Republic of the
Supreme Court
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Hermenegildo M. Trinidad, |
G.R. No. 147477 |
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Petitioner, |
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Present: |
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PANGANIBAN,
CJ., Chairperson, |
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YNARES-SANTIAGO, |
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- versus - |
AUSTRIA-MARTINEZ, |
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CALLEJO,
SR. and |
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CHICO-NAZARIO, JJ. |
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Promulgated: |
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Estrella Acapulco, |
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Respondent. |
June
27, 2006 |
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D E C I S I O N
AUSTRIA-MARTINEZ,
J.:
Before this Court is a Petition for Review
under Rule 45 of the Rules of Court assailing the Decision[1]
of the Court of Appeals (CA) in CA-G.R. CV No. 42518 promulgated on
The facts are as follows:
On P580,000.00. Cañete also said that if respondent herself will buy the
car, Cañete was willing to sell it for P500,000.00. Petitioner
borrowed the car from respondent for two days but instead of returning the car
as promised, petitioner told respondent to buy the car from Cañete
for P500,000.00 and that petitioner would pay
respondent after petitioner returns from P500,000.00
for which respondent issued three checks in favor of Cañete.
Respondent thereafter executed a deed of
sale in favor of petitioner even though petitioner did not pay her any
consideration for the sale. When
petitioner returned from Davao, he refused to pay
respondent the amount of P500,000.00 saying that said amount would just
be deducted from whatever outstanding obligation respondent had with
petitioner. Due to petitioner’s failure
to pay respondent, the checks that respondent issued in favor of Cañete bounced, thus criminal charges were filed against
her.[3] Respondent then prayed that the deed of sale
between her and petitioner be declared null and void; that the car be returned
to her; and that petitioner be ordered to pay damages.[4]
In his Answer petitioner contended
that: it is not true that he borrowed the car and that any demand was made to
return it; he also did not give any instructions to respondent to buy the car
from Cañete because as early as September 28, 1990, Cañete has already sold the car to respondent for P500,000.00;
at the time respondent executed the deed of sale in his favor on March 4, 1991,
respondent was already in possession of the deed of sale from Cañete; the amount of P500,000.00 was fully paid by
way of dation in payment to partially extinguish
respondent’s obligation with petitioner; the contract entered into was a true
sale of a motor vehicle and the mode of payment was that of dation
in payment agreed upon at the time of the sale.[5]
The
parties filed their respective pre-trial briefs. Petitioner raised as issue: whether or not
there is valid dation in payment;[6] while respondent put forth
the questions: whether or not she is indebted to petitioner in the amount of P566,000.00, and whether the car was ceded by her to petitioner
in order to partially pay off her obligation of P566,000.00 to petitioner
as dation in payment.[7]
On
WHEREFORE,
judgment is hereby rendered in favor of the plaintiff (
1. Declaring the deed of sale executed by plaintiff in favor of defendant as null and void for being fictitious and/or simulated;
2. The defendant is ordered to return the Mercedes Benz car in question to plaintiff in the same condition when it was delivered to him by plaintiff;
3.
Defendant is ordered to pay plaintiff the amount of P100,000.00 as moral damages; P20,000.00 as exemplary
damages and attorney’s fees of P20,000.00 as well as litigation expenses
in the amount of P5,000.00 and costs.
SO ORDERED.[10]
Petitioner
filed a Motion for Reconsideration arguing that contrary to the findings of the
trial court that there was no common consent, the offer to deliver the car to
him actually came from respondent after petitioner told her that he was going
to file estafa cases against her for her failure to
pay her debt to petitioner.[11]
Petitioner
also filed a Supplemental Motion and for the first time averred that assuming
that respondent did not agree to having the purchase price charged against the P566,000.00 she owed petitioner, nonetheless, with or without
her consent and/or knowledge, the obligations parties owed to each other were
extinguished by operation of law or through legal compensation in the amount of
P500,000.00.[12]
The RTC
issued an Order dated
Petitioner appealed to the CA which affirmed the Decision
of the trial court, finding that the issue of legal compensation was filed too
late as it was brought up only in the supplemental motion for reconsideration;
that the parties agreed that the issue to be tried was whether or not there was
dacion en pago; that
dacion en pago
however is not present in this case as the parties did not give their consent
thereto; that there can also be no legal compensation as one of the obligations
of this case did not entail payment of a monetary debt but the delivery of a
car; and that the admission of petitioner that the sale price of the car was
not paid entitled respondent to file the action for rescission of sale.[14]
Petitioner
argues that: the purchase price of the car had been automatically offset by
respondent’s own monetary obligation of P566,000.00, even if he and
respondent had not agreed to offsetting following Article 1290[16]
of the Civil Code; Bank of the Philippine Islands v. Court of Appeals[17]
also held that compensation shall take place when two persons, in their own
right, are creditors and debtors of each other; legal compensation takes place by
operation of law and may be taken up even though it is not raised in the
pleadings or during trial; it is the duty of courts to grant the relief to
which the parties are entitled as shown by the allegations and the facts proven
at the trial; here, while petitioner claimed dation
in payment, there was more than enough testimony and admissions to prove
elements of legal compensation; failure to pay the agreed purchase price does
not make the contract of sale fictitious and null and void; the CA erred in not
ordering respondent to pay petitioner the balance of her partially extinguished
indebtedness and in assessing damages against him as there was no basis therefor.[18]
In her
Comment, respondent counters that: it was only in the Supplemental Motion for Reconsideration
of the decision of the trial court that petitioner changed his theory and
started claiming legal compensation as a defense; the CA did not commit any
error in rejecting the belated new defense of petitioner as it would be
offensive to the basic rule of fair play, justice and due process; Article 1279
of the Civil Code also states that for legal compensation to be proper both
debts should consist of sum of money; in this case, one of the obligations does
not entail payment of money but delivery of a car.[19]
Petitioner
merely reiterated his arguments in his Memorandum,[20]
while respondent in hers, further averred that: she is not the owner of the
car, but was only in possession thereof in order to sell it at a price of P580,000.00 with P80,000.00 going to her; both the trial
court and the CA failed to make a finding as to the exact amount respondent
owed petitioners.[21]
Stripped to
its basics, what petitioner is contending is that legal compensation should be
appreciated, though not expressly stated in his Answer to the Complaint before
the trial court, as his allegations therein and the facts proven at the trial
show the presence of legal compensation.
He further argues that, in any case, legal compensation takes place by
operation of law even without the consent of the interested parties.
The Court
resolves to grant the petition.
Our rules recognize the broad discretionary power of an appellate court to waive the lack of proper assignment of errors and to consider errors not assigned.[22] The interest of justice dictates that the Court consider and resolve issues even though not particularly raised if it is necessary for the complete adjudication of the rights and obligations of the parties and it falls within the issues already found by them.[23] While it is true that petitioner failed to raise the issue of legal compensation at the earliest opportunity, this should not preclude the courts from appreciating the same especially in this case, where ignoring the same would only result to unnecessary and circuitous filing of cases.
Indeed, the
doctrine that higher courts are precluded from entertaining matters neither
alleged in the pleadings nor raised during the proceedings below but ventilated
for the first time only in a motion for reconsideration or on appeal, is
subject to exceptions, such as when:
(a) grounds not assigned as errors but
affecting jurisdiction over the subject matter; (b) matters not assigned as
errors on appeal but are evidently plain or clerical errors within
contemplation of law; (c) matters not assigned as errors on appeal but
consideration of which is necessary in arriving at a just decision and complete
resolution of the case or to serve the interests of justice or to avoid
dispensing piecemeal justice; (d) matters not specifically assigned as errors
on appeal but raised in the trial court and are matters of record having some
bearing on the issue submitted which the parties failed to raise or which the
lower court ignored; (e) matters not assigned as errors on appeal but closely
related to an error assigned; and (f) matters not assigned as errors on appeal
but upon which the determination of a question properly assigned, is dependent.[24]
In this
case, petitioner raised the issue of dacion
en pago in his Answer to respondent’s Complaint. The trial court thus focused on ascertaining
whether the elements of dacion en pago are present in the case at bar, i.e.:
whether there is consent, object certain and cause or consideration, with
common consent as an essential prerequisite to have the effect of totally
extinguishing the debt or obligation.[25] As respondent’s consent was not adequately
proven by petitioner, the trial court held that there could be no dacion en pago. Petitioner thereafter filed a Motion for Reconsideration
and a Supplemental Motion for Reconsideration where, for the first time, he
raised the issue of legal compensation.
In striking down petitioner’s claim of legal compensation, the trial
court reasoned that it was raised too late.
This was affirmed by the CA.
This Court
holds otherwise.
Compensation
takes effect by operation of law even without the consent or knowledge of the
parties concerned when all the requisites mentioned in Article 1279 of the
Civil Code are present.[26] This is in consonance with Article 1290 of
the Civil Code which provides that:
Article 1290. When all the requisites mentioned in article 1279 are present, compensation takes effect by operation of law, and extinguishes both debts to the concurrent amount, even though the creditors and debtors are not aware of the compensation.
Since it
takes place ipso jure,[27] when used as a defense, it retroacts to the
date when all its requisites are fulfilled.[28]
Article 1279 provides that in order that compensation may be proper, it
is necessary:
(1) that each one of the obligors be bound principally, and that
he be at the same time a principal creditor of the other;
(2) that both debts
consist in a sum of money, or if the things due are consumable, they be of the
same kind, and also of the same quality if the latter has been stated;
(3) that the two debts
be due;
(4) that they be
liquidated and demandable;
(5) that over neither
of them there be any retention or controversy, commenced by third persons and
communicated in due time to the debtor.
Here, petitioner’s stance is that legal compensation has taken place and
operates even against the will of the parties because: (a) respondent
and petitioner were personally both creditor and debtor of each other; (b) the
monetary obligation of respondent was P566,000.00 and that of the
petitioner was P500,000.00 showing that both indebtedness were monetary
obligations the amount of which were also both known and liquidated; (c) both
monetary obligations had become due and demandable—petitioner’s obligation as
shown in the deed of sale and respondent’s indebtedness as shown in the
dishonored checks; and (d) neither of the debts or obligations are subject of a
controversy commenced by a third person.
While the proceedings in the RTC focused on
ascertaining the presence of the elements of dacion
en pago, it was likewise proven that petitioner
owed respondent the amount of P500,000.00 while
respondent owed petitioner P566,000.00; that both debts are due,
liquidated and demandable, and; that neither of the debts or obligations are
subject of a controversy commenced by a third person.
Respondent in her cross-examination categorically
admitted that she is indebted to petitioner as follows:
Q But you will admit that you have borrowed several times from Mr. Trinidad some money?
A Yes.
Q And in fact the total amount of money
that you have borrowed from Mr. Trinidad reaches to P566,000.00, right?
A Yes.
Q And in fact you have issued checks to cover for this account?
A Yes.
Q There were several checks you have issued, right?
A Yes.
Q And all of these checks bounced?
A Yes.[29]
x x x x
Q x x x It is now very clear, Mrs. Acapulco, that at the time you
executed a deed of absolute sale of the car in favor of Hermenegildo
Trinidad you have an outstanding account with him in the amount of P566,000.00?
A Yes.[30]
Ignoring this admission would only result in added
burden to petitioner as well as the courts as petitioner will be forced to file
a separate case for collection of sum of money just so he could enforce his
right to collect from respondent. This
is precisely what compensation seeks to avoid as its aim is to prevent
unnecessary suits and payments through the mutual extinction of concurring
debts by operation of law.[31]
The claim of respondent that there could be no legal
compensation in this case as one of the obligations consists of delivery of a
car and not a sum of money must also fail.
Respondent sold the car to petitioner on P500,000.00
while she filed her complaint for nullification of the sale only on P500,000.00 which is the price of the vehicle.
Consequently, by operation of law, the P500,000.00 which petitioner owed respondent is off-set against
the P566,000.00 owed by respondent to petitioner, leaving a balance of P66,000.00,
which respondent should pay with 12% interest per annum from date of judicial
or extrajudicial deed.[32] Since there was no extrajudicial deed in this
case, the interest shall be resolved from the date petitioner filed its
Supplemental Motion for Reconsideration invoking for the first time legal compensation,
that is, May 20, 1992.[33]
Finally, the Court agrees with
petitioner that the trial court erred in awarding damages in favor of
respondent.
In order that moral damages may be
awarded, there must be pleading and proof of moral suffering, mental anguish,
fright and the like, and while no proof of pecuniary loss is necessary in order
that moral damages may be awarded, it is nevertheless essential that the
claimant should satisfactorily show the existence of the factual basis of
damages and its causal connection to defendant’s acts.[34] Claims must be substantiated by clear and
convincing proof[35]
and there must be clear testimony on the anguish and other forms of mental
sufferings as mere allegations will not suffice.[36]
Allegations of besmirched reputation,
embarrassment and sleepless nights are insufficient for it must be shown that
the proximate cause thereof was the unlawful act or omission of the opposing
party.[37]
Indeed, for a court to arrive upon a
judicious approximation of emotional or moral injury, competent and substantial
proof of the suffering experienced must be laid before it.[38]
There must be definite findings as to
what the supposed moral damages suffered consisted of.[39] The award of moral damages must be solidly
anchored on a definite showing that the claiming party actually experienced
emotional and mental sufferings.[40]
In this case, respondent merely
testified that after petitioner refused the payment of the car as well as its
return, she was very much worried, which if converted into monetary amount is
equivalent to P200,000.00.[41] We deem such testimony insufficient to
warrant the award of moral damages.
Similarly, in order that exemplary
damages may be awarded, it must be shown that the wrongful act was accompanied
by bad faith or done in a wanton, fraudulent, reckless or malevolent manner.[42]
Exemplary damages are also allowed only
in addition to moral damages such that no exemplary damage can be awarded
unless the claimant first establishes his clear right to moral damages.[43] As moral damages are improper in the present
case, so is the award of exemplary damages.
The decision of the trial court also
does not mention the reason for the award of attorney’s fees and the award was
simply contained in the dispositive portion of the
decision. Again, the trial court erred
on this score as it must explicitly state in the body of its decision and not
only in the dispositive portion thereof the legal
reason for the award of attorney’s fees.[44]
WHEREFORE, the petition is GRANTED.
The decision of the Court of Appeals dated P500,000.00 which Hermenegildo M. Trinidad owed Estrella
Acapulco is offset against the P566,000.00 which P66,000.00 plus interest
at 12% per annum from
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate
Justice
WE CONCUR:
Chief Justice
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CONSUELO YNARES-SANTIAGO Associate Justice |
ROMEO J. CALLEJO, SR. Associate Justice |
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MINITA V. CHICO-NAZARIO Associate Justice |
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution, 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’s Division.
ARTEMIO V.
PANGANIBAN
Chief Justice
[1] Penned by Associate Justice Andres B. Reyes, Jr. and concurred in by Associate Justices B. A. Adefuin-De La Cruz and Rebecca De Guia-Salvador, rollo, pp. 35-45.
[2] Penned by Judge Ramon AM. Torres, rollo, pp. 27-33.
[3] Records, pp. 1-3.
[4]
[5]
[6]
[7]
[8] Records, p. 37.
[9] Rollo, p. 31.
[10]
[11] Records, pp. 56-57.
[12]
[13] Records, p. 87
[14] Rollo, pp. 41-44.
[15] Rollo, pp. 8-9.
[16] Civil Code, Article 1290. When all the requisites mentioned in article 1279 are present, compensation takes effect by operation of law, and extinguishes both debts to the concurrent amount, even though the creditors and debtors are not aware of the compensation.
[17] 325 Phil. 930 (1996).
[18] Rollo, pp. 10-22.
[19]
[20]
[21]
[22]
[23] Insular Life Assurance Co. Ltd. Employees Association-NATU v.
Insular Life Assurance Co. Ltd., No.
[24] Supra note 22, at 702-703.
[25] Vda. de Jayme v. Court of Appeals, 439 Phil. 192, 210 (2002).
[26] Pioneer
Insurance & Surety Corporation v. Court of Appeals, G.R. No. 76509,
December 15, 1989, 180 SCRA 156, 160-161; International Corporate Bank v.
Intermediate Appellate Court, No. L-69560,
[27] Mavest, Inc. v. Sampaguita Garment Corp., G.R. No. 127454, September 21, 2005, 470 SCRA 440.
[28] Bank
of the Philippine
[29] TSN,
[30]
[31] Nadela v. ECCO-Asia, G.R. No. 145259,
[32] Eastern
Assurance and Surety Corporation v. Court of Appeals, 379 Phil. 84, 91
(2000).
[33] Records, p. 72.
[34] Kierulf v. Court of Appeals, 336 Phil. 414, 431-432 (1997).
[35] Mahinay v. Velasquez, Jr., G.R. No. 152753,
[36] Kierulf v. Court of Appeals, supra.
[37] Francisco v. Ferrer, Jr., G.R. No.
142029,
[38]
[39]
[40]
[41] TSN,
[42] Francisco v. Ferrer, Jr., supra note 37 at 267.
[43] Mahinay v. Velasquez, Jr., supra note 35 at 122; Quezon City Government v. Dacara, supra.
[44] Pimentel v. Court of Appeals, 366 Phil. 494 (1999).