Art 448 Carrascoso Jr vs CA _ 123672 _ December 14, 2005 _ J
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Transcript of Art 448 Carrascoso Jr vs CA _ 123672 _ December 14, 2005 _ J
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THIRDDIVISION
FERNANDOCARRASCOSO,JR.,
Petitioner,versusTHEHONORABLE COURTOF APPEALS, LAURO LEVISTE, as Director andMinorityStockholderandOnBehalfofOtherStockholdersofElDoradoPlantation,Inc. and EL DORADO PLANTATION, INC., represented by one of its minoritystockholders,LauroP.Leviste,
Respondents.xxPHILIPPINELONGDISTANCETELEPHONECOMPANY,
Petitioner,versus
LAUROLEVISTE,asDirectorandMinorityStockholderandOnBehalfofOtherStockholders of El Dorado Plantation, Inc., EL DORADO PLANTATION, INC.,represented by Minority Stockholder, Lauro P. Leviste, and FERNANDOCARRASCOSO,JR.
Respondents.G.R.No.123672Present:PANGANIBAN,J.,Chairman,SANDOVALGUTIERREZ,CORONA,CARPIOMORALES,andGARCIA,JJ.
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G.R.No.164489Promulgated:December14,2005
xx
DECISION
CARPIOMORALES,J.:
ElDoradoPlantation, Inc. (ElDorado)was the registeredownerofaparcelof land(theproperty)withanareaofapproximately1,825hectarescoveredbyTransferCertificate
ofTitle(TCT)No.T93[1]
situatedinSablayan,OccidentalMindoro.On February 15, 1972, at a special meeting of El Dorados Board of Directors, a
Resolution[2]
was passed authorizing Feliciano Leviste, then President of El Dorado, tonegotiatethesaleofthepropertyandsignalldocumentsandcontractsbearingthereon.
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On March 23, 1972, by a Deed of Sale of Real Property,[3]
El Dorado, throughFelicianoLeviste,soldthepropertytoFernandoO.Carrascoso,Jr.(Carrascoso).
ThepertinentprovisionsoftheDeedofSaleread:
NOW,THEREFORE,forandinconsiderationofthesumofONEMILLIONEIGHTHUNDREDTHOUSAND(1,800,000.00)PESOS,PhilippineCurrency, theVendorherebysells,cedes,andtransfer(sic)untothehereinVENDEE,hisheirs,successorsandassigns,theabovedescribedpropertysubjecttothefollowingtermsandconsitions(sic):
1.Of thesaidsumofP1,800,000.00whichconstitutes thefullconsiderationof this
sale,P290,000.00shallbepaid,asitisherebypaid,tothePhilippines(sic)NationalBank,therebyeffectingthereleaseandcancellationfo(sic)thepresentmortgageover theabovedescribedproperty.
2.ThatthesumofP210,000.00shallbepaid,asitisherebypaidbytheVENDEEto
theVENDOR,receiptofwhichamountisherebyacknowledgedbytheVENDOR.3.The remainingbalanceofP1,300,000.00plus interest thereonat the rateof10%
perannumshallbepaidbytheVENDEEtotheVENDORwithinaperiodofthree(3)years,asfollows:
(a)One(1)yearfromthedateof thesigningof thisagreement, theVENDEEshall
pay to the VENDOR the sum of FIVE HUNDRED NINETEEN THOUSAND EIGHTHUNDREDTHIRTYTHREE&33/100(P519,833.33)PESOS.
(b)Two(2)yearsfromthedateofsigningofthisagreement,theVENDEEshallpay
to the VENDOR the sum of FIVE HUNDRED NINETTEN (sic) THOUSAND EIGHTHUNDREDANDTHIRTYTHREE&33/100(P519,833.33)PESOS.
(c)Three(3)yearsfromthedateofsigningofthisagreement,theVENDEEshallpay
totheVENDORthesumofFIVEHundredNINETEENTHOUSANDEIGHTHUNDREDANDTHIRTYTHREE&33/100(P519,833.33)PESOS.
4.Thetitleoftheproperty,subjectofthisagreement,shallpassandbetransferredto
theVENDEEwhoshallhavefullauthoritytoregisterthesameandobtainthecorrespondingtransfercertificateoftitleinhisname.
xxx
6. THE VENDOR certifies and warrants that the property abovedescribed is notbeing cultivated by any tenant and is therefore not covered by the provisions of theLandReformCode.If,therefore,theVENDEEbecomesliableunderthesaidlaw,theVENDOR
shall reimburse the VENDEE for all expenses and damages he may incur thereon.[4]
(Underscoringsupplied)
FromtheabovequotedprovisionsoftheDeedofSale,Carrascosowastopaythefull
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amountofthepurchasepriceonMarch23,1975.Onevendate,theBoardofDirectorsofElDoradopassedaResolutionreading:
RESOLVEDthatbyreasonofthesaleofthatparceloflandcoveredbyTCTNo.T93toDr.FERNANDOO.CARRASCOSO,JR.,thecorporationinterposesnoobjectionto thepropertybeingmortgage (sic) byDr.FERNANDOO.CARRASCOSO, JR. toanybankofhischoiceaslongasthebalanceontheDeedofSaleshallberecognizedbyDr.FERNANDOO.CARRASCOSO,JR.
RESOLVED,FURTHER,thatthecorporationauthorizestheprefered(sic)claimon
thepropertytobesubordinatedtoanymortgagethatmaybeconstitutedbyDr.FERNANDOO.CARRASCOSO,JR.
RESOLVED, FINALLY, that in case of any mortgage on the property, the
corporation waives the preference of any vendors lien on the property.[5]
(Emphasis andunderscoringsupplied)
FelicianoLevistealsoexecutedthefollowingaffidavitonthesameday:
1.ThatbyreasonofthesaleofthatparceloflandcoveredbyTransferCertificateofTitle T93 as evidenced by the Deed of Sale attached hereto as Annex A and made anintegralparthereof,theElDoradoPlantation,Inc.hasnoobjectiontotheaforementionedproperty being mortgaged by Dr. Fernando O. Carrascoso, Jr. to any bank of hischoice,aslongasthepaymentofthebalanceduetheElDoradoPlantation,Inc.underthe Deed of Sale, Annex A hereof, shall be recognized by the vendee therein, Dr.FernandoO.Carrascoso,Jr.thoughsubordinatedtothepreferredclaimofthemortgageebank.
2. That in case of any mortgage on the property, the vendor hereby waives the
preferenceofanyvendorslienontheproperty,subjectmatterofthedeedofsale.3.ThatthisaffidavitisbeingexecutedtoavoidanyquestionontheauthorityofDr.
FernandoO.Carrascoso,Jr.tomortgagethepropertysubjectoftheDeedofSale,AnnexAhereof,wherethepurchasepriceprovidedthereinhasnotbeenfullypaid.
4.ThatthisaffidavithasbeenexecutedpursuanttoaboardresolutionofElDorado
Plantation,Inc.[6]
(Emphasisandunderscoringsupplied)Onthefollowingday,March24,1972,CarrascosoandhiswifeMarleneexecuteda
RealEstateMortgage[7]
overthepropertyinfavorofHomeSavingsBank(HSB)tosecurealoanintheamountofP1,000,000.00.Ofthisamount,P290,000.00waspaidtoPhilippineNationalBanktoreleasethemortgagepriorlyconstitutedonthepropertyandP210,000.00waspaidtoElDoradopursuant toabovequotedparagraphNos.1and2of thetermsand
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conditionsoftheDeedofSale.[8]
TheMarch23,1972DeedofSaleofRealPropertywasregisteredandannotatedon
ElDoradosTCTNo.T93asEntryNo.15240[9]
onApril5,1972.Onevendate,TCTNo.
T93coveringthepropertywascancelledandTCTNo.T6055[10]
wasinitssteadissuedby theRegistryofDeedsofOccidentalMindoro in thenameofCarrascosoonwhich the
realestatemortgageinfavorofHSBwasannotatedasEntryNo.15242.[11]
OnMay18,1972,therealestatemortgageinfavorofHSBwasamendedtoinclude
anadditionalthreeyearloanofP70,000.00asrequestedbythespousesCarrascoso.[12]
TheAmendmentofRealEstateMortgagewasalsoannotatedonTCTNo.T6055asEntryNo.
15486onMay24,1972.[13]
The 3year period forCarrascoso to fully pay for the property onMarch 23, 1975
passedwithouthimhavingcompliedtherewith.In the meantime, on July 11, 1975, Carrascoso and the Philippine Long Distance
Telephone Company (PLDT), through its President Ramon Cojuangco, executed an
Agreement toBuy and Sell[14]
whereby the former agreed to sell 1,000 hectares of thepropertytothelatterataconsiderationofP3,000.00perhectareoratotalofP3,000,000.00.
The July11,1975Agreement toBuyandSellwasnot registeredandannotatedon
CarrascososTCTNo.T6055.Lauro Leviste (Lauro), a stockholder andmember of the Board of Directors of El
Dorado, through his counsel, Atty. Benjamin Aquino, by letter[15]
dated December 27,1976, called the attention of the Board to Carrascosos failure to pay the balance of thepurchasepriceofthepropertyamountingtoP1,300,000.00.AndLauroslawyermanifestedthat:
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Because of the default for a long time ofMr. Carrascoso to pay the balance of the
consideration of the sale, Don Lauro Leviste, in his behalf and in behalf of the othershareholderssimilarlysituatedlikehim,wantarescissionofthesalemadebytheElDoradoPlantation, Inc. to Mr. Carrascoso. He desires that the Board of Directors take the
correspondingactionforrescission.[16]
Laurosdesire torescindthesalewasreiteratedin twoother letters[17]
addressedtotheBoarddatedJanuary20,1977andMarch3,1977.
JoseP.Leviste,asPresidentofElDorado,latersentaletterofFebruary21,1977[18]
toCarrascosoinforminghimthatinviewofhisfailuretopaythebalanceofthepurchasepriceoftheproperty,ElDoradowasseekingtherescissionoftheMarch23,1972DeedofSaleofRealProperty.
Thepertinentportionsoftheletterread:
xxx
I regret to informyou that the balance ofP1,300,000.00 and the interest thereonhave longbeen due and payable, although you havemortgaged said propertywith theHome SavingsBank for P1,000,000.00 on March 24, 1972, which was subsequently increased toP1,070,000.00onMay18,1972.YouverywellknowthattheElDoradoPlantation,Inc.,isaclosefamilycorporation,ownedexclusivelybythemembersoftheLevistefamilyandIamoneofthecoownersoftheland.AsnothingappearstohavebeendoneonyourpartafterournumerousrequestsforpaymentofthesaidamountofP1,300,000.00andtheinterestof10%perannumduethereon,pleasebe
advised that we would like to rescind the contract of sale of the land.[19]
(Underscoringsupplied)
Jose Leviste, by letter[20]
dated March 10, 1977, informed Lauros counsel Atty.Aquinoofhis(Joses)February21,1977lettertoCarrascoso,helamentingthatCarrascosohasnotdeemeditfittogive[his]letterthecourtesyofareplyandadvis[ing]thatsomeoftheDirectorsof[ElDorado]couldnotseetheirwayclearincomplyingwiththedemandsofyourclient[Lauro]andhavefailedtoreachaconsensustobringthecorrespondingactionfor
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rescissionofthecontractagainst...Carrascoso.[21]
LauroandElDoradofinallyfiledonMarch15,1977acomplaint[22]
forrescissionoftheMarch23,1972DeedofSaleofRealPropertybetweenElDoradoandCarrascosowithdamagesbeforetheCourtofFirstInstance(CFI)ofOccidentalMindoro,docketedasCivilCaseNo.R226.
LauroandElDoradoalsosoughtthecancellationofTCTNo.T6055inthenameofCarrascosoandtherevivalofTCTNo.T93inthenameofElDorado,freefromanyliensandencumbrances.Furthermore,thetwoprayedfortheissuanceofanorderforCarrascosoto:(1)reconveythepropertytoElDoradouponreturntohimofP500,000.00,(2)secureadischargeof therealestatemortgageconstitutedon thepropertyfromHSB,(3)submitanaccountingofthefruitsofthepropertyfromMarch23,1972uptothereturnofpossessionofthelandtoElDorado,(4)turnoversaidfruitsortheequivalentvaluethereoftoElDorado
and(5)paytheamountofP100,000.00forattorneysfeesandotherdamages.[23]
AlsoonMarch15,1977,LauroandElDoradocausedtobeannotatedonTCTNo.T
6055aNoticeofLisPendens,inscribedasEntryNo.39737.[24]
Inthemeantime,Carrascoso,asvendorandPLDT,asvendeeforgedonApril6,1977
aDeedofAbsoluteSale[25]
overthe1,000hectareportionofthepropertysubjectoftheirJuly11,1975AgreementtoBuyandSell.ThepertinentportionsoftheDeedareasfollows:
WHEREAS, theVENDORandtheVENDEEenteredintoanagreementToBuyand
SellonJuly11,1975,whichismadeaparthereofbyreferenceWHEREAS,theVENDORandtheVENDEEarenowdecidedtoexecutetheDeedof
AbsoluteSalereferredtointheaforementionedagreementtoBuyandSellWHEREFORE, for and in consideration of the foregoing premises and the terms
hereunderstated,theVENDORandtheVENDEEhaveagreedasfollows:1.ForandinconsiderationofthesumofTHREEMILLIONPESOS(P3,000,000.00),
Philippine currency, of which ONE HUNDRED TWENTY THOUSAND PESOS
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P120,000.00have (sic)alreadybeen receivedby theVENDOR, theVENDORherebysells,transfersandconveysuntotheVENDEEonethousandhectares(1,000has.)ofhisparceloflandcoveredbyT.C.T.No.T6055of theRegistryofDeedsofMindoro,delineatedasLotNo.3B1inthesubdivisionsurveyplanxxx
2.TheVENDEEshall pay to theVENDORupon the signingof this agreement, the
sum of TWO MILLION FIVE HUNDRED THOUSAND PESOS (P2,500,000.00) in thefollowingmanner:
a) The sum of TWO MILLION THREE HUNDRED THOUSAND PESOS
(P2,300,000.00) to Home Savings Bank in full payment of the VENDORs mortgagedobligationtherewith
b)ThesumofTWOHUNDREDTHOUSANDPESOS(P200,000.00)toVENDORThe remaining balance of the purchase price in the sum of THREE HUNDRED
EIGHTYTHOUSANDPESOS(P380,000.00),lesssuchexpenseswhichmaybeadvancedbythe VENDEE but which are for the account of the VENDOR under Paragraph 6 of theAgreementtoBuyandSell,shallbepaidbytheVENDEEtotheVENDORuponissuanceof
titletotheVENDEE.[26]
(Underscoringsupplied)
In turn, PLDT, by Deed of Absolute Sale[27]
dated May 30, 1977, conveyed theaforesaid 1,000 hectare portion of the property to its subsidiary, PLDT AgriculturalCorporation(PLDTAC),foraconsiderationofP3,000,000.00,theamountofP2,620,000.00ofwhichwaspayabletoPLDTuponsigningofsaidDeed,andP380,000.00toCarrascosouponissuanceoftitletoPLDTAC.
Inthemeantime,onOctober19,1977,theElDoradoBoardofDirectors,byaspecial
meeting,[28]
adoptedandapprovedaResolutionratifyingandconferringtheprosecutionofCivilCaseNo.R226oftheCourtofFirstInstanceofOccidentalMindoro,entitledLauroP.
Levistevs.FernandoCarascoso(sic),etc.initiatedbystockholderMr.LauroP.Leviste.[29]
InhisAnswerwithCompulsoryCounterclaim,[30]
Carrascosoallegedthat:(1)hehadnotpaidhisremainingP1,300,000.00obligationundertheMarch23,1972DeedofSaleofReal Property in view of the extensions of time to comply therewith granted him by ElDorado(2)thecomplaintsufferedfromfataldefects,therebeingnoshowingofcompliancewiththeconditionprecedentofexhaustionofintracorporateremediesandtherequirement
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thataderivativesuit institutedbyacomplainingstockholderbeverifiedunderoath(3)ElDorado committed a grossmisrepresentationwhen itwarranted that the propertywas notbeingcultivatedbyanytenanttotakeitoutofthecoverageoftheLandReformCodeand(4)hesuffereddamagesduetotheprematurefilingofthecomplaintforwhichLauroandElDoradomustbeheldliable.
OnFebruary21,1978, theApril6,1977andMay30,1977DeedsofAbsoluteSaleandtherespectiveArticlesofIncorporationofPLDTandPLDTACwereannotatedonTCT
No.T6055asEntryNos.24770,[31]
42774,[32]
42769[33]
and24772,[34]
respectively.On
evendate,CarrascososTCTNo.T6055wascancelledandTCTNo.T12480[35]
coveringthe1,000hectareportionofthepropertywasissuedinthenameofPLDTAC.TheMarch15,1977NoticeofLisPendenswascarriedovertoTCTNo.T12480.
On July31,1978,PLDTandPLDTACfiledanUrgentMotion for Intervention[36]
whichwasgrantedbythetrialcourtbyOrder[37]
ofSeptember7,1978.
PLDTandPLDTAC thereupon filed theirAnswer In InterventionwithCompulsory
CounterclaimandCrossclaim[38]
againstCarrascosoonNovember13,1978,allegingthat:(1)whenCarrascosoexecutedtheApril6,1977DeedofAbsoluteSale infavorofPLDT,PLDTwasnotawareofanylitigationinvolvingthe1,000hectareportionofthepropertyorofanyflawinhistitle,(2)PLDTisapurchaseringoodfaithandforvalue(3)whenPLDTexecuted the May 30, 1977 Deed of Absolute Sale in favor of PLDTAC, they had noknowledgeof anypending litigationover theproperty andneitherwere they aware that anoticeoflispendenshadbeenannotatedonCarrascosostitleand(4)LauroandElDoradoknewofthesalebyCarrascosotoPLDTandPLDTsactualpossessionofthe1,000hectareportion of the property since June 30, 1975 and of its exercise of exclusive rights of
ownershipthereonthroughagriculturaldevelopment.[39]
ByDecision[40]
ofJanuary28,1991,Branch45oftheSanJoseOccidentalMindoroRegionalTrialCourt towhich theCFIhasbeen renamed, dismissed the complaint on the
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groundofprematurity,disposingasfollows,quotedverbatim:
WHEREFORE, in view of all the foregoing considerations, judgment is herebyrendered:
1. Dismissing the plaintiffs complaint against the defendant on the ground of
prematurity2.OrderingtheplaintiffstopaytothedefendantthesumofP2,980,000.00asactual
and compensatory damages, aswell as the sumof P100,000.00 as and for attorneys feesprovided,however, that theaforesaidamountsmust firstbe setoff from the lattersunpaidbalancetotheformer
3.Dismissingthedefendantsintervenorscounterclaimandcrossclaimand4.Orderingtheplaintiffstopayto(sic)thecostsofsuit.
SOORDERED.[41]
(Underscoringsupplied)
Carrascoso, PLDT and PLDTAC filed their respective appeals to the Court of
Appeals.
ByDecision[42]
ofJanuary31,1996,theappellatecourtreversedthedecisionofthetrialcourt,disposingasfollows,quotedverbatim:
WHEREFORE, not being meritorious, PLDTs/PLDTACs appeal is hereby
DISMISSEDandfindingElDoradosappealtobeimpressedwithmerit,WeREVERSEtheappealedDecisionandrenderthefollowingjudgment:
1.TheDeedofSaleofRealProperty(ExhibitC)isherebyrescindedandTCTNo.T
12480(ExhibitQ)iscancelledwhileTCTNo.T93(ExhibitA),isreactivated.2.FernandoCarrascoso,Jr.iscommandedto:
2.1.returnthepossessionofthe825[hectare]remainingportionofthelandto El Dorado Plantation, Inc. without prejudice to the landholdings oflegitimatetenantsthereon2.2.returnthenetfruitsofthelandtoElDoradoPlantation,Inc.fromMarch23,1972toJuly11,1975,andofthe825hectareremainingportionminusthetenants landholdings, from July 11, 1975 up to its delivery to El DoradoPlantation,Inc.includingwhateverhemayhavereceivedfromthetenantsifanybywayofcompensationundertheOperationLandTransferorunderanyotherpertinentagrarianlaw2.3 Pay El Dorado Plantation, Inc. an attorneys fee of P20,000.00 and
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litigationexpensesofP30,000.002.4 Return to Philippine Long Distance Telephone Company/PLDTAgriculturalCorporationP3,000,000.00pluslegalinterestfromApril6,1977untilfullypaid
3.PLDTAgriculturalCorporationisorderedtosurrenderthepossessionofthe1000hectareFarmtoElDoradoPlantation,Inc.
4. El Dorado Plantation, Inc. is directed to return the P500,000.00 to Fernando
Carrascoso,Jr.pluslegalinterestfromMarch23,1972untilfullypaid.Theperformanceofthis obligationwill however await the full compliance by FernandoCarrascoso, Jr. of hisobligationtoaccountforanddeliverthenetfruitsofthelandmentionedabovetoElDoradoPlantation,Inc.
5.Tocomplywithparagraph2.2herein,Carrascosoisdirectedtosubmitin(sic)the
courtaquoafullaccountingofthefruitsofthelandduringtheperiodmentionedaboveforthelattersapproval,afterwhichthenetfruitsshallbedeliveredtoElDorado,Plantation,Inc.
6.ElDoradoPlantation,Inc.shouldinformPhilippineLongDistanceTelephoneCo.and PLDT Agricultural Corporation in writing within ten (10) days after finality of thisdecisionregardingtheexerciseofitsoptionunderArt.448oftheCivilCode.
SOORDERED.[43]
(Underscoringsupplied)
PLDTandPLDTACfiledonFebruary22,1996,aMotionforReconsideration[44]
oftheJanuary31,1996CADecision,whileCarrascosowentupthisCourtbyfilingonMarch
25,1996apetitionforreview,[45]
docketedasG.R.No.123672,assailing theJanuary31,1996CADecisionandseekingthereinstatementoftheJanuary28,1991Decisionofthetrialcourt exceptwith respect to its finding that the acquisition of PLDT and PLDTACof the1,000hectareportionofthepropertywassubjecttothenoticeoflispendens.
Lauro, in themeantime,died,hence,onApril16,1996,aMotionforSubstitutionof
Party[46]
wasfiledprayingthathisheirs,representedbyConradC.Leviste,besubstitutedas
respondents.TheMotionwasgrantedbyResolution[47]
ofJuly10,1996.
PLDTandPLDTACfiledtheirComment[48]
toCarrascosospetitionandprayedthatjudgment be rendered finding them to be purchasers in good faith to thus entitle them topossessionandownershipofthe1,000hectareportionoftheproperty,togetherwithallthe
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improvementstheybuiltthereon.Reiteratingthattheywerenotpurchaserspendentelite,theyaverredthatElDoradoandLaurohadactualknowledgeoftheirinterestsinthesaidportionof the property prior to the annotation of the notice of lispendens to thereby render saidnoticeineffective.
ElDorado and theheirs ofLauro, both representedbyConradC.Leviste, also filed
theirComment[49]
toCarrascosospetition,prayingthatitbedismissedforlackofmeritandthatparagraph6ofthedispositiveportionoftheJanuary31,1996CADecisionbemodifiedtoreadasfollows:
6.ElDoradoPlantation,Inc.shouldinformPhilippineLongDistanceTelephoneCo.
and PLDT Agricultural Corporation in writing within ten (10) days after finality of thisdecision regarding the exercise of its option under Arts. 449 and 450 of the Civil Code,without right to indemnity on the part of the latter should the former decide to keep the
improvementsunderArticle449.[50]
(Underscoringsupplied)
CarrascosofiledonNovember13,1996hisReply[51]
totheCommentofElDoradoandtheheirsofLauro.
Inthemeantime,astheFebruary22,1996MotionforReconsiderationfiledbyPLDT
andPLDTACoftheCAdecisionhadremainedunresolved,thisCourt,byResolution[52]
ofJune30,2003,directedtheappellatecourttoresolvethesame.
ByResolution[53]
of July8, 2004, theCAdeniedPLDTandPLDTACsMotion forReconsiderationforlackofmerit.
PLDT[54]
thereuponfiledonSeptember2,2004apetitionforreview[55]
beforethisCourt,docketedasG.R.No.164489,seekingtoreverseandsetasidetheJanuary31,1996DecisionandtheJuly8,2004Resolutionof theappellatecourt.Itprayedthat judgmentberenderedupholdingitsright,interestandtitletothe1,000hectareportionofthepropertyandthatitanditssuccessorsininterestbedeclaredownersandlegalpossessorsthereof,together
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withallimprovementsbuilt,sownandplantedthereon.
ByResolution[56]
ofAugust25,2004,G.R.No.164489wasconsolidatedwithG.R.No.123672.
Inhispetition,CarrascosofaultstheCAasfollows:
I
THE COURT OF APPEALS ACTEDWITH GRAVE ABUSE OF DISCRETION ANDCOMMITTEDAMISTAKEOFLAWINNOTDECLARINGTHATTHEACTIONFORRESCISSIONWASPREMATURELYFILED.
II
THE COURT OF APPEALS ACTEDWITH GRAVE ABUSE OF DISCRETION ANDCOMMITTED A MISTAKE OF LAW IN DISREGARDING THE CRUCIALSIGNIFICANCE OF THE WARRANTY OF NONTENANCY EXPRESSLYSTIPULATEDINTHECONTRACTOFSALE.
III
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION IN
REVERSINGTHEDECISIONOFTHETRIALCOURT.[57]
(Underscoringsupplied)PLDT,ontheotherhand,faultstheCAasfollows:
I
THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN HOLDINGTHATPETITIONERANDPLTAC(sic)TOOKTHEIRRIGHT,INTERESTANDTITLETO THE FARM SUBJECT TO THE NOTICE OF LIS PENDENS, THE SAME INDISREGARD OF THE PROTECTION ACCORDED THEM UNDER ARTICLES 1181AND1187OFTHENEWCIVILCODE.
II
THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN HOLDINGTHATPETITIONERANDPLDTACTOOKTHEIRRIGHT,INTERESTANDTITLETOTHE FARM SUBJECT TO THE NOTICE OF LIS PENDENS, THE SAME INDISREGARDOF THE LEGAL PRINCIPLE THATRESPONDENTS ELDORADOETAL.s PRIOR, ACTUAL KNOWLEDGE OF PETITIONER PLDTS AGREEMENT TOBUY AND SELL WITH RESPONDENT CARRASCOSO RESULTING IN THEDELIVERYTO,ANDPOSSESSION,OCCUPATIONANDDEVELOPMENTBY,SAID
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PETITIONER OF THE FARM, IS EQUIVALENT TO REGISTRATION OF SUCHRIGHT,INTERESTANDTITLEAND,THEREFORE,APRIORREGISTRATIONNOT
AFFECTEDBYTHELATERNOTICEOFLISPENDENS.[58]
(Underscoringsupplied)CarrascosopositsthatintheElDoradoBoardResolutionandtheAffidavitofFeliciano
Leviste, both datedMarch23, 1972, noobjectionwas interposed to hismortgagingof thepropertytoanybankprovidedthatthebalanceofthepurchasepriceofthepropertyundertheMarch23,1972DeedofSaleofRealPropertyisrecognized,hence,ElDoradocouldcollecttheunpaidbalanceofP1,300,000.00onlyafterthemortgageinfavorofHSBispaidinfullandthefilingofthecomplaintforrescissionwithdamagesonMarch15,1977wasprematureashefullypaidhisobligationtoHSBonlyonApril5,1977asevidencedbytheCancellation
ofMortgage[59]
signedbyHSBPresidentGregorioB.Licaros.CarrascosofurtherpositsthatextensionsoftheperiodtopayElDoradowereverbally
accordedhimbyElDoradosdirectorsandofficers,particularlyJoseandAngelLeviste.Article1191oftheCivilCodeprovides:
Art.1191.Thepowertorescindobligationsisimpliedinreciprocalones,incaseoneoftheobligorsshouldnotcomplywithwhatisincumbentuponhim.
The injured party may choose between the fulfillment and the rescission of the
obligation,with thepaymentofdamages ineithercase.Hemayalsoseekrescission,evenafterhehaschosenfulfillment,ifthelattershouldbecomeimpossible.
Thecourtshalldecree therescissionclaimed,unless therebe justcauseauthorizing
thefixingofaperiod.This is understood to bewithout prejudice to the rights of third personswho have
acquiredthething,inaccordancewithArticles1385and1388andtheMortgageLaw.
Reciprocalobligationsarethosewhicharisefromthesamecause,andinwhicheach
party is a debtor and a creditor of theother, such that theobligationof one is dependent
upontheobligationoftheother.[60]
Theyaretobeperformedsimultaneouslysuchthatthe
performanceofoneisconditioneduponthesimultaneousfulfillmentoftheother.[61]
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TherightofrescissionofapartytoanobligationunderArticle1191ispredicatedon
abreachoffaithbytheotherpartywhoviolatesthereciprocitybetweenthem.[62]
Acontractofsaleisareciprocalobligation.Thesellerobligatesitselftotransferthe
ownershipofanddeliveradeterminatething,andthebuyerobligatesitselftopaytherefora
pricecertaininmoneyoritsequivalent.[63]
Thenonpaymentofthepricebythebuyerisaresolutory condition which extinguishes the transaction that for a time existed, and
discharges the obligations created thereunder.[64]
Such failure to pay the price in themannerprescribedbythecontractofsaleentitlestheunpaidsellertosueforcollectionorto
rescindthecontract.[65]
Inthecaseatbar,ElDoradoalreadyperformeditsobligationthroughtheexecutionof
theMarch23,1972DeedofSaleofRealPropertywhicheffectivelytransferredownershipofthepropertytoCarrascoso.Thelatter,ontheotherhand,failedtoperformhiscorrelativeobligationofpaying in full thecontractprice in themannerandwithin theperiodagreedupon.
ThetermsoftheDeedareclearandunequivocal:Carrascosowastopaythebalance
ofthepurchasepriceofthepropertyamountingtoP1,300,000.00plusinterestthereonattherateof10%perannumwithinaperiodofthree(3)yearsfromthesigningofthecontractonMarch23,1972.WhenJoseLevisteinformedhimthatElDoradowasseekingrescissionofthecontractby letterofFebruary21,1977, theperiodgiven tohimwithinwhich to fullysatisfyhisobligationhadlonglapsed.
The El Dorado Board Resolution and the Affidavit of Jose Leviste interposing no
objectiontoCarrascososmortgagingofthepropertytoanybankdidnothavetheeffectofsuspendingtheperiodtofullypaythepurchaseprice,asexpresslystipulatedin theDeed,pendingfullpaymentofanymortgageobligationofCarrascoso.
AstheCAcorrectlyfound:
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Theadverted resolution (Exhibit2)doesnot say that theobligationofCarrascoso to
paythebalancewasextended.NeithercanWeseeinitanythingthatcanlogicallyinfersaidaccommodation.
A partially unpaid seller can agree to the buyersmortgaging the subject of the sale
without changing the time fixed for the payment of the balance of the price. The twoagreementsarenotincompatiblewitheachothersuchthatwhenoneistobeimplemented,theotherhas tobesuspended. In thecaseatbench, therewasno impediment forCarrascoso topaythebalanceofthepriceaftermortgagingtheland.
Also,ElDoradossubordinatingitspreferredclaimorwaivingitssuperiorvendorslien
overthelandinfavorofthemortgageeofsaidpropertyonlymeansthatinasituationwheretheunpaidpriceoftheLandandloansecuredbythemortgageovertheLandbothbecomedueand demandable, the mortgagee shall have precedence in going after the Land for thesatisfactionof the loan.Suchaccommodationsdonotnecessarily imply themodificationoftheperiodfixedinthecontractofsaleforthepaymentbyCarrascosoofthebalance.
The palpable purpose of El Dorado in not raising any objection to Carrascosos
mortgaging the landwas toeliminateany legal impediment to suchacontract.Thatwas sosuccinctly expressed in theAffidavit (Exhibit 2A) of President Feleciano (sic) Leviste. ElDoradosyieldingitssuperiorlienoverthelandinfavorofthemortgageewasplainlyintendedtoovercomethenaturalreluctanceoflendinginstitutionstoacceptalandwhosepricehasnot
yetbeenfullypaidascollateralofaloan.[66]
(Underscoringsupplied)
RespectingCarrascososinsistencethathewasgrantedverbalextensionswithinwhich
topaythebalanceofthepurchasepriceofthepropertybyElDoradosdirectorsandofficersJose and Angel Leviste, this Court finds the same unsubstantiated by the evidence onrecord.
ItbearsrecallingthatJoseLevistewroteCarrascoso,byletterofFebruary21,1977,
callinghisattentiontohisfailuretocomply,despitenumerousrequests,withhisobligationtopaytheamountofP1,300,000.00and10%annualinterestthereon,andadvisinghimthatwe would like to rescind the contract of sale. This letter reiterated the term of paymentagreedupon in theMarch23,1972DeedofSaleofRealPropertyandCarrascosossnoncompliancetherewith.
Carrascoso,harpingonJoseLevistesMarch10,1977lettertoLauroscounselwherein
he(JoseLeviste)statedthatsomeoftheDirectorsofthecorporationcouldnotseetheirwayclear in complyingwith the demands of [Lauro] and have failed to reach a consensus to
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bring the corresponding action for rescission of the contract against Dr. FernandoCarrascoso, argues that the extensions priorly given to him no doubt lead to the logical
conclusiononsomeofthedirectorsinabilitytofilesuitagainsthim.[67]
Theargumentisspecious.AstheCAfound,evenifsomeofficersofElDoradowere
initially reluctant to filesuitagainsthim, thesameshouldnotbe interpreted tomean thatthiswasbroughtaboutbyapriorextensionoftheperiodtopaythebalanceofthepurchasepriceofthepropertyassuchreluctancecouldhavebeenduetoamyriadofreasonstotallyunrelatedtotheperiodofpaymentofthebalance.
The bottomline however is, if El Dorado really intended to extend the period of
paymentofthebalancetherewasabsolutelynoreasonwhyitdidnotdoitinwritinginclearand unmistakable terms. That there is no suchwriting negates all the speculations of thecourtaquoandpretensionsofCarrascoso.
xxx
TheunalterablefacthereremainsthatonMarch23,1973,withorwithoutdemand,theobligationofCarrascosotopayP519,933.33becamedue.ThesamewastrueonMarch23,1974andonMarch23,1975forequalamounts.Sincehedidnotperformhisobligationunder the contract of sale, he, therefore, breached it. Having breached the contract, El
Doradoscauseofactionforrescissionofthatcontractarose.[68]
(Underscoringsupplied)
Carrascosogoesontoarguethattheappellatecourterredinignoringtheimportofthe
warrantyofnontenancyexpresslystipulated in theMarch23,1972DeedofSaleofRealProperty.HeallegesthatonMarch8,1972ortwoweekspriortotheexecutionoftheDeedofSale,hediscovered,whileinspectingthepropertyonboardahelicopter,thattherewerepeopleandcattleintheareawhenheconfrontedElDoradoaboutit,hewastoldthatthe
occupants were caretakers of cattle who would soon leave[69]
four months after theexecutionof theDeedofSale,upon inquirywith theBureauofLandsand theBureauofSoils,hewasinformedthattherewerepeopleclaimingtobetenantsincertainportionsof
theproperty[70]
andhe thusbrought thematteragain toElDoradowhich informedhim
thattheoccupantswerenottenantsbutsquatters.[71]
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Carrascosonowalleges that as a result ofwhat he concludes tobe a breachof thewarrantyofnontenancycommittedbyElDorado,he incurredexpenses in theamountofP2,890,000.00 for which he should be reimbursed, his unpaid obligation to El Dorado
amountingtoP1,300,000.00tobedeductedtherefrom.[72]
The breach of an express warranty makes the seller liable for damages.[73]
Thefollowing requisites must be established in order that there be an express warranty in acontractofsale:(1)theexpresswarrantymustbeanaffirmationoffactoranypromisebythe seller relating to the subject matter of the sale (2) the natural tendency of suchaffirmation or promise is to induce the buyer to purchase the thing and (3) the buyer
purchasesthethingrelyingonsuchaffirmationorpromisethereon.[74]
UndertheMarch23,1972DeedofSaleofRealProperty,ElDoradowarranted that
thepropertywasnotbeingcultivatedbyanytenantandwas,andtherefore,notcoveredbytheprovisionsoftheLandReformCode.IfCarrascosowouldbecomeliableunderthesaidlaw,hewouldbereimbursedforallexpensesanddamagesincurredthereon.
Carrascoso claims to have incurred expenses in relocating persons found on the
propertyfourmonthsaftertheexecutionoftheDeedofSale.Apartfromsuchbareclaim,
therecordsarebereftofanyproofthatthosepersonswereindeedtenants.[75]
Thefactof
tenancy[76]
nothavingbeenpriorlyestablished,[77]
ElDoradomaynotbeheldliableforactualdamages.
Carrascosofurtherarguesthatboththetrialandappellatecourtserredinholdingthat
thesaleofthe1,000hectareportionofthepropertytoPLDT,aswellasitssubsequentsaletoPLDTAC,issubjecttotheMarch15,1977NoticeofLisPendens.
PLDTadditionallyarguesthattheCAincorrectlyignoredtheAgreementtoBuyand
SellwhichitenteredintowithCarrascosoonJuly11,1975,positingthattheefficacyofitspurchasefromCarrascoso,uponhisfulfillmentof theconditionit imposedresultinginitsdecision to formalize their transaction and execute the April 6, 1977 Deed of Sale,
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retroactedtoJuly11,1975orbeforetheannotationoftheNoticeofLisPendens.[78]
The pertinent portions of the July 11, 1975 Agreement to Buy and Sell betweenPLDTandCarrascosoread:
2. That theVENDOR hereby agrees to sell to theVENDEE and the latter hereby
agreestopurchasefromtheformer,1,000hectaresoftheabovedescribedparceloflandasshown in the map hereto attached as Annex A and made an integral part hereof and ashereaftertobemoreparticularlydeterminedbythesurveytobeconductedbyCerteza&Co.,at thepurchasepriceofP3,000.00perhectareorforatotalconsiderationofThreeMillionPesos(P3,000,000.00)payableincash.
3.That this contract shall be considered rescinded and cancelled and of no further
forceandeffect,uponfailureoftheVENDORtocleartheaforementioned1,000hectaresoflandof all theoccupants therein located,within aperiodofone (1)year from thedateofexecutionofthisAgreement.However,theVENDEEshallhavetheoptiontoextendthelifeofthisAgreementbyanothersixmonths,duringwhichperiodtheVENDEEshalldefinitelyinformtheVENDORofitsdecisiononwhetherornottofinalizethedeedofabsolutesalefortheaforementioned1,000hectaresofland.
The VENDOR agrees that the amount of P500.00 per family within the
aforementioned1,000hectaresoflandshallbespentbyhimforrelocationpurposes,whichamount however shall be advancedby theVENDEEandwhich shall not exceed the totalamount of P120,000.00, the same to be thereafter deducted by the VENDEE from theaforementionedpurchasepriceofP3,000,000.00.
TheaforementionedadvanceofP120,000.00shallberemittedbytheVENDEEtothe
VENDORuponthesigningofthisAgreement.
xxx
It is likewisefurtheragreedthat theVENDEEshallhavetherighttoenterintoanypartoftheaforementioned1,000hectaresatanytimewithintheperiodofthisAgreementforpurposesofcommencingthedevelopmentofthesame.
xxx
5.Titletotheaforementionedlandshallalsobeclearedofallliensorencumbrances
andif thereareanyunpaid taxes,existingmortgages, liensandencumbrancesonthe land,thepaymentstobemadebytheVENDEEtotheVENDORofthepurchasepriceshallfirstbeappliedtoliquidatesaidmortgages, liensand/orencumbrances,suchthatsaidpaymentsshallbemadedirectlytothecorrespondingcreditors.Thus,thebalanceofthepurchasepricewill be paid to the VENDOR after the title to the land is cleared of all such liens andencumbrances.
xxx
7.TheVENDORagreesthat,duringtheexistenceofthisAgreementandwithoutthepreviouswrittenpermissionfromtheVENDEE,heshallnotsell,cede,assignand/ortransfer
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theparceloflandsubjectofthisAgreement.[79]
Anoticeof lispendens isanannouncement to thewholeworld thataparticular real
propertyisinlitigation,andservesasawarningthatonewhoacquiresaninterestoversaidpropertydoessoathisownrisk,orthathegamblesontheresultofthelitigationoversaid
property.[80]
Onceanoticeoflispendenshasbeendulyregistered,anycancellationorissuanceof
titleover the land involvedaswellasanysubsequent transactionaffecting thesamewouldhavetobesubjecttotheoutcomeofthesuit.Inotherwords,apurchaserwhobuysregisteredlandwith fullnoticeof the fact that it is in litigationbetween thevendoranda thirdpartystands in the shoes of his vendor and his title is subject to the incidents and result of the
pendinglitigation.[81]
xxxNoticeoflispendenshasbeenconceivedand,moreoftenthannot,availedof,to
protect the real rights of the registrant while the case involving such rights is pendingresolution or decision.With the notice of lis pendens duly recorded, and while it remainsuncancelled,theregistrantcouldrestsecurethathewouldnotlosethepropertyoranypartofitduringthelitigation.
Thefilingofanoticeoflispendensineffect(1)keepsthesubjectmatteroflitigation
withinthepowerofthecourtuntiltheentryofthefinaljudgmentsoastopreventthedefeatofthe latter by successive alienations and (2) binds a purchaser of the land subject of thelitigationtothejudgmentordecreethatwillbepromulgatedthereonwhethersuchapurchaserisabonafidepurchaserornotbut(3)doesnotcreateanonexistentrightorlien.
Thedoctrineoflispendensisfoundeduponreasonofpublicpolicyandnecessity,the
purposeofwhichistokeepthesubjectmatterofthelitigationwithinthepowerofthecourtuntil the judgment or decree shall have been entered otherwise by successive alienationspending the litigation, its judgment or decree shall be rendered abortive and impossible ofexecution. The doctrine of lis pendens is based on considerations of public policy andconvenience,which forbid a litigant togive rights toothers, pending the litigation, so as toaffect the proceedings of the court then progressing to enforce those rights, the rule beingnecessary to the administration of justice in order that decisions in pending suits may bebindingandmaybegivenfulleffect,bykeepingthesubjectmatterincontroversywithinthepower of the court until final adjudication, that there may be an end to litigation, and topreservethepropertythatthepurposeofthependingsuitmaynotbedefeatedbysuccessive
alienationsandtransfersoftitle.[82]
(Italicsintheoriginal)
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InrulingagainstPLDTandPLDTAC,theappellatecourtheld:
PLDTandPLDTACarguethatinrealitytheFarmwasboughtbytheformeronJuly11, 1975whenCarrascoso and it entered into theAgreement toBuy andSell (Exhibit 15).How can an agreement to buy and sell which is a preparatory contract be the same as acontractofsalewhichisaprincipalcontract?IfPLDTscontentioniscorrectthatitboughttheFarmon July11,1975,whydid itbuy the samepropertyagainonApril6,1977?There issimplynowayPLDTandPLDTACcanextricatethemselvesfromtheeffectsofsaidNoticeofLisPendens.ItisadmittedthatPLDTtookpossessionoftheFarmonJuly11,1975aftertheexecutionoftheAgreementtoBuyandSellbutitdidsonotasownerbutasprospectivebuyeroftheproperty.Asprospectivebuyerwhichhadactualon(sic)constructivenoticeofthelispendens,whydiditpursueandgothroughwiththesaleifithadnotbeenwillingtogamble
withtheresultofthiscase?[83]
(Underscoringsupplied)
Further,initsJuly8,2004Resolution,theCAheld:
PLDTcannotshielditselffromthenoticeoflispendensbecauseallthatithadatthetimeof its inscriptionwas anAgreement toBuy andSellwithCARRASCOSO,which ineffectisamerecontracttosellthatdidnotpasstoittheownershipoftheproperty.
xxx
Ownershipwas retained byCARRASCOSOwhich ELDORADOmay verywell recoverthroughitsactionforrescission.
xxx
PLDTs possession at the time the notice of lis pendens was registered not being a legalpossessionbasedonownershipbutamerepossessioninfactandtheAgreementtoBuyandSellunderwhichitsupposedlytookpossessionnotbeingregistered,itisnotprotectedfromanadverse judgment thatmayberendered in thecasesubjectof thenoticeof lis pendens.[84]
(Underscoringsupplied)Inacontractofsale,thetitlepassestothevendeeuponthedeliveryofthethingsold
whereasinacontracttosell,ownershipisnottransferredupondeliveryofthepropertybut
uponfullpaymentofthepurchaseprice.[85]
Intheformer,thevendorhaslostandcannotrecover ownership until and unless the contract is resolved or rescinded whereas in thelatter,titleisretainedbythevendoruntilthefullpaymentoftheprice,suchpaymentbeinga positive suspensive condition and failure of which is not a breach but an event that
preventstheobligationofthevendortoconveytitlefrombecomingeffective.[86]
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PLDT argues that the July 11, 1975 Agreement to Buy and Sell is a conditional
contractof sale, thus calling for the applicationofArticles1181[87]
and1187[88]
of the
CivilCodeasheldinCoronelv.CourtofAppeals.[89]
TheCourtisnotpersuaded.For in a conditional contract of sale, if the suspensive condition is fulfilled, the
contractofsaleistherebyperfected,suchthatiftherehadalreadybeenpreviousdeliveryofthepropertysubjectofthesaletothebuyer,ownershiptheretoautomaticallytransferstothe
buyerbyoperationoflawwithoutanyfurtheracthavingtobeperformedbytheseller.[90]
Whereasinacontracttosell,uponfulfillmentofthesuspensivecondition,ownershipwillnot automatically transfer to the buyer although the property may have been previouslydeliveredtohim.Theprospectivesellerstillhastoconveytitletotheprospectivebuyerby
enteringintoacontractofabsolutesale.[91]
Aperusalofthecontract[92]
advertedtoinCoronelrevealsmarkeddifferencesfromtheAgreementtoBuyandSellinthecaseatbar.IntheCoronelcontract,therewasaclearintentonthepartofthethereinpetitionerssellerstotransfertitletothethereinrespondentbuyer.IntheJuly11,1975AgreementtoBuyandSell,PLDTstillhadtodefinitelyinformCarrascoso of its decision onwhether or not to finalize the deed of absolute sale for the1,000hectareportionoftheproperty,suchthatintheApril6,1977DeedofAbsoluteSalesubsequentlyexecuted,thepartiesdeclaredthattheyarenowdecidedtoexecutesuchdeed,indicating that theAgreement toBuy andSellwas, as the appellate court held,merely apreparatory contract in the nature of a contract to sell. In fact, the parties even had tostipulateinthesaidAgreementtoBuyandSellthatCarrascoso,duringtheexistenceoftheAgreement, shallnot sell, cede,assignand/or transfer theparcelof land,whichprovision
thisCourthasheldtobeatypicalcharacteristicofacontracttosell.[93]
Beingacontracttosell,whatwasvestedbytheJuly11,1975AgreementtoBuyand
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SelltoPLDTwasmerelythebeneficialtitletothe1,000hectareportionoftheproperty.
The right of Daniel Jovellanos to the property under the contract [to sell] withPhilamlifewasmerelyaninchoateandexpectantrightwhichwouldripenintoavestedrightonlyuponhisacquisitionofownershipwhich,asaforestated,wascontingentuponhis fullpayment of the rentals and compliance with all his contractual obligations thereunder. Avested right is an immediate fixed right of present and future enjoyment. It is to bedistinguished from a right that is expectant or contingent. It is a right which is fixed,unalterable,absolute,completeandunconditionaltotheexerciseofwhichnoobstacleexists,andwhich is perfect in itself andnot dependent upon a contingency.Thus, for a propertyright tobevested, theremustbea transitionfromthepotentialorcontingent to theactual,and the proprietary interest must have attached to a thing it must have become fixed or
establishedandisnolongeropentodoubtorcontroversy.[94]
(Underscoringsupplied)
In thecaseatbar, theJuly11,1975Agreement toBuyandSellwasnotregistered,
whichactofregistrationis