Title
Cabral vs. Court of Appeals
Case
G.R. No. 50702
Decision Date
Sep 29, 1989
Buyers sued sellers for refund after discovering land area discrepancy; Supreme Court upheld refund, reduced interest rate to 6% due to void sale.
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Case Digest (G.R. No. 50702)

Facts:

Background of the Case: The case originated from a complaint filed by Clemente Barachina and Socorro Alcaraz (respondents) against Alfredo Cabral, Salome Delloro-Cabral, and Policarpio Calma, Jr. for Recovery of Sum of Money and Damages before the Court of First Instance of Camarines Sur.

Transaction Details: The defendants sold a parcel of land covered by Original Certificate of Title No. 22945 to the respondents for ₱36,000.00. The payment was to be made in installments, with ₱26,000.00 allocated to Calma and ₱10,000.00 to the Cabrals. Upon signing the deed of sale, the Cabrals received and encashed a check for ₱10,000.00, while Calma received ₱1,920.00.

Discrepancy in Land Area: The land was supposed to have an area of 14.3733 hectares, as stated in the title. However, when the buyers attempted to take possession, they discovered that Mrs. Loreto Manubay occupied the greater portion of the property. A survey revealed that only about four (4) hectares were available for possession, contrary to the title’s representation.

Demand for Refund: Due to the discrepancy, the respondents sought the return of the ₱10,000.00 paid to the Cabrals and the ₱1,920.00 paid to Calma.

Trial Court Decision: The trial court ordered the defendants to pay the respondents ₱11,920.00, ₱1,000.00 for survey expenses, and ₱1,000.00 as attorney’s fees.

Appeal to the Court of Appeals: Only the Cabrals appealed the trial court’s decision. The Court of Appeals affirmed the decision but added an award of 12% interest per annum on the ₱11,920.00, starting from February 27, 1968, until full payment.

Issue:

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Ruling:

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Ratio:

  1. Award of Interest: Although the trial court did not award interest and the respondents did not appeal the omission, the Court of Appeals had the discretion to award interest under Article 2210 of the Civil Code, which allows interest on damages awarded for breach of contract. However, the Supreme Court ruled that the legal interest rate should be 6% per annum, not 12%, as the case did not involve a loan or forbearance of recovery.

  2. Refund of Payment: The sale was void ab initio because the land was a Free Patent issued within the five-year prohibition period. Consequently, the defendants had no title to the money received, and the obligation to refund it arose. The Court cited jurisprudence (Dauan vs. Secretary of Agriculture and Natural Resources and Castillo vs. Abalanta) supporting the return of the purchase price with interest.

  3. Liberal Application of Rules: The Supreme Court adopted a liberal stance, emphasizing that litigations should be decided on their merits rather than technicalities. This approach justified the Court of Appeals’ award of interest despite the respondents not appealing the omission.


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