171488-2015-Ascano-Cupino v. Pacific Rehouse Corp PDF
171488-2015-Ascano-Cupino v. Pacific Rehouse Corp PDF
171488-2015-Ascano-Cupino v. Pacific Rehouse Corp PDF
DECISION
CARPIO , J : p
The Case
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to reverse the Decision 1 dated 17 July 2012 and Resolution 2 dated 8
January 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 90568. The CA reversed
and set aside the Decision 3 dated 15 April 2005 of the Regional Trial Court (RTC) of
Trece Martires City, Cavite, Branch 23, in Civil Case No. TM-936.
The Facts
On 1 October 1994, Honorlita Ascano-Cupino 4 and Flaviana Ascano-Colocado
(petitioners), and their sister, Noeminia Ascano, (collectively, the Ascanos) 5 entered
into a Deed of Conditional Sale with Paci c Rehouse Corporation (Paci c). The latter
obliged itself to purchase from the Ascanos a parcel of land with an area of 59,753
square meters located in General Trias, Cavite for P5,975,300.
Following the terms of the Deed of Conditional Sale, Pacific paid a down payment
of P1,792,590 leaving a balance of P4,182,710, to be paid upon the fulfillment of certain
conditions, namely: (1) the completion of all documents necessary for the transfer of
the certi cate of title of the land; (2) the vendors (the Ascanos) shall guarantee removal
of the tenants, squatters and other occupants on the land, with the disturbance
compensation to said tenants to be paid by vendors; and (3) submission by vendors to
Pacific of the Affidavit of Non-Tenancy and the land operation transfer documents. 6
In November 1994, petitioners asked for an additional P600,000 to be deducted
from the purchase price, which Pacific paid. 7
In 1995, petitioners asked for another P1,000,000, again deductible from the
purchase price, purportedly to be used to ful ll the conditions in the Deed of
Conditional Sale. Pacific paid the amount. 8 TCAScE
Petitioners assert that Paci c is bound by the Deed of Conditional Sale and its
Addendum because Fortuno was its authorized representative. They emphasized that
Fortuno, along with Paci c's liaison o cer Purity Mendez, signed the Deed of
Conditional Sale and Addendum, while Dee Hua T. Gatchalian did not. 35 As further
proof, they pointed to a letter dated 5 April 1995 where Fortuno himself clearly stated
that he was the company's authorized representative. 36
Petitioners also insist that Paci c has not paid the entire purchase price agreed
upon. They underscore that the real purchase price agreed upon was P200 per square
meter or P11,950,600. However, Paci c only acknowledges the purchase price to be
P5,975,300, the amount stated in the Deed of Conditional Sale. In any case, petitioners
insist that since the total amount paid by Paci c only totals P3,605,180, 37 there
remains a balance to be paid whether the purchase price is that stated in the Deed of
Conditional Sale or P11,950,600.
Petitioners also allege that Paci c has not complied with its contractual
obligation to pay the tenants' disturbance compensation. Despite receiving P792,590
through its authorized representative, Paci c never paid the tenants who continue to
occupy the property. 38
Thus, petitioners contend that they are the injured parties in this case, and
therefore, entitled to ask for the rescission of the Deed of Conditional Sale. 39
Respondent's Arguments
In its Comment/Opposition, 40 Paci c presents a different version of the facts. It
alleges that the purchase price agreed upon is that stated in the Deed of Conditional
Sale, which is P5,975,300. Paci c paid the down payment amounting to P1,792,590,
leaving a balance of P4,182,710. The balance, as stipulated in the deed, was to be paid
"upon completion by the VENDORS of the pertinent documents that are necessary for
the transfer of the Certi cate of Title of the above mentioned parcel of land unto the
VENDEE[.]" Likewise, the deed stated that the vendors guaranteed to pay the tenants
disturbance compensation to rid the property of squatters and other occupants. 41
In November 1994, petitioners requested from Paci c an additional partial
payment of P600,000 purportedly to be used to ful ll the conditions in the Deed of
Conditional Sale. Thereafter, petitioners asked for another P1,000,000, again to be
considered as partial payment, which Paci c agreed to pay on the conditions that, first,
petitioners submit a Barangay Agrarian Reform Council Certi cation that the property
was untenanted, and second, deliver all the necessary documents, certi cations and
clearances necessary to consummate the sale. On 13 February 1995, petitioners
submitted to Pacific a Barangay Agrarian Reform Council Certification that the land was
untenanted. They also assured Paci c that the other documents needed to complete
the sale were being processed. 42
However, by March 1995, petitioners were still unable to deliver the necessary
documents, certi cations and clearances. Paci c also heard from Fortuno that
petitioners were contemplating on rescinding the Deed of Conditional Sale.
This prompted Paci c to tender to petitioners the payment for the balance of the
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purchase price by opening a savings account in petitioners' names and depositing the
amount in said account. Paci c informed petitioners of the deposit and told them that
the amount was at their disposal. Petitioners still failed to comply with their obligations
under the Deed of Conditional Sale. 43
Paci c was then constrained to effect an annotation of adverse claim on the
property's transfer certi cate of title. 44 Thereafter, Paci c sent several demand letters
to petitioners, 45 which remained unheeded.
When Paci c was about to initiate legal action, petitioners' lawyer commenced
negotiations for the rescission of the Deed of Conditional Sale. However, in December
1998, the lawyer informed Paci c that his services had been terminated and he would
no longer negotiate for petitioners. 46
On 11 February 1999, Paci c again demanded that petitioners ful ll their
obligations under the Deed of Conditional Sale. 47 The demand was again unheeded.
Hence, Paci c led the Complaint 48 for rescission/cancellation of contract and
damages before the RTC.
Paci c argues that the petition raises questions of fact and should be denied.
Moreover, Paci c avers that the issues raised by petitioners have already been decided
by the CA. In particular, Paci c emphasizes that the argument regarding Fortuno's
authority has been conclusively passed upon by the CA. 49
Paci c also maintains that it is not the party guilty of failing to comply with the
obligations under the Deed of Conditional Sale. It maintains that it is simply not true
that the purchase price agreed upon is P200 per square meter. For one, it says, being a
corporation, it is in its best interest that the true and correct purchase price be
recorded in its books as an expense. In fact, it further says, the party that will most
benefit from reducing the price will be petitioners themselves. 50
Likewise, Paci c points out that the Addendum, which states, "[t]hat we, the
above-named Vendors, hereby amend item 2 of the said Deed of Conditional Sale to
read as follows . . .," proves that the amendment was a "unilateral act" and without
Pacific's consent. 51
Based on the foregoing arguments, Paci c insists that it is the injured party in
this case. As it has clearly asked for speci c performance in its Amended Complaint,
the CA correctly overturned the RTC's decision. 52
The Issue
Petitioners raise this sole issue:
WITH ALL DUE RESPECT, TO DECLARE THAT SPECIFIC PERFORMANCE IS
WARRANTED IN THE CASE AT BAR, INSTEAD OF RESCISSION, THE COURT OF
APPEALS HAS DECIDED IN A WAY PROBABLY NOT IN ACCORD WITH LAW
AND/OR WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT. ON
THE CONTRARY, CANCELLATION OF THE DEED OF CONDITIONAL SALE IS
JUSTIFIED BECAUSE [RESPONDENT] WAS INDEED REMISS [IN] ITS
OBLIGATION AS VENDEE. 53 cHDAIS
With Paci c's ling of the Amended Complaint, the original one must be deemed
to have been abandoned and to have become functus officio. 57 Thus, this Court has
ruled:
When a pleading is amended, the original pleading is deemed abandoned. The
original ceases to perform any further function as a pleading. The case stands
for trial on the amended pleading only. 58
Therefore, the Amended Complaint, to which petitioners led an Amended
Answer with Counterclaim, 59 should have been the basis for the RTC's decision.
The parties' obligations under
the Deed of Conditional Sale
Considering that Paci c seeks speci c performance, particularly for petitioners
to execute a Deed of Absolute Sale and ful ll their obligations under the Deed of
Conditional Sale, it is prudent to re-examine the terms of said deed to understand each
party's obligations.
In particular, the terms and conditions under the Deed of Conditional Sale are:
1. That the VENDEE shall pay unto the VENDORS the sum of PESOS:
ONE MILLION SEVEN HUNDRED NINETY TWO THOUSAND FIVE HUNDRED
NINETY (P1,792,590.00), as downpayment for the purchase of the aforesaid
parcel of land, which the VENDORS acknowledged receipt hereof upon the
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execution of this Conditional Sale;
2. That full payment of the balance of PESOS: FOUR MILLION ONE
HUNDRED EIGHTY TWO THOUSAND SEVEN HUNDRED TEN ONLY
(P4,182,710.00), shall be made by the VENDEE unto the VENDORS upon
completion by the VENDORS of the pertinent documents that are necessary for
the transfer of the [Transfer of] Certi cate of Title of the above mentioned
parcel of land unto the VENDEE;
3. That the VENDORS shall guarantee the removal of any tenant/s,
squatters and other occupants on the said parcel of land. Payments for the
tenants' disturbance compensation shall be shouldered by the VENDORS;
4. That the VENDORS shall furnish the VENDEE the A davit of Non-
Tenancy and the Land operation transfer document;
xxx xxx xxx 60
In summary, Paci c's obligations are: (1) to pay the down payment of
P1,892,590, which it did; and (2) to pay the balance of the purchase price "upon
completion by the VENDORS of the pertinent documents that are necessary for the
transfer of the Transfer Certi cate of Title of the above mentioned parcel of land unto
the VENDEE[.]" ISHCcT
On the other hand, the Ascanos undertook the following: (1) to furnish Paci c
with all "pertinent documents that are necessary for the transfer of the Transfer
Certi cate of Title" to the subject property; (2) to guarantee removal of tenants and
shoulder the full amount of the tenants' disturbance compensation; and (3) to furnish
Pacific the certificate of non-tenancy and land operation transfer document.
Likewise, as ruled by the CA, the Addendum relied upon by petitioners cannot
prevail over the original Deed of Conditional Sale entered into by the parties. 61 As the
CA found, the Addendum was not signed by any of Paci c's o cers or authorized
representatives. Paci c's authorized representative, Dee Hua T. Gatchalian, did not sign
the Addendum. Moreover, Fortuno, the person purported to be Paci c's representative,
signed as a mere witness. 62
A witness is not a party to the contract and is not automatically converted to a
party simply because, under some other extraneous document or circumstance, he has
presented himself as the corporation's authorized representative. 63 Likewise, such act
of signing as a witness cannot be taken as evidence of that person's authority.
Thus, the Addendum did not alter the parties' obligations under the original Deed
of Conditional Sale.
Pacific is entitled to ask for
specific performance.
Article 1191 of the Civil Code states:
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 ful llment and the rescission of
the obligation, with payment of damages in either case. He may also seek
rescission, even after he has chosen ful llment, if the latter should become
impossible.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
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This is understood to be without prejudice to the rights of third persons
who have acquired the thing, in accordance with Articles 1385 and 1388 and the
Mortgage Law.
As previously discussed, the Deed of Conditional Sale clearly spells out the
obligations of each party. Based on the allegations of the parties and the findings of the
lower courts, Paci c has already partially ful lled its obligation while petitioners have
not.
The obligation of petitioners under the Deed of Conditional Sale is to "guarantee
removal of tenants" and not merely to pay disturbance compensation. It is an
undertaking speci cally given to petitioners under the Deed of Conditional Sale,
considering that Paci c is not yet the owner of the property and will have no personality
to evict the property's present occupants. Petitioners failed to ful ll this obligation, as
well as the obligation to deliver the necessary documents to complete the sale.
As previously held by the Court, "the injured party is the party who has faithfully
ful lled his obligation or is ready and willing to perform his obligation." 64 From the
foregoing, it is clear that Paci c is the injured party, entitled to elect between rescinding
of the contract and exacting ful llment of the obligation. It has opted for the remedy of
specific performance, as embodied in its Amended Complaint.
Moreover, rescission must not be allowed in favor of petitioners, since they
themselves failed to perform their obligations under the Deed of Conditional Sale. 65
As to the purchase price, both the RTC and the CA held that, given no other
evidence to conclude otherwise, the true purchase price agreed upon by the parties is
P5,975,300, the amount stipulated in the Deed of Conditional Sale.
The Court agrees.
The RTC's Pre-trial Order 66 is instructive. Speci cally, item "2" of the stipulations
reads:
STIPULATIONS
The parties have agreed on the following:
xxx xxx xxx
2. That on October 1, 1994, plaintiff and defendant[s] entered into a Deed
of Conditional Sale whereby plaintiff obliged itself to purchase the property
belonging to defendants for a sum of P5,975,300.00;
xxx xxx xxx 67
Likewise, in the check vouchers issued by Paci c for each of its payments, the
consideration under the contract was stated as P100 per square meter. These check
vouchers were acknowledged and signed by petitioners. 68
Finally, records show, and petitioners do not dispute, that the following amounts
have already been paid by Pacific:
(1) down payment of P1,792,590, receipt evidenced by Check Voucher No. 0863;
69
9. Id.
10. Id.
11. Id. at 49.
12. Id. at 176.
58. Magaspi v. Ramolete, 200 Phil. 583, 596 (1982). Citations omitted.
59. Rollo, pp. 142-148.
65. See Central Bank of the Philippines v. Spouses Bichara, 385 Phil. 553, 567-568 (2000).
66. Rollo, pp. 162-164.