not P25,000.00.
They further alleged that petitioners agreed to assume in full the then
remaining mortgage loan with DBP and to withdraw the certificate of title of
the land not later than P72,703.06
from its proceeds to DBP on
Respondents-Intervenors Benjamin Aquino and
Virginia Aquino are the siblings of respondent Aquino and intervened as co-owners of Lot No. 2080. An
amicable settlement[10] was entered into between respondent Aquino and
the intervenors on
The
trial court issued an Order dated
STIPULATIONS OF FACTS
x x x
2. That the 8.2030 hectares
of riceland located at Cordon, Isabela
is covered by Transfer Certificate of Title No. 36937, Isabela
Registry, in the name of Daniel Aquino;
x x x
5. That the payments made by
Rene Lemar R. Ramel and
duly receipted are:
(1)
On P4,800.00
xxx;
(2)
On P5,000.00
xxx;
(3)
On P15,000.00
xxx;
(4)
On P2,700.00
xxx;
and admitted by all the parties.[12]
On
WHEREFORE,
in light of the foregoing considerations[,] judgment is hereby rendered:
1. ORDERING
the spouses Daniel Aquino and Guadalupe Aquino to execute a deed of sale over a portion of lot 2080
located and bounded by Ilut Creek on the south, Juan
Mariano’s lot on the east, portion of lot 2080 on the north and Castillo’s lot
on the west, containing an area of [2,484] square meters more or less, in favor
of Rene Lemar Ramel.
2. DECLARING
that the oral contract of sale between the plaintiff Rene Lemar
Ramel and the defendants spouses Daniel and Guadalupe
Aquino as rescinded.
3. ORDERING
the defendants spouses Daniel and Guadalupe Aquino to
pay to the plaintiff Rene Lemar Ramel
the sums of P29,800.00 representing the amount received by said
defendants for the land, plus P108,216.00 representing the amount paid
by the plaintiffs to the bank.
4. ORDERING
the plaintiffs to return the peaceful possession of the land, lot 2080[,] after
they shall have been paid the aforesaid amount by the defendants.
5. ORDERING
the intervenors Benjamin Aquino
and Virginia Aquino to reimburse to the defendant
Daniel Aquino their one-third share each of the
amount of P138,016[.00] which the latter paid to the plaintiff.
6.
DECLARING that the intervenors
Benjamin Aquino and Virginia Aquino
are the co-owners of the 8.2030 southern portion of lot 2080 in equal shares.[13]
Petitioners appealed to the Court of
Appeals which affirmed the decision of the trial court and denied their Motion
for Reconsideration. Hence, this petition assailing the decision of the
appellate court, viz.:
I.A. Based not only on misapprehension and
appreciation of facts, but also on the findings which manifestly overlooked
certain relevant facts not disputed by the parties and which, if properly
considered, would justify a different conclusion, as well as on an inference
which is manifestly mistaken.
I.B. Based on A false, fabricated and
self-serving testimony of the respondents.
I.C. Based on the findings of facts which are
contrary to those of the trial court and contrary to the admission of the
respondents herein.
II. The judgment of the trial court which
was affirmed by the Court of Appeals is not in accord with the existing laws
and the applicable decisions of this Honorable Court, being an erroneous
application of Articles 1191 and 1545 of the Civil Code and the applicable jurisprudence.[14]
The hinge issues are the following: (1) whether
petitioners substantially breached their obligation warranting the rescission
of the contract and (2) whether there is legal ground to order the offsetting
of the claim of improvements by petitioners to the claim of fruits derived from
the land by respondents.
First to be determined is the total
amount paid by petitioners to respondents to show the former’s
compliance or non-compliance with their obligation.
There is no question that petitioners
were obligated to pay the remaining mortgage obligation of respondents with the
DBP as of P75,544.92, that is after petitioners had paid the bank P10,000.00
on the same date. Hence, the total remaining mortgage obligation as of P85,544.92. Deducting this from the total value of the land which is
about P110,700.00, the balance of about P25,000.00, and not P35,000.00,
was to be paid by petitioners to respondents.
The courts a quo erred
in concluding that petitioners were able to pay respondents a total sum of P29,800.00.
Per stipulation by the parties themselves, petitioners paid to respondents the total
sum of P27,500.00.[16]
This even includes the amount of P2,700.00 which petitioners paid for
the additional 2,484-square meter strip of land which they purchased from
respondents. Deducting this P2,700.00 from the total payments made for
the 8.2030 hectares, petitioners were able to pay a sum of P24,800.00 of
the P25,000.00 balance for the subject parcel. This small discrepancy is
not a ground for respondents to rescind their contract with petitioners.
We look, however, to the other ground
– the failure of petitioners to pay the remaining balance of the mortgage
obligation of respondents to the DBP. The record shows that at the time
petitioners filed the case with the trial court on October 9, 1984, they were
able to pay only P23,097.00 of the then P85,544.92 outstanding
mortgage obligation of respondents. Instead of petitioners paying the remaining
balance on or before
First, after respondents learned that petitioners had
re-structured the loan, respondents paid the amount of P72,703.06 to DBP. The fact that respondents later on withdrew the amount
cannot operate against them because the trial court had enjoined them from
withdrawing the certificate of title and the bank from releasing the same.
Second, the subject property was facing foreclosure that
December of 1983. It was precisely due to the impending foreclosure that
respondents offered to sell the subject property to petitioners. It was never the
intention of respondents to be left at the mercy of petitioners as to when the
latter would complete payment of the remaining mortgage obligation. It goes
against the common sense of man and the ordinary course of business that an
owner of land sells his property without any definite agreement as to when the
obligation shall be paid, especially if his property is facing foreclosure. Though
petitioners were able to subsequently fully settle the mortgage loan in May
1986 – two years and five months from December 1983, and one and a half years
after they filed this case – the fact remains that they reneged on their
obligation to pay within the agreed period. They could have asked respondents
to give them a grace period to settle the remaining loan obligation but they
did not.
It is true that petitioners sent a Notice of Loan Approval[17]
dated
With the breach committed by petitioners, the trial court ruled
and the appellate court rightly affirmed that petitioners substantially violated
their obligation. Hence, respondents are entitled to a rescission of the
contract under Article 1191 of the Civil Code, viz.:
Art. 1191. The
power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him.
The injured party
may choose between the fulfillment and the rescission of the obligation, with
the payment of damages in either case. He may also seek rescission, even after
he has chosen fulfillment, if the latter should become impossible.
The
court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
x x x
Petitioners
can not argue that their breach is merely casual and slight, especially that
they were able to subsequently pay the loan and the purpose of the contract has
been fulfilled by petitioners, i.e., that the mortgage obligation shall
be paid and respondents shall be able to retain at least the rest of the land
free from any liens or encumbrances.[18]
The ruling of the trial court on this issue is correct, viz.:
x x x It is admitted that the
underlying purpose of the Aquinos to sell a portion
of the land was in order that their mortgage obligation shall be paid and they
shall be able to retain at least the rest of the land free from any liens and
encumbrances. It was imperative then for Rene Ramel
to pay the mortgage obligation. He did not do so. x x
x x More important[,] he
did not even intend to pay the bank because he had the loan re-structured so as
to be payable in ten years. Of course, he finally paid the mortgage loan but
only after one and one-half years after the filing of this case. To the mind of
the [c]ourt, the non-payment of the mortgage
obligation until after one and one-half years after the filing of this case
constitutes a substantial breach that entitles the Aquinos
to rescind the contract.[19]
Rightly, the appellate court affirmed the
ruling, viz.:
Since
Ramel failed to settle Aquino’s
mortgage obligation on or before
Petitioners further invoke Article 1592 of the Civil Code
and argue that respondents are not entitled to rescission because no demand has
been made upon them either judicially or by notarial
act. They contend that respondents “merely raised rescission as a defense in
this case of Specific Performance and they have never informed the Ramels about their alleged decision to exercise the said
right before this case was filed xxx.”[21]
They aver that the act of the Aquinos in tendering
payment to DBP does not constitute demand as the term is defined under Article
1592,[22]
viz.:
Art.
1592. In the sale of immovable property,
even though it may have been stipulated that upon failure to pay the price at
the time agreed upon the rescission of the contract shall of right take place,
the vendee may pay, even after the expiration of the period, as long as no
demand for rescission of the contract has been made upon him either judicially
or by a notarial act. After the demand, the court may
not grant him a new term.
Again, we reject the argument. We held in the case of Luzon
Brokerage Co., Inc. v. Maritime Building Co., Inc.[23]
that even a cross-claim found in the Answer filed in the trial court constitutes
judicial demand for rescission that satisfies the requirements of Article 1592.
Further, in Iringan v. Court of Appeals,[24]
we held that an action for Judicial Confirmation of Rescission and Damages
before the Regional Trial Court complied with the requirement of the law for
judicial demand of rescission even if the intention of the moving party was to
compel the other party to formalize in a public document their extrajudicial mutual
agreement to rescind. In this case, the mutual agreement to rescind was forged
when the injured party sent to the defaulting party a letter stating that he
had considered the contract rescinded and that he would not accept any further
payment. The defaulting party replied that he was not opposing the revocation
of the sale, save for some reimbursements. We held that though the letter
declaring the intention to rescind did not satisfy the “demand” required by the
law, the subsequent case filed for a judicial confirmation of the rescission
did meet the requirement for a valid demand.
We rule that respondents satisfied
Article 1592 when they raised rescission as a defense in their Answer.
To be sure, petitioners learned of respondents’ intention to rescind even
before they filed their Answer. Petitioners knew the intent to rescind when respondents
deposited the amount of P72,703.06 with DBP to fully settle their
remaining obligation. Petitioners were told by respondents that they were
rescinding the contract after the mortgage was re-structured without their
consent. Indeed, it was this declaration by respondents that prompted
petitioners to file the case of Specific Performance with the trial court.
Finally, petitioners question the ruling
of the courts a quo offsetting the claim of improvements by petitioners
and the claim of the fruits derived from the land by respondents. Petitioners
claim that the offsetting of claims is erroneous citing Articles 546 and 547 of
the Civil Code, viz.:
Art. 546.
Necessary expenses shall be refunded to every possessor; but only the possessor
in good faith may retain the thing until he has been reimbursed therefor.
Useful
expenses shall be refunded only to the possessor in good faith with the same
right of retention, the person who has defeated him in the possession having
the option of refunding the amount of the expenses or of paying the increase in
value which the thing may have acquired by reason thereof.
Art. 547. If
the useful improvements can be removed without damage to the principal thing,
the possessor in good faith may remove them, unless the person who recovers the
possession exercises the option under paragraph 2 of the preceding
article.
Under these provisions, petitioners argue that as possessors
in good faith and in the concept of an owner, they are entitled to the fruits
received before possession was legally interrupted and they must be reimbursed
for their expenses or for the increase in the value the subject property may
have acquired by reason thereof.[25]
The records show that both parties failed
to prove their claims through any receipt or document. Despite the lack of
proof, the trial court ordered that whatever improvements spent on the land
shall be offset from the fruits derived therefrom, viz.:[26]
The
plaintiffs claimed that they were able to improve the land after possession was
given to them. No receipts were shown to guide the [c]ourt
as to how much [were] the costs of the improvements. Likewise the defendants
claimed that the plaintiffs were able to cultivate the land and harvest palay although their testimonies to this effect [are] based
on their presumptions and calculations not on actual harvest such that the [c]ourt also cannot make determination of the real fruits derived
from the land. This being so, the [c]ourt shall just
offset the claim of improvements to the claim of fruits derived from the land
and then place the parties in their previous positions before the agreement.
Whatever improvements spent on the land shall be compensated from the fruits
derived therefrom.[27]
The appellate court found the setting off by the trial court to be
in order, viz.:
[W]e find in
order the Solomonic setting off by the court a quo
the appellants’ claim of improvements on, with the appellees’
claims for value of the fruits of, the subject land, given the paucity of
evidence on the matter. Along the same vein, We find it just and fair to set
off the compensation arising from the possession and enjoyment of the fruits of
subject lot by appellants during the pendency of the
case with the interests due on the amounts paid by them to the Aquinos and to the DBP.[28]
We can not order an offsetting of the claims as did the
trial court and the appellate court. The evidence show that both parties failed
to prove their respective claims. In the absence of evidence from both parties
on their claims, offsetting is improper. The right to offset may exist but the
question of how much is to be offset is factual in nature and needs to be
proved by proper evidence.
IN VIEW WHEREOF, the Decision and the Resolution of the Court of
Appeals in CA-G.R. CV No. 28654 dated
April 16, 1997 and March 25, 1998, respectively, are AFFIRMED with the MODIFICATION that respondents are ordered to pay petitioners
the sum of P24,800.00, not P29,800.00 as ordered by the trial court,
representing the amounts they received from petitioners, plus the sum of P108,216.00
representing the amounts petitioners paid to DBP. The order on the offsetting
of claims is deleted for lack of evidence. Respondents-intervenors,
as co-owners,
are likewise ordered to reimburse respondent Aquino
their one-third share each of the total amount to be paid by Aquino to petitioners.
SO ORDERED.
REYNATO S. PUNO
Associate Justice
WE
CONCUR:
CANCIO C. GARCIA
Associate Justice
I attest that the conclusions in the above Decision had
been 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
Pursuant
to Section 13, Article VIII of the Constitution and the Division Chairperson’s
Attestation, I certify that the conclusions in the above decision had been reached
in consultation before the case was assigned to the writer of the opinion of
the Court’s Division.
ARTEMIO
V. PANGANIBAN
[1] RTC
Decision, 7; CA rollo, 45.
[2] Receipt
dated
[3] Receipt
dated
[4] Receipt
dated
[5] See Exhibits C, E, E-1, G and G-1.
[6] Receipt
dated
[7] See RTC Decision, 2; CA rollo, 40.
[8] Exhibit
F; Folder of Exhibits, 22.
[9] RTC
Decision, 12; CA rollo, 50.
[10] Exhibit
7; Folder of Exhibits, 10-15.
[11] Should be
1984.
[12] See RTC Decision, 5-6; CA rollo, 43-44.
[13] RTC
Decision, 17;
[14] See Petition for Review on Certiorari; Rollo, 9-42.
[15] See Exhibit F; Folder of Exhibits, 18.
[16] See Folder of Exhibits; see also Stipulations of Facts, RTC
Decision, 5-6; Rollo, 43-44.
[17] See Exhibit F; Folder of
Exhibits, 18.
[18] Petition,
20; Rollo, 28.
[19] RTC Decision,
16; CA rollo, 54.
[20] CA Decision,
10; Rollo, 79.
[21] Petition,
27;
[22] Petition,
25-26;
[23] G.R. No. L-25885,
[24] G.R. No. 129107,
[25] Petition,
31; Rollo, 39.
[26] RTC
Decision, 17; CA rollo, 55.
[27] RTC Decision, 16-17;
[28] CA
Decision, 11; Rollo, 80.