Facts:

The case involves Lomises Aludos, who was substituted by his wife Flora Aludos after his death, as the petitioner against Johnny M. Suerte, the respondent. The events leading to the case began in January 1969 when Lomises acquired the right to occupy two stalls in the Hangar Market in Baguio City, supported by a permit from the City Treasurer. On September 8, 1984, Lomises entered into an agreement with Johnny for the transfer of all improvements and rights over the two market stalls (Stall Nos. 9 and 10) for a total price of P260,000. Johnny made an initial down payment of P45,000, which Lomises acknowledged in a receipt. By the end of 1984, Johnny had paid a total of P68,000 towards the purchase price. However, before the full payment could be completed, Lomises decided to back out of the agreement and returned the P68,000 to Johnny's parents, Domes and Jaime Suerte, as documented in a handwritten receipt dated October 9, 1985.

Following this, Johnny protested the re...

Facts:

Acquisition of Market Stalls
In January 1969, Lomises Aludos acquired the right to occupy two stalls (Stall Nos. 9 and 10) in the Hangar Market in Baguio City through a permit issued by the City Treasurer.

Agreement with Johnny Suerte
On September 8, 1984, Lomises entered into an agreement with Johnny M. Suerte to transfer all improvements and rights over the two stalls for P260,000. Johnny paid a down payment of P45,000, evidenced by a receipt signed by Lomises and his wife, Flora. A subsequent payment of P23,000 was made, totaling P68,000.

Return of Payment and Dispute
Before full payment, Lomises backed out of the agreement and returned the P68,000 to Johnny’s parents, Domes and Jaime Suerte, on October 9, 1985. Johnny protested the return and demanded the enforcement of the agreement. When Lomises refused, Johnny filed a complaint for specific performance with damages before the Regional Trial Court (RTC).

RTC Decision
The RTC nullified the agreement on November 24, 1998, ruling that the assignment of leasehold rights required the consent of the Baguio City Government, which was not obtained. The court ordered Lomises to return the down payment with 12% interest and dismissed both parties’ claims for damages.

CA Decision
On appeal, the Court of Appeals (CA) upheld the RTC’s nullification of the leasehold rights assignment but ruled that the sale of improvements was valid. The CA remanded the case to the RTC to determine the value of the improvements.

Issue:

1. Whether the agreement between Lomises and Johnny was a contract of loan or a sale of improvements and assignment of leasehold rights.
2. Whether the sale of improvements was valid despite the nullity of the leasehold rights assignment.
3. Whether Lomises’ claim that the stalls themselves constituted the only improvements was supported by evidence.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)