SECOND DIVISION
[G.R. No. 138842. October 18, 2000]
NATIVIDAD P. NAZARENO, MAXIMINO P. NAZARENO, JR., petitioners, vs. COURT OF APPEALS, ESTATE OF MAXIMINO A. NAZARENO, SR., ROMEO P. NAZARENO and ELIZA NAZARENO, respondents. DECISION MENDOZA, J.: This is a petition for review on certiorari of the decision[1] of the Court of Appeals in CA-GR CV No. 39441 dated May 29, 1998 affirming with modifications the decision of the Regional Trial Court, Branch 107, Quezon City, in an action for annulment of sale and damages. The facts are as follows: Maximino Nazareno, Sr. and Aurea Poblete were husband and wife. Aurea died on April 15, 1970, while Maximino, Sr. died on December 18, 1980. They had five children, namely, Natividad, Romeo, Jose, Pacifico, and Maximino, Jr. Natividad and Maximino, Jr. are the petitioners in this case, while the estate of Maximino, Sr., Romeo, and his wife Eliza Nazareno are the respondents. During their marriage, Maximino Nazareno, Sr. and Aurea Poblete acquired properties in Quezon City and in the Province of Cavite. It is the ownership of some of these properties that is in question in this case. It appears that after the death of Maximino, Sr., Romeo filed an intestate case in the Court of First Instance of Cavite, Branch XV, where the case was docketed as Sp. Proc. No. NC-28.Upon
the reorganization of the courts in 1983, the case was transferred to the Regional Trial Court of Naic, Cavite. Romeo was appointed administrator of his fathers estate. In the course of the intestate proceedings, Romeo discovered that his parents had executed several deeds of sale conveying a number of real properties in favor of his sister, Natividad. One of the deeds involved six lots in Quezon City which were allegedly sold by Maximino, Sr., with the consent of Aurea, to Natividad on January 29, 1970 for the total amount of P47,800.00.The Deed of Absolute Sale reads as follows: DEED OF ABSOLUTE SALE KNOW ALL MEN BY THESE PRESENTS: I, MAXIMINO A. NAZARENO, Filipino, married to Aurea PobleteNazareno, of legal age and a resident of the Mun. of Naic, Prov. of Cavite, Philippines, -WITNESSETHThat I am the absolute registered owner of six (6) parcels of land with the improvements thereon situated in Quezon City, Philippines, which parcels of land are herewith described and bounded as follows, to wit: TRANS. CERT. OF TITLE NO. 140946 A parcel of land (Lot 3-B of the subdivision plan Psd-47404, being a portion of Lot 3, Block D-3 described on plan Bsd-10642, G.L.R.O. Record No.) situated in the Quirino District, Quezon City. Bounded on the N., along line 1-2 by Lot 15, Block D-3 of plan Bsd - 10642; along line 2-3 by Lot 4, Block D-3 of plan Bsd-10642; along line 3-4 by Aurora Boulevard (Road Lot-1, Bsd-10642); and along line 4-1 by Lot 3-D of the subdivision plan. Beginning at a point marked 1 on plan, being S.29 deg. 26E., 1156.22 m. from B.L.L.M. 9, Quezon City, thence N. 79 deg. 53E., 12.50 m. to point 2;
thence S. 10 deg. 07E., 40.00 m. to point 3;
TRANS. CERT. OF TITLE NO. 118885
thence S. 79 deg. 53W., 12.50 m. to point 4;
A parcel of land (Lot No. 10, of the consolidation and subdivision plan Pcs-988, being a portion of the consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and 27-B, Psd-14901, G.L.R.O.Record No. 917), situated in the District of Cubao, Quezon City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and subdivision plan; on the SE., by Lot No. 11 of the consolidation and subdivision plan; on the SW., by Lot No. 3 of the consolidation and subdivision plan; and on the NW., by Lot No. 9 of the consolidation and subdivision plan. Beginning at a point marked 1 on the plan, being S. 7 deg. 26W., 4269.90 m. more or less from B.L.L.M. No. 1, Mp. of Mariquina;
thence N. 10 deg. 07W., 40.00 m. to the point of beginning; containing an area of FIVE HUNDRED (500) SQUARE METERS. All points referred to are indicated on the plan and are marked on the ground as follows: points 1 and 4 by P.L.S. Cyl. Conc. Mons. bearings true; date of the original survey, April 8-July 15, 1920 and that of the subdivision survey, March 25, 1956. TRANS. CERT. OF TITLE NO. 132019 A parcel of land (Lot 3, Block 93 of the subdivision plan Psd-57970 being a portion of Lot 6, Pcs-4786, G.L.R.O. Rec. No. 917) situated in Quirino District Quezon City. Bounded on the NW., along line 1-2, by Lot 1, Block 93; on the NE., along line 2-3, by Road Lot 101; on the SE., along line 3-4, by Road Lot 100; on the SW., along line 4-1, by Lot 4, Block 93; all of the subdivision plan. Beginning at point marked 1 on plan, being S. 65 deg. 40 3339.92 m. from B.L.L.M. No. 1, Marikina, Rizal; thence N. 23 deg. 28 min. E., 11.70 m. to point 2; thence S. 66 deg. 32 min. E., 18.00 m. to point 3; thence S. 23 deg. 28 min. W., 11.70 m. to point 4; thence N. 66 deg. 32. min. W., 18.00 m. to the point of beginning; containing an area of TWO HUNDRED TEN SQUARE METERS AND SIXTY SQUARE DECIMETERS (210.60). All points referred to are indicated on the plan and are marked on the ground by B.L. Cyl. Conc. Mons. 15 x 60 cm.; bearings true; date of the original survey, Nov. 10, 1920 and Jan. 31-March 31, 1924 and that of the subdivision survey, February 1 to September 30, 1954. Date approved - March 9, 1962.
thence S. 25 deg. 00E., 12.00 m. to point 2; thence S. 64 deg. 59W., 29.99 m. to point 3; thence N. 25 deg. 00W., 12.00 m to point 4; thence N. 64 deg. 59E., 29.99 m. to the point of beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360), more or less. All points referred to are indicated on the plan and on the ground are marked by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true; declination 0 deg. 50E., date of the original survey, April 8 to July 15, 1920, and that of the consolidation and subdivision survey, April 24 to 26, 1941. TRANS. CERT. OF TITLE NO. 118886 A parcel of land (Lot No. 11, of the consolidation and subdivision plan Pcs-988, being a portion of the consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and 27-B, Psd-14901, G.L.R.O. Record No. 917), situated in the District of Cubao, Quezon City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and subdivision plan; on the SE., by Lot No. 12 of the consolidation and subdivision plan; on the SW., by Lot No. 3 of the consolidation and subdivision plan; on the NW., by Lot No. 10 of the consolidation and
subdivision plan. Beginning at a point marked 1 on plan, being S. 79 deg. 07W., 4264.00 m. more or less from B.L.L.M. No. 1, Mp. of Mariquina; thence S. 64 deg. 59W., 29.99 m. to point 2;
beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360, more or less. All points referred to are indicated on the plan and on the ground are marked by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true; declination 0 deg. 50E., date of the original survey, April 8 to July 15, 1920, and that of the consolidation and subdivision survey, April 24 to 26, 1941.
thence N. 25 deg. 00W., 12.00 m. to point 3; thence N. 64 deg. 59E., 29.99 m. to point 4; thence S. 26 deg. 00E., 12.00 m. to the point of beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360), more or less. All points referred to are indicated on the plan and on the ground, are marked by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true; declination 0 deg. 50E.; date of the original survey, April 8 to July 15, 1920, and that of the consolidation and subdivision survey, April 24 to 26, 1941. A parcel of land (Lot No. 13 of the consolidation and subdivision plan Pcs-988, being a portion of the consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and 27-B, Psd-14901, G.L.R.O. Record No. 917), situated in the District of Cubao, Quezon City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and subdivision plan; on the SE., by Lot No. 14, of the consolidation; and subdivision plan; on the SW., by Lot No. 3 of the consolidation and subdivision plan; and on the NW., by Lot No. 12, of the consolidation and subdivision plan. Beginning at the point marked 1 on plan, being S.78 deg. 48W., 4258.20 m. more or less from B.L.L.M. No. 1, Mp. of Mariquina; thence S. 64 deg. 58W., 30.00 m. to point 2;
A parcel of land (Lot No. 14, of the consolidation and subdivision plan Pcs-988, being a portion of the consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and 27-B, Psd-14901, G.L.R.O. Record No. 917), situated in the District of Cubao, Quezon City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and subdivision plan; on the SE., by Lot No. 15, of the consolidation and subdivision plan; on the SW., by Lot No. 3 of the consolidation and subdivision plan; and on the NW., by Lot No. 13 of the consolidation and subdivision plan. Beginning at the point marked 1 on plan, being S.78 deg. 48W., 4258.20 m. more or less from B.L.L.M. No. 1, Mp. of Mariquina; thence S. 25 deg. 00E., 12.00 m. to point 2; thence S. 65 deg. 00W., 30.00 m. to point 3; thence S. 65 deg. 00W., 12.00 m. to point 4; thence N.64 deg. 58E., 30.00 m. to the point of beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360), more or less. All points referred to are indicated on the plan and on the ground are marked by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true; declination 0 deg. 50E., date of the original survey, April 8 to July 15, 1920, and that of the consolidation and subdivision survey, April 24 to 26, 1941.
thence N. 25 deg. 00W., 12.00 m. to point 3; thence N. 64 deg. 59E., 29.99 m. to point 4; thence S.25 deg. 00E., 12.00 m. to point of
That for and in consideration of the sum of FORTY THREE THOUSAND PESOS (P43,000.00) PHILIPPINE CURRENCY, to me in hand paid by NATIVIDAD P. NAZARENO, Filipino, single, of legal age and a resident of the Mun. of Naic, Prov. of Cavite, Philippines, the receipt whereof is acknowledged to my entire
satisfaction, I do hereby CEDE, SELL, TRANSFER, CONVEY and ASSIGN unto the said Natividad P. Nazareno, her heirs, administrators and assigns, all my title, rights, interests and participations to the abovedescribed parcels of land with the improvements thereon, with the exception of LOT NO. 11 COVERED BY T.C.T. NO. 118886, free of any and all liens and encumbrances; and
August 4, 1983, Maximino, Jr. brought an action for recovery ofpossession and damages with prayer for writs of preliminary injunction and mandatory injunction with the Regional Trial Court of Quezon City. On December 12, 1986, the trial court ruled in favor of Maximino, Jr. In CA-G.R. CV No. 12932, the Court of Appeals affirmed the decision of the trial court.[10]
That for and in consideration of the sum of FOUR THOUSAND EIGHT HUNDRED PESOS (P4,800.00) PHILIPPINE CURRENCY, to me in hand paid by NATIVIDAD P. NAZARENO, Filipino, single, of legal age and a resident of the Mun. of Naic, Prov. of Cavite, Philippines, the receipt whereof is acknowledged to my entire satisfaction, I do hereby CEDE, SELL, TRANSFER, CONVEY and ASSIGN unto the said Natividad P. Nazareno, her heirs, administrators and assigns, all my title, rights, interests and participations in and to Lot No. 11 covered by T.C.T. No. 118886 above-described, free of any and all liens and encumbrances, with the understanding that the title to be issued in relation hereto shall be separate and distinct from the title to be issued in connection with Lots Nos. 13 and 14, although covered by the same title.
On June 15, 1988, Romeo in turn filed, on behalf of the estate of Maximino, Sr., the present case for annulment of sale with damages against Natividad and Maximino, Jr. The case was filed in the Regional Trial Court of Quezon City, where it was docketed as Civil Case No. 88-58.[11] Romeo sought the declaration of nullity of the sale made on January 29, 1970 to Natividad and that made on July 31, 1982 to Maximino, Jr. on the ground that both sales were void for lack of consideration.
IN WITNESS WHEREOF, I have hereunto signed this deed of absolute sale in the City of Manila, Philippines, this 29th day of January, 1970.[2] By virtue of this deed, transfer certificates of title were issued to Natividad, to wit: TCT No. 162738 (Lot 3-B),[3] TCT No. 162739 (Lot 3),[4] TCT No. 162735 (Lot 10),[5] TCT No. 162736 (Lot 11),[6] and TCT No. 162737 (Lots 13 and 14),[7] all of the Register of Deeds of Quezon City. Among the lots covered by the above Deed of Sale is Lot 3B which is registered under TCT No. 140946. This lot had been occupied by Romeo, his wife Eliza, and by Maximino, Jr. since 1969. Unknown to Romeo, Natividad sold Lot 3-B on July 31, 1982 to Maximino, Jr.,[8] for which reason the latter was issued TCT No. 293701 by the Register of Deeds of Quezon City.[9] When Romeo found out about the sale to Maximino, Jr., he and his wife Eliza locked Maximino, Jr. out of the house. On
On March 1, 1990, Natividad and Maximino, Jr. filed a thirdparty complaint against the spouses Romeo and Eliza.[12] They alleged that Lot 3, which was included in the Deed of Absolute Sale of January 29, 1970 to Natividad, had been surreptitiously appropriated by Romeo by securing for himself a new title (TCT No. 277968) in his name.[13] They alleged that Lot 3 is being leased by the spouses Romeo and Eliza to third persons. They therefore sought the annulment of the transfer to Romeo and the cancellation of his title, the eviction of Romeo and his wife Eliza and all persons claiming rights from Lot 3, and the payment of damages. The issues having been joined, the case was set for trial. Romeo presented evidence to show that Maximino and Aurea Nazareno never intended to sell the six lots to Natividad and that Natividad was only to hold the said lots in trust for her siblings. He presented the Deed of Partition and Distribution dated June 28, 1962 executed by Maximino Sr. and Aurea and duly signed by all of their children, except Jose, who was then abroad and was represented by their mother, Aurea. By virtue of this deed, the nine lots subject of this Deed of Partition were assigned by raffle as follows: 1. Romeo - Lot 25-L (642 m2) 2. Natividad - Lots 23 (312 m2) and 24 (379 m2)
3. Maximino, Jr. - Lots 6 (338 m2) and 7 (338 m2) 4. Pacifico - Lots 13 (360 m2) and 14 (360 m2) 5. Jose - Lots 10 (360 m2) and 11 (360 m2) Romeo received the title to Lot 25-L under his name,[14] while Maximino, Jr. received Lots 6 and 7 through a Deed of Sale dated August 16, 1966 for the amount of P9,500.00.[15] Pacifico and Joses shares were allegedly given to Natividad, who agreed to give Lots 10 and 11 to Jose, in the event the latter came back from abroad. Natividads share, on the other hand, was sold to third persons[16] because she allegedly did not like the location of the two lots. But, Romeo said, the money realized from the sale was given to Natividad. Romeo also testified that Lot 3-B was bought for him by his father, while Lot 3 was sold to him for P7,000.00 by his parents on July 4, 1969.[17] However, he admitted that a document was executed by his parents transferring six properties in Quezon City, i.e., Lots 3, 3-B, 10, 11, 13, and 14, to Natividad. Romeo further testified that, although the deeds of sale executed by his parents in their favor stated that the sale was for a consideration, they never really paid any amount for the supposed sale. The transfer was made in this manner in order to avoid the payment of inheritance taxes.[18] Romeo denied stealing Lot 3 from his sister but instead claimed that the title to said lot was given to him by Natividad in 1981 after their father died. Natividad and Maximino, Jr. claimed that the Deed of Partition and Distribution executed in 1962 was not really carried out. Instead, in December of 1969, their parents offered to sell to them the six lots in Quezon City, i.e., Lots 3, 3-B, 10, 11, 13 and 14. However, it was only Natividad who bought the six properties because she was the only one financially able to do so. Natividad said she sold Lots 13 and 14 to Ros-Alva Marketing Corp.[19] and Lot 3-B to Maximino, Jr. for P175,000.00.[20] Natividad admitted that Romeo and the latters wife were occupying Lot 3-B at that time and that she did not tell the latter about the sale she had made to Maximino, Jr.
Natividad said that she had the title to Lot 3 but it somehow got lost. She could not get an original copy of the said title because the records of the Registrar of Deeds had been destroyed by fire. She claimed she was surprised to learn that Romeo was able to obtain a title to Lot 3 in his name. Natividad insisted that she paid the amount stated in the Deed of Absolute Sale dated January 29, 1970. She alleged that their parents had sold these properties to their children instead of merely giving the same to them in order to impose on them the value of hardwork. Natividad accused Romeo of filing this case to harass her after Romeo lost in the action for recovery of possession (Civil Case No. Q-39018) which had been brought against him by Maximino, Jr. It appears that before the case filed by Romeo could be decided, the Court of Appeals rendered a decision in CA-GR CV No. 12932 affirming the trial courts decision in favor of Maximino, Jr. On August 10, 1992, the trial court rendered a decision, the dispositive portion of which states: WHEREFORE, judgment is hereby rendered declaring the nullity of the Deed of Sale dated January 29, 1970. Except as to Lots 3, 3-B, 13 and 14 which had passed on to third persons, the defendant Natividad shall hold the rest in trust for Jose Nazareno to whom the same had been adjudicated. The Register of Deeds of Quezon City is directed to annotate this judgment on Transfer Certificate of Titles Nos. 162735 and 162736 as a lien in the titles of Natividad P. Nazareno. The defendants counterclaim is dismissed. Likewise, the third-party complaint is dismissed. The defendants are hereby directed to pay to the plaintiff jointly and severally the sum of P30,000 as and for attorneys fees. Likewise, the third-party plaintiff is directed to pay the third-party defendants attorneys fees of P20,000. All other claims by one party against the other are dismissed.
SO ORDERED.[21] Natividad and Maximino, Jr. filed a motion for reconsideration. As a result, on October 14, 1992 the trial court modified its decision as follows: WHEREFORE, the plaintiffs Partial Motion for Reconsideration is hereby granted. The judgment dated August 10, 1992 is hereby amended, such that the first paragraph of its dispositive portion is correspondingly modified to read as follows: WHEREFORE, judgment is hereby rendered declaring the nullity of the Deeds of Sale dated January 29, 1970 and July 31, 1982. Except as to Lots 3, 13 and 14 which had passed on to third person, the defendant Natividad shall hold the rest OF THE PROPERTIES COVERED BY THE DEED OF SALE DATED JANUARY 29, 1970 (LOTS 10 and 11) in trust for Jose Nazareno to whom the same had been adjudicated. The Register of Deeds of Quezon City is directed to annotate this judgment on Transfer Certificates of Title No. 162735 and 162736 as a lien on the titles of Natividad P. Nazareno. LIKEWISE, THE SAID REGISTER OF DEEDS IS DIRECTED TO CANCEL TCT NO. 293701 (formerly 162705) OVER LOT 3-B AND RESTORE TCT NO. 140946 IN THE NAME OF MAXIMINO NAZARENO SR. AND AUREA POBLETE.[22] On appeal to the Court of Appeals, the decision of the trial court was modified in the sense that titles to Lot 3 (in the name of Romeo Nazareno) and Lot 3-B (in the name of Maximino Nazareno, Jr.), as well as to Lots 10 and 11 were cancelled and ordered restored to the estate of Maximino Nazareno, Sr. The dispositive portion of the decision dated May 29, 1998 reads: WHEREFORE, the appeal is GRANTED. The decision and the order in question are modified as follows:
1. The Deed of Absolute Sale dated 29 January 1970 and the Deed of Absolute Sale dated 31 July 1982 are hereby declared null and void; 2. Except as to Lots 13 and 14 ownership of which has passed on to third persons, it is hereby declared that Lots 3, 3-B, 10 and 11 shall form part of the estate of the deceased Maximino Nazareno, Sr.; 3. The Register of Deeds of Quezon City is hereby ordered to restore TCT No. 140946 (covering Lot 3-B), TCT No. 132019 (covering Lot 3), TCT No. 118885 (covering Lot 10), and TCT No. 118886 (covering Lot 11).[23] Petitioners filed a motion for reconsideration but it was denied in a resolution dated May 27, 1999. Hence this petition. Petitioners raise the following issues: 1. WHETHER OR NOT THE UNCORROBORATED TESTIMONY OF PRIVATE RESPONDENT ROMEO P. NAZARENO CAN DESTROY THE FULL FAITH AND CREDIT ACCORDED TO NOTARIZED DOCUMENTS LIKE THE DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 (EXH. 1) EXECUTED BY THE DECEASED SPOUSES MAXIMINO A. NAZARENO, SR. AND AUREA POBLETE IN FAVOR OF PETITIONER NATIVIDAD P. NAZARENO. 2. WHETHER OR NOT THE RESPONDENT COURT GROSSLY MISAPPRECIATED THE FACTS OF THE CASE WITH RESPECT TO THE VALIDITY OF THE SAID DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 (EXH. 1) IN THE LIGHT OF THE FOLLOWING: A) THE DOCUMENTARY EVIDENCE, ALL OF WHICH ARE NOTARIZED, EXECUTED BY THE DECEASED SPOUSES DURING THEIR LIFETIME INVOLVING SOME OF THEIR CONJUGAL PROPERTIES.
B) THE EXECUTION OF AN EXTRA-JUDICIAL PARTITION WITH WAIVER OF RIGHTS AND CONFIRMATION OF SALE DATED MAY 24, 1975 (EXH. 14A) OF THE ESTATE OF AUREA POBLETE BY THE DECEASED MAXIMINO A. NAZARENO, SR. AND THEIR CHILDREN INVOLVING THE ONLY REMAINING ESTATE OF AUREA POBLETE THUS IMPLIEDLY ADMITTING THE VALIDITY OF PREVIOUS DISPOSITIONS MADE BY SAID DECEASED SPOUSES ON THEIR CONJUGAL PROPERTIES, HALF OF WHICH WOULD HAVE BECOME A PART OF AUREA POBLETES ESTATE UPON HER DEMISE. C) THE ADMISSION MADE BY MAXIMINO A. NAZARENO, SR. IN HIS TESTIMONY IN OPEN COURT ON AUGUST 13, 1980 DURING HIS LIFETIME IN CIVIL CASE NO. NC-712 (EXH. 81, 81B) THAT HE HAD SOLD CERTAIN PROPERTIES IN FAVOR OF NATIVIDAD P. NAZARENO THUS BELYING THE CLAIM OF ROMEO P. NAZARENO THAT THE DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 IS ONE AMONG THE DOCUMENTS EXECUTED BY THE DECEASED SPOUSES TO BE WITHOUT CONSIDERATION. D) THE ADMISSIONS MADE BY ROMEO P. NAZARENO HIMSELF CONTAINED IN A FINAL DECISION OF THE RESPONDENT COURT IN CA-GR CV NO. 12932 DATED AUGUST 31, 1992 AND AN ANNEX APPEARING IN HIS ANSWER TO THE COMPLAINT IN CIVIL CASE NO. Q-39018 (EXH. 11-B) INVOLVING LOT 3B, ONE OF THE PROPERTIES IN QUESTION THAT THE SAID PROPERTY IS OWNED BY PETITIONER NATIVIDAD P. NAZARENO.
E) THE PARTIAL PROJECT OF PARTITION DATED MAY 24, 1995 WHICH WAS APPROVED BY THE INTESTATE COURT IN SP. PROC. NO. NC-28 AND EXECUTED IN ACCORDANCE WITH THE LATTER COURTS FINAL ORDER DATED JULY 9, 1991 DETERMINING WHICH WERE THE REMAINING PROPERTIES OF THE ESTATE. 3. WHETHER OR NOT THE DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 EXECUTED BY THE DECEASED SPOUSES MAXIMINO A. NAZARENO, SR. AND AUREA POBLETE DURING THEIR LIFETIME INVOLVING THEIR CONJUGAL PROPERTIES IS AN INDIVISIBLE CONTRACT? AND IF SO WHETHER OR NOT UPON THEIR DEATH, THE ESTATE OF MAXIMINO A. NAZARENO, SR. ALONE CAN SEEK THE ANNULMENT OF SAID SALE? 4. WHETHER OR NOT THE SALE OF LOT 3 UNDER THE DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 IN FAVOR OF PETITIONER NATIVIDAD P. NAZARENO, IS VALID CONSIDERING THAT AS PER THE ORDER OF THE LOWER COURT DATED NOVEMBER 21, 1990. ROMEO NAZARENO ADMITTED THAT HE DID NOT PAY THE CONSIDERATION STATED IN THE DEED OF ABSOLUTE SALE DATED JULY 4, 1969 EXECUTED BY THE DECEASED SPOUSES IN HIS FAVOR (EXH. M-2). 5. WHETHER OR NOT AS A CONSEQUENCE, THE TITLE ISSUED IN THE NAME OF ROMEO P. NAZARENO, TCT NO. 277968 (EXH. M) SHOULD BE CANCELLED AND DECLARED NULL AND VOID AND A NEW ONE ISSUED IN FAVOR OF NATIVIDAD P. NAZARENO PURSUANT TO THE DEED OF ABSOLUTE SALE EXECUTED IN THE LATTERS FAVOR ON JANUARY 29, 1970 BY THE DECEASED SPOUSES.[24]
We find the petition to be without merit. First. Petitioners argue that the lone testimony of Romeo is insufficient to overcome the presumption of validity accorded to a notarized document. To begin with, the findings of fact of the Court of Appeals are conclusive on the parties and carry even more weight when these coincide with the factual findings of the trial court. This Court will not weigh the evidence all over again unless there is a showing that the findings of the lower court are totally devoid of support or are clearly erroneous so as to constitute serious abuse of discretion.[25] The lone testimony of a witness, if credible, is sufficient. In this case, the testimony of Romeo that no consideration was ever paid for the sale of the six lots to Natividad was found to be credible both by the trial court and by the Court of Appeals and it has not been successfully rebutted by petitioners. We, therefore, have no reason to overturn the findings by the two courts giving credence to his testimony. The fact that the deed of sale was notarized is not a guarantee of the validity of its contents. As held in Suntay v. Court of Appeals:[26] Though the notarization of the deed of sale in question vests in its favor the presumption of regularity, it is not the intention nor the function of the notary public to validate and make binding an instrument never, in the first place, intended to have any binding legal effect upon the parties thereto. The intention of the parties still and always is the primary consideration in determining the true nature of a contract. Second. Petitioners make capital of the fact that in C.A.-G.R. CV No. 12932, which was declared final by this Court in G.R. No. 107684, the Court of Appeals upheld the right of Maximino, Jr. to recover possession of Lot 3-B. In that case, the Court of Appeals held: As shown in the preceding disquisition, Natividad P. Nazareno acquired the property in dispute by purchase in 1970. She was issued
Transfer Certificate of Title No. 162738 of the Registry of Deeds of Quezon City. When her parents died, her mother Aurea PobleteNazareno in 1970 and her father Maximino A. Nazareno, Sr. in 1980, Natividad P. Nazareno had long been the exclusive owner of the property in question. There was no way therefore that the aforesaid property could belong to the estate of the spouses Maximino Nazareno, Sr. and Aurea Poblete. The mere fact that Romeo P. Nazareno included the same property in an inventory of the properties of the deceased Maximino A. Nazareno, Sr. will not adversely affect the ownership of the said realty. Appellant Romeo P. Nazarenos suspicion that his parents had entrusted all their assets under the care and in the name of Natividad P. Nazareno, their eldest living sister who was still single, to be divided upon their demise to all the compulsory heirs, has not progressed beyond mere speculation. His barefaced allegation on the point not only is without any corroboration but is even belied by documentary evidence. The deed of absolute sale (Exhibit B), being a public document (Rule 132, Secs. 19 and 23, Revised Rules on Evidence), is entitled to great weight; to contradict the same, there must be evidence that is clear, convincing and more than merely preponderant (Yturralde vs. Aganon, 28 SCRA 407; Favor vs. Court of Appeals, 194 SCRA 308). Defendants-appellants own conduct disproves their claim of co-ownership over the property in question. Being themselves the owner of a ten-unit apartment building along Stanford St., Cubao Quezon City, defendants-appellants, in a letter of demand to vacate addressed to their tenants (Exhibits P, P-1 and P-2) in said apartment, admitted that the house and lot located at No. 979 Aurora Blvd., Quezon City where they were residing did not belong to them. Also, when they applied for a permit to repair the subject property in 1977, they stated that the property belonged to and was registered in the name of Natividad P. Nazareno. Among the documents submitted to support their application for a building permit was a copy of TCT No. 162738 of the Registry of Deeds of Quezon City in the name of Natividad Nazareno (Exhibit O and submarkings; tsn March 15, 1985, pp. 4-5).[27] To be sure, that case was for recovery of possession based on ownership of Lot 3-B. The parties in that case were Maximino, Jr., as plaintiff, and the spouses Romeo and Eliza, as defendants. On the other hand, the parties in the present case for
annulment of sale are the estate of Maximino, Sr., as plaintiff, and Natividad and Maximino, Jr., as defendants. Romeo and Eliza were named third-party defendants after a third-party complaint was filed by Natividad and Maximino, Jr. As already stated, however, this third-party complaint concerned Lot 3, and not Lot 3-B. The estate of a deceased person is a juridical entity that has a personality of its own.[28] Though Romeo represented at one time the estate of Maximino, Sr., the latter has a separate and distinct personality from the former. Hence, the judgment in CAGR CV No. 12932 regarding the ownership of Maximino, Jr. over Lot 3-B binds Romeo and Eliza only, and not the estate of Maximino, Sr., which also has a right to recover properties which were wrongfully disposed. Furthermore, Natividads title was clearly not an issue in the first case. In other words, the title to the other five lots subject of the present deed of sale was not in issue in that case. If the first case resolved anything, it was the ownership of Maximino, Jr. over Lot 3-B alone. Third. Petitioners allege that, as shown by several deeds of sale executed by Maximino, Sr. and Aurea during their lifetime, the intention to dispose of their real properties is clear.Consequently, they argue that the Deed of Sale of January 29, 1970 should also be deemed valid. This is a non-sequitur. The fact that other properties had allegedly been sold by the spouses Maximino, Sr. and Aurea does not necessarily show that the Deed of Sale made on January 29, 1970 is valid. Romeo does not dispute that their parents had executed deeds of sale. The question, however, is whether these sales were made for a consideration. The trial court and the Court of Appeals found that the Nazareno spouses transferred their properties to their children by fictitious sales in order to avoid the payment of inheritance taxes.
Indeed, it was found both by the trial court and by the Court of Appeals that Natividad had no means to pay for the six lots subject of the Deed of Sale. All these convince the Court that Natividad had no means to pay for all the lots she purportedly purchased from her parents. What is more, Romeos admission that he did not pay for the transfer to him of lots 3 and 25-L despite the considerations stated in the deed of sale is a declaration against interest and must ring with resounding truth. The question is, why should Natividad be treated any differently, i.e., with consideration for the sale to her, when she is admittedly the closest to her parents and the one staying with them and managing their affairs? It just seems without reason. Anyway, the Court is convinced that the questioned Deed of Sale dated January 29, 1970 (Exh. A or 1) is simulated for lack of consideration, and therefore ineffective and void.[29] In affirming this ruling, the Court of Appeals said: Facts and circumstances indicate badges of a simulated sale which make the Deed of Absolute Sale dated 29 January 1970 void and of no effect. In the case of Suntay vs. Court of Appeals (251 SCRA 430 [1995]), the Supreme Court held that badges of simulation make a deed of sale null and void since parties thereto enter into a transaction to which they did not intend to be legally bound. It appears that it was the practice in the Nazareno family to make simulated transfers of ownership of real properties to their children in order to avoid the payment of inheritance taxes. Per the testimony of Romeo, he acquired Lot 25-L from his parents through a fictitious or simulated sale wherein no consideration was paid by him. He even truthfully admitted that the sale of Lot 3 to him on 04 July 1969 (Deed of Absolute Sale, Records, Vol. II, p. 453) likewise had no consideration. This document was signed by the spouses Max, Sr. and Aurea as vendors while defendant-appellant Natividad signed as witness.[30] Fourth. Petitioners argue further:
The Deed of Absolute Sale dated January 29, 1970 is an indivisible contract founded on an indivisible obligation. As such, it being indivisible, it can not be annulled by only one of them. And since this suit was filed only by the estate of Maximino A. Nazareno, Sr. without including the estate of Aurea Poblete, the present suit must fail. The estate of Maximino A. Nazareno, Sr. can not cause its annulment while its validity is sustained by the estate of Aurea Poblete.[31]
their parents executed the Deed of Sale in favor of Natividad because the latter was the only female and the only unmarried member of the family.[34] She was thus entrusted with the real properties in behalf of her siblings. As she herself admitted, she intended to convey Lots 10 and 11 to Jose in the event the latter returned from abroad. There was thus an implied trust constituted in her favor. Art. 1449 of the Civil Code states:
An obligation is indivisible when it cannot be validly performed in parts, whatever may be the nature of the thing which is the object thereof. The indivisibility refers to the prestation and not to the object thereof.[32] In the present case, the Deed of Sale of January 29, 1970 supposedly conveyed the six lots to Natividad. The obligation is clearly indivisible because the performance of the contract cannot be done in parts, otherwise the value of what is transferred is diminished. Petitioners are therefore mistaken in basing the indivisibility of a contract on the number of obligors.
There is also an implied trust when a donation is made to a person but it appears that although the legal estate is transmitted to the donee, he nevertheless is either to have no beneficial interest or only a part thereof.
In any case, if petitioners only point is that the estate of Maximino, Sr. alone cannot contest the validity of the Deed of Sale because the estate of Aurea has not yet been settled, the argument would nonetheless be without merit. The validity of the contract can be questioned by anyone affected by it. [33] A void contract is inexistent from the beginning. Hence, even if the estate of Maximino, Sr. alone contests the validity of the sale, the outcome of the suit will bind the estate of Aurea as if no sale took place at all. Fifth. As to the third-party complaint concerning Lot 3, we find that this has been passed upon by the trial court and the Court of Appeals. As Romeo admitted, no consideration was paid by him to his parents for the Deed of Sale. Therefore, the sale was void for having been simulated. Natividad never acquired ownership over the property because the Deed of Sale in her favor is also void for being without consideration and title to Lot 3 cannot be issued in her name. Nonetheless, it cannot be denied that Maximino, Sr. intended to give the six Quezon City lots to Natividad. As Romeo testified,
There being an implied trust, the lots in question are therefore subject to collation in accordance with Art. 1061 which states: Every compulsory heir, who succeeds with other compulsory heirs, must bring into the mass of the estate any property or right which he may have received from the decedent, during the lifetime of the latter, by way of donation, or any other gratuitous title, in order that it may be computed in the determination of the legitime of each heir, and in the account of the partition. As held by the trial court, the sale of Lots 13 and 14 to RosAlva Marketing, Corp. on April 20, 1979[35] will have to be upheld for Ros-Alva Marketing is an innocent purchaser for value which relied on the title of Natividad. The rule is settled that every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property.[36] WHEREFORE, the decision of the Court of Appeals is AFFIRMED. SO ORDERED. Bellosillo, (Chairman), JJ., concur. Buena, J., no part.
Quisumbing, and De
Leon,
Jr.,
SECOND DIVISION January 11, 2016 G.R. No. 167615
SPOUSES ALEXANDER AND JULIE LAM, Doing Business Under the Name and Style "COLORKWIK LABORATORIES" AND "COLORKWIK PHOTO SUPPLY", Petitioners, vs. KODAK PHILIPPINES, LTD., Respondent. DECISION LEONEN, J.: This is a Petition for Review on Certiorari filed on April 20, 2005 assailing the March 30, 2005 Decision1 and September 9, 2005 Amended Decision2 of the Court of Appeals, which modified the February 26, 1999 Decision3 of the Regional Trial Court by reducing the amount of damages awarded to petitioners Spouses Alexander and Julie Lam (Lam Spouses).4 The Lam Spouses argue that respondent Kodak Philippines, Ltd.’s breach of their contract of sale entitles them to damages more than the amount awarded by the Court of Appeals.5
2. 19% Multiple Order Discount shall be applied in the form of merchandise and delivered in advance immediately after signing of the contract. * Also includes start-up packages worth P61,000.00. 3. NO DOWNPAYMENT. 4. Minilab Equipment Package shall be payable in 48 monthly installments at THIRTY FIVE THOUSAND PESOS (P35,000.00) inclusive of 24% interest rate for the first 12 months; the balance shall be re-amortized for the remaining 36 months and the prevailing interest shall be applied. 5. Prevailing price of Kodak Minilab System 22XL as of January 8, 1992 is at ONE MILLION SEVEN HUNDRED NINETY SIX THOUSAND PESOS. 6. Price is subject to change without prior notice.
I On January 8, 1992, the Lam Spouses and Kodak Philippines, Ltd. entered into an agreement (Letter Agreement) for the sale of three (3) units of the Kodak Minilab System 22XL6 (Minilab Equipment) in the amount of ₱1,796,000.00 per unit,7 with the following terms: This confirms our verbal agreement for Kodak Phils., Ltd. To provide Colorkwik Laboratories, Inc. with three (3) units Kodak Minilab System 22XL . . . for your proposed outlets in Rizal Avenue (Manila), Tagum (Davao del Norte), and your existing Multicolor photo counter in Cotabato City under the following terms and conditions: 1. Said Minilab Equipment packages will avail a total of 19% multiple order discount based on prevailing equipment price provided said equipment packages will be purchased not later than June 30, 1992.
*Secured with PDCs; 1st monthly amortization due 45 days after installation[.]8 On January 15, 1992, Kodak Philippines, Ltd. delivered one (1) unit of the Minilab Equipment in Tagum, Davao Province.9 The delivered unit was installed by Noritsu representatives on March 9, 1992.10 The Lam Spouses issued postdated checks amounting to ₱35,000.00 each for 12 months as payment for the first delivered unit, with the first check due on March 31, 1992.11 The Lam Spouses requested that Kodak Philippines, Ltd. not negotiate the check dated March 31, 1992 allegedly due to insufficiency of funds.12 The same request was made for the check due on April 30, 1992. However, both checks were negotiated by Kodak Philippines, Ltd. and were honored by the depository bank.13 The 10 other checks were subsequently
dishonored after the Lam Spouses ordered the depository bank to stop payment.14 Kodak Philippines, Ltd. canceled the sale and demanded that the Lam Spouses return the unit it delivered together with its accessories.15 The Lam Spouses ignored the demand but also rescinded the contract through the letter dated November 18, 1992 on account of Kodak Philippines, Ltd.’s failure to deliver the two (2) remaining Minilab Equipment units.16 On November 25, 1992, Kodak Philippines, Ltd. filed a Complaint for replevin and/or recovery of sum of money. The case was raffled to Branch 61 of the Regional Trial Court, Makati City.17 The Summons and a copy of Kodak Philippines, Ltd.’s Complaint was personally served on the Lam Spouses.18 The Lam Spouses failed to appear during the pre-trial conference and submit their pre-trial brief despite being given extensions.19 Thus, on July 30, 1993, they were declared in default.20 Kodak Philippines, Ltd. presented evidence exparte.21 The trial court issued the Decision in favor of Kodak Philippines, Ltd. ordering the seizure of the Minilab Equipment, which included the lone delivered unit, its standard accessories, and a separate generator set.22 Based on this Decision, Kodak Philippines, Ltd. was able to obtain a writ of seizure on December 16, 1992 for the Minilab Equipment installed at the Lam Spouses’ outlet in Tagum, Davao Province.23 The writ was enforced on December 21, 1992, and Kodak Philippines, Ltd. gained possession of the Minilab Equipment unit, accessories, and the generator set.24 The Lam Spouses then filed before the Court of Appeals a Petition to Set Aside the Orders issued by the trial court dated July 30, 1993 and August 13, 1993. These Orders were subsequently set aside by the Court of Appeals Ninth Division, and the case was remanded to the trial court for pre-trial.25 On September 12, 1995, an Urgent Motion for Inhibition was filed against Judge Fernando V. Gorospe, Jr.,26 who had issued
the writ of seizure.27 The ground for the motion for inhibition was not provided. Nevertheless, Judge Fernando V. Gorospe Jr. inhibited himself, and the case was reassigned to Branch 65 of the Regional Trial Court, Makati City on October 3, 1995.28 In the Decision dated February 26, 1999, the Regional Trial Court found that Kodak Philippines, Ltd. defaulted in the performance of its obligation under its Letter Agreement with the Lam Spouses.29 It held that Kodak Philippines, Ltd.’s failure to deliver two (2) out of the three (3) units of the Minilab Equipment caused the Lam Spouses to stop paying for the rest of the installments.30 The trial court noted that while the Letter Agreement did not specify a period within which the delivery of all units was to be made, the Civil Code provides "reasonable time" as the standard period for compliance: The second paragraph of Article 1521 of the Civil Code provides: Where by a contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable time. What constitutes reasonable time is dependent on the circumstances availing both on the part of the seller and the buyer. In this case, delivery of the first unit was made five (5) days after the date of the agreement. Delivery of the other two (2) units, however, was never made despite the lapse of at least three (3) months.31 Kodak Philippines, Ltd. failed to give a sufficient explanation for its failure to deliver all three (3) purchased units within a reasonable time.32 The trial court found: Kodak would have the court believe that it did not deliver the other two (2) units due to the failure of defendants to make good the installments subsequent to the second. The court is not
convinced. First of all, there should have been simultaneous delivery on account of the circumstances surrounding the transaction. . . . Even after the first delivery . . . no delivery was made despite repeated demands from the defendants and despite the fact no installments were due. Then in March and in April (three and four months respectively from the date of the agreement and the first delivery) when the installments due were both honored, still no delivery was made. Second, although it might be said that Kodak was testing the waters with just one delivery - determining first defendants’ capacity to pay - it was not at liberty to do so. It is implicit in the letter agreement that delivery within a reasonable time was of the essence and failure to so deliver within a reasonable time and despite demand would render the vendor in default. .... Third, at least two (2) checks were honored. If indeed Kodak refused delivery on account of defendants’ inability to pay, nondelivery during the two (2) months that payments were honored is unjustified.33 Nevertheless, the trial court also ruled that when the Lam Spouses accepted delivery of the first unit, they became liable for the fair value of the goods received: On the other hand, defendants accepted delivery of one (1) unit. Under Article 1522 of the Civil Code, in the event the buyer accepts incomplete delivery and uses the goods so delivered, not then knowing that there would not be any further delivery by the seller, the buyer shall be liable only for the fair value to him of the goods received. In other words, the buyer is still liable for the value of the property received. Defendants were under obligation to pay the amount of the unit. Failure of delivery of the other units did not thereby give unto them the right to suspend payment on the unit delivered. Indeed, in incomplete deliveries, the buyer has the remedy of refusing payment unless delivery is first made. In this case though, payment for the two undelivered
units have not even commenced; the installments made were for only one (1) unit. Hence, Kodak is right to retrieve the unit delivered.34 The Lam Spouses were under obligation to pay for the amount of one unit, and the failure to deliver the remaining units did not give them the right to suspend payment for the unit already delivered.35 However, the trial court held that since Kodak Philippines, Ltd. had elected to cancel the sale and retrieve the delivered unit, it could no longer seek payment for any deterioration that the unit may have suffered while under the custody of the Lam Spouses.36 As to the generator set, the trial court ruled that Kodak Philippines, Ltd. attempted to mislead the court by claiming that it had delivered the generator set with its accessories to the Lam Spouses, when the evidence showed that the Lam Spouses had purchased it from Davao Ken Trading, not from Kodak Philippines, Ltd.37 Thus, the generator set that Kodak Philippines, Ltd. wrongfully took from the Lam Spouses should be replaced.38 The dispositive portion of the Regional Trial Court Decision reads: PREMISES CONSIDERED, the case is hereby dismissed. Plaintiff is ordered to pay the following: 1) PHP 130,000.00 representing the amount of the generator set, plus legal interest at 12% per annum from December 1992 until fully paid; and 2) PHP 1,300,000.00 as actual expenses in the renovation of the Tagum, Davao and Rizal Ave., Manila outlets. SO ORDERED.39
On March 31, 1999, the Lam Spouses filed their Notice of Partial Appeal, raising as an issue the Regional Trial Court’s failure to order Kodak Philippines, Ltd. to pay: (1) ₱2,040,000 in actual damages; (2) ₱50,000,000 in moral damages; (3) ₱20,000,000 in exemplary damages; (4) ₱353,000 in attorney’s fees; and (5) ₱300,000 as litigation expenses.40 The Lam Spouses did not appeal the Regional Trial Court’s award for the generator set and the renovation expenses.41
The Court of Appeals agreed with the trial court’s Decision, but extensively discussed the basis for the modification of the dispositive portion.
Kodak Philippines, Ltd. also filed an appeal. However, the Court of Appeals42 dismissed it on December 16, 2002 for Kodak Philippines, Ltd.’s failure to file its appellant’s brief, without prejudice to the continuation of the Lam Spouses’ appeal.43 The Court of Appeals’ December 16, 2002 Resolution denying Kodak Philippines, Ltd.’s appeal became final and executory on January 4, 2003.44
In determining the divisibility of an obligation, the following factors may be considered, to wit: (1) the will or intention of the parties, which may be expressed or presumed; (2) the objective or purpose of the stipulated prestation; (3) the nature of the thing; and (4) provisions of law affecting the prestation.
In the Decision45 dated March 30, 2005, the Court of Appeals Special Fourteenth Division modified the February 26, 1999 Decision of the Regional Trial Court: WHEREFORE, PREMISES CONSIDERED, the Assailed Decision dated 26 February 1999 of the Regional Trial Court, Branch 65 in Civil Case No. 92-3442 is hereby MODIFIED. Plaintiff-appellant is ordered to pay the following: 1. P130,000.00 representing the amount of the generator set, plus legal interest at 12% per annum from December 1992 until fully paid; and 2. P440,000.00 as actual damages; 3. P25,000.00 as moral damages; and 4. P50,000.00 as exemplary damages. SO ORDERED.46 (Emphasis supplied)
The Court of Appeals ruled that the Letter Agreement executed by the parties showed that their obligations were susceptible of partial performance. Under Article 1225 of the New Civil Code, their obligations are divisible:
Applying the foregoing factors to this case, We found that the intention of the parties is to be bound separately for each Minilab Equipment to be delivered as shown by the separate purchase price for each of the item, by the acceptance of Sps. Lam of separate deliveries for the first Minilab Equipment and for those of the remaining two and the separate payment arrangements for each of the equipment. Under this premise, Sps. Lam shall be liable for the entire amount of the purchase price of the Minilab Equipment delivered considering that Kodak had already completely fulfilled its obligation to deliver the same. . . . Third, it is also evident that the contract is one that is severable in character as demonstrated by the separate purchase price for each of the minilab equipment. "If the part to be performed by one party consists in several distinct and separate items and the price is apportioned to each of them, the contract will generally be held to be severable. In such case, each distinct stipulation relating to a separate subject matter will be treated as a separate contract." Considering this, Kodak's breach of its obligation to deliver the other two (2) equipment cannot bar its recovery for the full payment of the equipment already delivered. As far as Kodak is concerned, it had already fully complied with
its separable obligation to deliver the first unit of Minilab Equipment.47 (Emphasis supplied)
remaining units has made them liable for the unpaid portion of the purchase price.51
The Court of Appeals held that the issuance of a writ of replevin is proper insofar as the delivered Minilab Equipment unit and its standard accessories are concerned, since Kodak Philippines, Ltd. had the right to possess it:48
The Court of Appeals noted that Kodak Philippines, Ltd. sought the rescission of its contract with the Lam Spouses in the letter dated October 14, 1992.52 The rescission was based on Article 1191 of the New Civil Code, which provides: "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."53 In its letter, Kodak Philippines, Ltd. demanded that the Lam Spouses surrender the lone delivered unit of Minilab Equipment along with its standard accessories.54
The purchase price of said equipment is P1,796,000.00 which, under the agreement is payable with forty eight (48) monthly amortization. It is undisputed that Sps. Lam made payments which amounted to Two Hundred Seventy Thousand Pesos (P270,000.00) through the following checks: Metrobank Check Nos. 00892620 and 00892621 dated 31 March 1992 and 30 April 1992 respectively in the amount of Thirty Five Thousand Pesos (P35,000.00) each, and BPI Family Check dated 31 July 1992 amounting to Two Hundred Thousand Pesos (P200,000.00). This being the case, Sps. Lam are still liable to Kodak in the amount of One Million Five Hundred Twenty Six Thousand Pesos (P1,526,000.00), which is payable in several monthly amortization, pursuant to the Letter Agreement. However, Sps. Lam admitted that sometime in May 1992, they had already ordered their drawee bank to stop the payment on all the other checks they had issued to Kodak as payment for the Minilab Equipment delivered to them. Clearly then, Kodak ha[d] the right to repossess the said equipment, through this replevin suit. Sps. Lam cannot excuse themselves from paying in full the purchase price of the equipment delivered to them on account of Kodak’s breach of the contract to deliver the other two (2) Minilab Equipment, as contemplated in the Letter Agreement.49(Emphasis supplied) Echoing the ruling of the trial court, the Court of Appeals held that the liability of the Lam Spouses to pay the remaining balance for the first delivered unit is based on the second sentence of Article 1592 of the New Civil Code.50 The Lam Spouses’ receipt and use of the Minilab Equipment before they knew that Kodak Philippines, Ltd. would not deliver the two (2)
The Court of Appeals likewise noted that the Lam Spouses rescinded the contract through its letter dated November 18, 1992 on account of Kodak Philippines, Inc.’s breach of the parties’ agreement to deliver the two (2) remaining units.55 As a result of this rescission under Article 1191, the Court of Appeals ruled that "both parties must be restored to their original situation, as far as practicable, as if the contract was never entered into."56 The Court of Appeals ratiocinated that Article 1191 had the effect of extinguishing the obligatory relation as if one was never created:57 To rescind is to declare a contract void in its inception and to put an end to it as though it never were. It is not merely to terminate it and to release parties from further obligations to each other but abrogate it from the beginning and restore parties to relative positions which they would have occupied had no contract been made.58 The Lam Spouses were ordered to relinquish possession of the Minilab Equipment unit and its standard accessories, while Kodak Philippines, Ltd. was ordered to return the amount of ₱270,000.00, tendered by the Lam Spouses as partial payment.59
As to the actual damages sought by the parties, the Court of Appeals found that the Lam Spouses were able to substantiate the following: Incentive fee paid to Mr. Ruales in the amount of P100,000.00; the rider to the contract of lease which made the Sps. Lam liable, by way of advance payment, in the amount of P40,000.00, the same being intended for the repair of the flooring of the leased premises; and lastly, the payment of P300,000.00, as compromise agreement for the pre-termination of the contract of lease with Ruales.60 The total amount is ₱440,000.00. The Court of Appeals found that all other claims made by the Lam Spouses were not supported by evidence, either through official receipts or check payments.61 As regards the generator set improperly seized from Kodak Philippines, Ltd. on the basis of the writ of replevin, the Court of Appeals found that there was no basis for the Lam Spouses’ claim for reasonable rental of ₱5,000.00. It held that the trial court’s award of 12% interest, in addition to the cost of the generator set in the amount of ₱130,000.00, is sufficient compensation for whatever damage the Lam Spouses suffered on account of its improper seizure.62 The Court of Appeals also ruled on the Lam Spouses’ entitlement to moral and exemplary damages, as well as attorney’s fees and litigation expenses: In seeking recovery of the Minilab Equipment, Kodak cannot be considered to have manifested bad faith and malevolence because as earlier ruled upon, it was well within its right to do the same. However, with respect to the seizure of the generator set, where Kodak misrepresented to the court a quo its alleged right over the said item, Kodak’s bad faith and abuse of judicial processes become self-evident. Considering the off-setting circumstances attendant, the amount of P25,000.00 by way of moral damages is considered sufficient.
In addition, so as to serve as an example to the public that an application for replevin should not be accompanied by any false claims and misrepresentation, the amount of P50,000.00 by way of exemplary damages should be pegged against Kodak. With respect to the attorney’s fees and litigation expenses, We find that there is no basis to award Sps. Lam the amount sought for.63 Kodak Philippines, Ltd. moved for reconsideration of the Court of Appeals Decision, but it was denied for lack of merit.64 However, the Court of Appeals noted that the Lam Spouses’ Opposition correctly pointed out that the additional award of ₱270,000.00 made by the trial court was not mentioned in the decretal portion of the March 30, 2005 Decision: Going over the Decision, specifically page 12 thereof, the Court noted that, in addition to the amount of Two Hundred Seventy Thousand (P270,000.00) which plaintiff-appellant should return to the defendantsappellants, the Court also ruled that defendants-appellants should, in turn, relinquish possession of the Minilab Equipment and the standard accessories to plaintiffappellant. Inadvertently, these material items were not mentioned in the decretal portion of the Decision. Hence, the proper correction should herein be made.65 The Lam Spouses filed this Petition for Review on April 14, 2005. On the other hand, Kodak Philippines, Ltd. filed its Motion for Reconsideration66 before the Court of Appeals on April 22, 2005. While the Petition for Review on Certiorari filed by the Lam Spouses was pending before this court, the Court of Appeals Special Fourteenth Division, acting on Kodak Philippines, Ltd.’s Motion for Reconsideration, issued the Amended Decision67 dated September 9, 2005. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, this Court resolved that: A. Plaintiff-appellant’s Motion for Reconsideration is hereby DENIED for lack of merit. B. The decretal portion of the 30 March 2005 Decision should now read as follows: "WHEREFORE, PREMISES CONSIDERED, the Assailed Decision dated 26 February 1999 of the Regional Trial Court, Branch 65 in Civil Cases No. 92-3442 is hereby MODIFIED. Plaintiff-appellant is ordered to pay the following: a. P270,000.00 representing the partial payment made on the Minilab equipment. b. P130,000.00 representing the amount of the generator set, plus legal interest at 12% per annum from December 1992 until fully paid; c. P440,000.00 as actual damages;
File an Appeal by Certiorari under Rule 45 of the 1997 Rules of Civil Procedure before this court.69 This was docketed as G.R. No. 169639. In the Motion for Consolidation dated November 2, 2005, the Lam Spouses moved that G.R. No. 167615 and G.R. No. 169639 be consolidated since both involved the same parties, issues, transactions, and essential facts and circumstances.70 In the Resolution dated November 16, 2005, this court noted the Lam Spouses’ September 23 and September 30, 2005 Manifestations praying that the Court of Appeals’ September 9, 2005 Amended Decision be considered in the resolution of the Petition for Review on Certiorari.71 It also granted the Lam Spouses’ Motion for Consolidation.72 In the Resolution73 dated September 20, 2006, this court deconsolidated G.R No. 167615 from G.R. No. 169639 and declared G.R. No. 169639 closed and terminated since Kodak Philippines, Ltd. failed to file its Petition for Review. II
d. P25,000.00 as moral damages; and
We resolve the following issues:
e. P50,000.00 as exemplary damages.
First, whether the contract between petitioners Spouses Alexander and Julie Lam and respondent Kodak Philippines, Ltd. pertained to obligations that are severable, divisible, and susceptible of partial performance under Article 1225 of the New Civil Code; and
Upon the other hand, defendants-appellants are hereby ordered to return to plaintiff-appellant the Minilab equipment and the standard accessories delivered by plaintiff-appellant. SO ORDERED." SO ORDERED.68 (Emphasis in the original) Upon receiving the Amended Decision of the Court of Appeals, Kodak Philippines, Ltd. filed a Motion for Extension of Time to
Second, upon rescission of the contract, what the parties are entitled to under Article 1190 and Article 1522 of the New Civil Code. Petitioners argue that the Letter Agreement it executed with respondent for three (3) Minilab Equipment units was not severable, divisible, and susceptible of partial performance. Respondent’s recovery of the delivered unit was unjustified.74
Petitioners assert that the obligations of the parties were not susceptible of partial performance since the Letter Agreement was for a package deal consisting of three (3) units.75 For the delivery of these units, petitioners were obliged to pay 48 monthly payments, the total of which constituted one debt.76 Having relied on respondent’s assurance that the three units would be delivered at the same time, petitioners simultaneously rented and renovated three stores in anticipation of simultaneous operations.77 Petitioners argue that the divisibility of the object does not necessarily determine the divisibility of the obligation since the latter is tested against its susceptibility to a partial performance.78 They argue that even if the object is susceptible of separate deliveries, the transaction is indivisible if the parties intended the realization of all parts of the agreed obligation.79 Petitioners support the claim that it was the parties’ intention to have an indivisible agreement by asserting that the payments they made to respondent were intended to be applied to the whole package of three units.80 The postdated checks were also intended as initial payment for the whole package.81 The separate purchase price for each item was merely intended to particularize the unit prices, not to negate the indivisible nature of their transaction.82 As to the issue of delivery, petitioners claim that their acceptance of separate deliveries of the units was solely due to the constraints faced by respondent, who had sole control over delivery matters.83 With the obligation being indivisible, petitioners argue that respondent’s failure to comply with its obligation to deliver the two (2) remaining Minilab Equipment units amounted to a breach. Petitioners claim that the breach entitled them to the remedy of rescission and damages under Article 1191 of the New Civil Code.84 Petitioners also argue that they are entitled to moral damages more than the ₱50,000.00 awarded by the Court of Appeals since respondent’s wrongful act of accusing them of nonpayment of their obligations caused them sleepless nights,
mental anguish, and wounded feelings.85 They further claim that, to serve as an example for the public good, they are entitled to exemplary damages as respondent, in making false allegations, acted in evident bad faith and in a wanton, oppressive, capricious, and malevolent manner.86 Petitioners also assert that they are entitled to attorney’s fees and litigation expenses under Article 2208 of the New Civil Code since respondent’s act of bringing a suit against them was baseless and malicious. This prompted them to engage the services of a lawyer.87 Respondent argues that the parties’ Letter Agreement contained divisible obligations susceptible of partial performance as defined by Article 1225 of the New Civil Code.88 In respondent’s view, it was the intention of the parties to be bound separately for each individually priced Minilab Equipment unit to be delivered to different outlets:89 The three (3) Minilab Equipment are intended by petitioners LAM for install[a]tion at their Tagum, Davao del Norte, Sta. Cruz, Manila and Cotabato City outlets. Each of these units [is] independent from one another, as many of them may perform its own job without the other. Clearly the objective or purpose of the prestation, the obligation is divisible. The nature of each unit of the three (3) Minilab Equipment is such that one can perform its own functions, without awaiting for the other units to perform and complete its job. So much so, the nature of the object of the Letter Agreement is susceptible of partial performance, thus the obligation is divisible.90 With the contract being severable in character, respondent argues that it performed its obligation when it delivered one unit of the Minilab Equipment.91 Since each unit could perform on its own, there was no need to await the delivery of the other units to complete its job.92 Respondent then is of the view that when petitioners ordered the depository bank to stop payment of the issued checks covering the first delivered unit, they violated their
obligations under the Letter Agreement since respondent was already entitled to full payment.93 Respondent also argues that petitioners benefited from the use of the Minilab Equipment for 10 months—from March to December 1992— despite having paid only two (2) monthly installments.94 Respondent avers that the two monthly installments amounting to ₱70,000.00 should be the subject of an offset against the amount the Court of Appeals awarded to petitioners.95 Respondent further avers that petitioners have no basis for claiming damages since the seizure and recovery of the Minilab Equipment was not in bad faith and respondent was well within its right.96 III
2. 19% Multiple Order Discount shall be applied in the form of merchandise and delivered in advance immediately after signing of the contract. * Also includes start-up packages worth P61,000.00. 3. NO DOWNPAYMENT. 4. Minilab Equipment Package shall be payable in 48 monthly installments at THIRTY FIVE THOUSAND PESOS (P35,000.00) inclusive of 24% interest rate for the first 12 months; the balance shall be re-amortized for the remaining 36 months and the prevailing interest shall be applied. 5. Prevailing price of Kodak Minilab System 22XL as of January 8, 1992 is at ONE MILLION SEVEN HUNDRED NINETY SIX THOUSAND PESOS.
The Letter Agreement contained an indivisible obligation. 6. Price is subject to change without prior notice. Agreement97
Both parties rely on the Letter as basis of their respective obligations. Written by respondent’s Jeffrey T. Go and Antonio V. Mines and addressed to petitioner Alexander Lam, the Letter Agreement contemplated a "package deal" involving three (3) units of the Kodak Minilab System 22XL, with the following terms and conditions: This confirms our verbal agreement for Kodak Phils., Ltd. to provide Colorkwik Laboratories, Inc. with three (3) units Kodak Minilab System 22XL . . . for your proposed outlets in Rizal Avenue (Manila), Tagum (Davao del Norte), and your existing Multicolor photo counter in Cotabato City under the following terms and conditions: 1. Said Minilab Equipment packages will avail a total of 19% multiple order discount based on prevailing equipment price provided said equipment packages will be purchased not later than June 30, 1992.
*Secured with PDCs; 1st monthly amortization due 45 days after installation[.]98 Based on the foregoing, the intention of the parties is for there to be a single transaction covering all three (3) units of the Minilab Equipment. Respondent’s obligation was to deliver all products purchased under a "package," and, in turn, petitioners’ obligation was to pay for the total purchase price, payable in installments. The intention of the parties to bind themselves to an indivisible obligation can be further discerned through their direct acts in relation to the package deal. There was only one agreement covering all three (3) units of the Minilab Equipment and their accessories. The Letter Agreement specified only one purpose for the buyer, which was to obtain these units for three different outlets. If the intention of the parties were to have a divisible contract, then separate agreements could have been made for
each Minilab Equipment unit instead of covering all three in one package deal. Furthermore, the 19% multiple order discount as contained in the Letter Agreement was applied to all three acquired units.99 The "no downpayment" term contained in the Letter Agreement was also applicable to all the Minilab Equipment units. Lastly, the fourth clause of the Letter Agreement clearly referred to the object of the contract as "Minilab Equipment Package." In ruling that the contract between the parties intended to cover divisible obligations, the Court of Appeals highlighted: (a) the separate purchase price of each item; (b) petitioners’ acceptance of separate deliveries of the units; and (c) the separate payment arrangements for each unit.100 However, through the specified terms and conditions, the tenor of the Letter Agreement indicated an intention for a single transaction. This intent must prevail even though the articles involved are physically separable and capable of being paid for and delivered individually, consistent with the New Civil Code: Article 1225. For the purposes of the preceding articles, obligations to give definite things and those which are not susceptible of partial performance shall be deemed to be indivisible. When the obligation has for its object the execution of a certain number of days of work, the accomplishment of work by metrical units, or analogous things which by their nature are susceptible of partial performance, it shall be divisible. However, even though the object or service may be physically divisible, an obligation is indivisible if so provided by law or intended by the parties. (Emphasis supplied) In Nazareno v. Court of Appeals,101 the indivisibility of an obligation is tested against whether it can be the subject of partial performance:
An obligation is indivisible when it cannot be validly performed in parts, whatever may be the nature of the thing which is the object thereof. The indivisibility refers to the prestation and not to the object thereof. In the present case, the Deed of Sale of January 29, 1970 supposedly conveyed the six lots to Natividad. The obligation is clearly indivisible because the performance of the contract cannot be done in parts, otherwise the value of what is transferred is diminished. Petitioners are therefore mistaken in basing the indivisibility of a contract on the number of obligors.102 (Emphasis supplied, citation omitted) There is no indication in the Letter Agreement that the units petitioners ordered were covered by three (3) separate transactions. The factors considered by the Court of Appeals are mere incidents of the execution of the obligation, which is to deliver three units of the Minilab Equipment on the part of respondent and payment for all three on the part of petitioners. The intention to create an indivisible contract is apparent from the benefits that the Letter Agreement afforded to both parties. Petitioners were given the 19% discount on account of a multiple order, with the discount being equally applicable to all units that they sought to acquire. The provision on "no downpayment" was also applicable to all units. Respondent, in turn, was entitled to payment of all three Minilab Equipment units, payable by installments. IV With both parties opting for rescission of the contract under Article 1191, the Court of Appeals correctly ordered for restitution. The contract between the parties is one of sale, where one party obligates himself or herself to transfer the ownership and deliver a determinate thing, while the other pays a certain price in money or its equivalent.103 A contract of sale is perfected upon the meeting of minds as to the object and the price, and the parties may reciprocally demand the performance of their respective obligations from that point on.104
The Court of Appeals correctly noted that respondent had rescinded the parties’ Letter Agreement through the letter dated October 14, 1992.105 It likewise noted petitioners’ rescission through the letter dated November 18, 1992.106This rescission from both parties is founded on Article 1191 of the New Civil Code: 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 fulfilment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfilment, if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. Rescission under Article 1191 has the effect of mutual restitution.107 In Velarde v. Court of Appeals:108 Rescission abrogates the contract from its inception and requires a mutual restitution of benefits received. .... Rescission creates the obligation to return the object of the contract. It can be carried out only when the one who demands rescission can return whatever he may be obliged to restore. To rescind is to declare a contract void at its inception and to put an end to it as though it never was. It is not merely to terminate it and release the parties from further obligations to each other, but to abrogate it from the beginning and restore the parties to their relative positions as if no contract has been made.109 (Emphasis supplied, citations omitted) The Court of Appeals correctly ruled that both parties must be restored to their original situation as far as practicable, as if the
contract was never entered into. Petitioners must relinquish possession of the delivered Minilab Equipment unit and accessories, while respondent must return the amount tendered by petitioners as partial payment for the unit received. Further, respondent cannot claim that the two (2) monthly installments should be offset against the amount awarded by the Court of Appeals to petitioners because the effect of rescission under Article 1191 is to bring the parties back to their original positions before the contract was entered into. Also in Velarde: As discussed earlier, the breach committed by petitioners was the nonperformance of a reciprocal obligation, not a violation of the terms and conditions of the mortgage contract. Therefore, the automatic rescission and forfeiture of payment clauses stipulated in the contract does not apply. Instead, Civil Code provisions shall govern and regulate the resolution of this controversy. Considering that the rescission of the contract is based on Article 1191 of the Civil Code, mutual restitution is required to bring back the parties to their original situation prior to the inception of the contract. Accordingly, the initial payment of ₱800,000 and the corresponding mortgage payments in the amounts of ₱27,225, ₱23,000 and ₱23,925 (totaling ₱874,150.00) advanced by petitioners should be returned by private respondents, lest the latter unjustly enrich themselves at the expense of the former.110 (Emphasis supplied) When rescission is sought under Article 1191 of the Civil Code, it need not be judicially invoked because the power to resolve is implied in reciprocal obligations.111 The right to resolve allows an injured party to minimize the damages he or she may suffer on account of the other party’s failure to perform what is incumbent upon him or her.112 When a party fails to comply with his or her obligation, the other party’s right to resolve the contract is triggered.113 The resolution immediately produces legal effects if the non-performing party does not question the resolution.114 Court intervention only becomes necessary when the party who allegedly failed to comply with his or her obligation
disputes the resolution of the contract.115 Since both parties in this case have exercised their right to resolve under Article 1191, there is no need for a judicial decree before the resolution produces effects. V The issue of damages is a factual one. A petition for review on certiorari under Rule 45 shall only pertain to questions of law.116 It is not the duty of this court to re-evaluate the evidence adduced before the lower courts.117Furthermore, unless the petition clearly shows that there is grave abuse of discretion, the findings of fact of the trial court as affirmed by the Court of Appeals are conclusive upon this court.118 In Lorzano v. Tabayag, Jr.:119 For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. .... For the same reason, we would ordinarily disregard the petitioner’s allegation as to the propriety of the award of moral damages and attorney’s fees in favor of the respondent as it is a question of fact. Thus, questions on whether or not there was a preponderance of evidence to justify the award of damages or whether or not there was a causal connection between the given set of facts and the damage suffered by the private complainant or whether or not the act from which civil liability might arise exists are questions of fact. Essentially, the petitioner is questioning the award of moral damages and attorney’s fees in favor of the respondent as the same is supposedly not fully supported by evidence. However, in the final analysis, the question of whether the said award is
fully supported by evidence is a factual question as it would necessitate whether the evidence adduced in support of the same has any probative value. For a question to be one of law, it must involve no examination of the probative value of the evidence presented by the litigants or any of them.120 (Emphasis supplied, citations omitted) The damages awarded by the Court of Appeals were supported by documentary evidence.121 Petitioners failed to show any reason why the factual determination of the Court of Appeals must be reviewed, especially in light of their failure to produce receipts or check payments to support their other claim for actual damages.122 Furthermore, the actual damages amounting to ₱2,040,000.00 being sought by petitioners123 must be tempered on account of their own failure to pay the rest of the installments for the delivered unit. This failure on their part is a breach of their obligation, for which the liability of respondent, for its failure to deliver the remaining units, shall be equitably tempered on account of Article 1192 of the New Civil Code.124 In Central Bank of the Philippines v. Court of Appeals:125 Since both parties were in default in the performance of their respective reciprocal obligations, that is, Island Savings Bank failed to comply with its obligation to furnish the entire loan and Sulpicio M. Tolentino failed to comply with his obligation to pay his ₱17,000.00 debt within 3 years as stipulated, they are both liable for damages. Article 1192 of the Civil Code provides that in case both parties have committed a breach of their reciprocal obligations, the liability of the first infractor shall be equitably tempered by the courts. WE rule that the liability of Island Savings Bank for damages in not furnishing the entire loan is offset by the liability of Sulpicio M. Tolentino for damages, in the form of penalties and surcharges, for not paying his overdue ₱17,000.00 debt. The liability of Sulpicio M. Tolentino for interest on his ₱17,000.00 debt shall not be included in offsetting the liabilities
of both parties. Since Sulpicio M. Tolentino derived some benefit for his use of the ₱17,000.00, it is just that he should account for the interest thereon.126 (Emphasis supplied) The award for moral and exemplary damages also appears to be sufficient. Moral damages are granted to alleviate the moral suffering suffered by a party due to an act of another, but it is not intended to enrich the victim at the defendant’s expense.127 It is not meant to punish the culpable party and, therefore, must always be reasonable vis-a-vis the injury caused.128 Exemplary damages, on the other hand, are awarded when the injurious act is attended by bad faith.129 In this case, respondent was found to have misrepresented its right over the generator set that was seized. As such, it is properly liable for exemplary damages as an example to the public.130 However, the dispositive portion of the Court of Appeals Amended Decision dated September 9, 2005 must be modified to include the recovery of attorney’s fees and costs of suit in favor of petitioners. In Sunbanun v. Go:131 Furthermore, we affirm the award of exemplary damages and attorney’s fees. Exemplary damages may be awarded when a wrongful act is accompanied by bad faith or when the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner which would justify an award of exemplary damages under Article 2232 of the Civil Code. Since the award of exemplary damages is proper in this case, attorney’s fees and cost of the suit may also be recovered as provided under Article 2208 of the Civil Code.132 (Emphasis supplied, citation omitted) Based on the amount awarded for moral and exemplary damages, it is reasonable to award petitioners ₱20,000.00 as attorney’s fees. WHEREFORE, the Petition is DENIED. The Amended Decision dated September 9, 2005 is AFFIRMED with
MODIFICATION. Respondent Kodak Philippines, Ltd. is ordered to pay petitioners Alexander and Julie Lam: (a) P270,000.00, representing the partial payment made on the Minilab Equipment; (b) P130,000.00, representing the amount of the generator set, plus legal interest at 12% .per annum from December 1992 until fully paid; (c) P440,000.00 as actual damages; (d) P25,000.00 as moral damages; (e) P50,000.00 as exemplary damages; and (f) P20,000.00 as attorney's fees. Petitioners are ordered to return the Kodak Minilab System 22XL unit and its standard accessories to respondent. SO ORDERED. MARVIC M.V.F. LEONEN Associate Justice
