Case Digest (G.R. No. 158245)
Facts:
Miguelito B. Limaco, Rogelio Limaco, Jr., and Isidro Limaco v. Shonan Gakuen Children's House Philippines, Inc., G.R. No. 158245, June 30, 2005, the Supreme Court Second Division, Puno, J., writing for the Court. Petitioners (the Limacos) are the registered owners of three parcels of agricultural land in Bay, Laguna, and on May 19, 1988 entered into a Contract of Sale with respondent Shonan Gakuen Children's House Philippines, Inc. for P12,531,720.00. The contract provided a down payment of P1,200,000.00 and seven equal installments for the balance; it also contained a clause that, if transfer could not be effected, all paid amounts would be applied to another similar property owned by the vendors.Pursuant to the contract, respondent paid the P1,200,000.00 down payment but withheld further installments because petitioners had not secured clearance or approval from the Department of Agrarian Reform (DAR) and tenant farmers occupied the land. DAR advised a donation scheme to effect transfer, which respondent found unacceptable and instead asked petitioners to substitute another untenanted property or return the down payment. When petitioners did not comply, respondent demanded return of the down payment and filed a complaint for rescission with the Regional Trial Court (RTC) of Makati (Civil Case No. 89-2939, Branch 132) on January 19, 1989.
On February 1, 1989 petitioners (with the tenant farmers) filed a case for specific performance in the RTC of Laguna (Civil Case No. 25, Branch 25). Respondent first moved to dismiss for litis pendentia but withdrew that motion after the Makati court dismissed its rescission complaint. In its answer with counterclaim in the Laguna RTC, respondent alleged specific performance was impossible because it had bought substitute property and sought rescission, refund of the P1,200,000.00 with interest, damages, and attorney’s fees. During trial the parties purportedly agreed on a compromise to return 50% (P600,000.00), but petitioners paid only P487,000.00, leaving a P113,000.00 shortfall.
Petitioners later moved to withdraw their complaint (July 9, 1996); the trial court denied the motion and dismissed the tenant farmers as plaintiffs, tried the case as to petitioners, and, after trial, rendered judgment on January 26, 1998 ordering petitioners to pay respondent P113,000.00 with legal interest. The trial court declared the sale void under Section 21, Article II of the 1987 Constitution and Section 6 of the Comprehensive Agrarian Reform Law (CARL), found the parties in pari delicto but applied estoppel and equitably limited recovery to the P113,000.00 balance.
Respondent appealed to the Court of Appeals (CA). The CA held that Section 21, Article II is a non-self-executing statement of state policy and thus cannot, by itself, void contracts, but affirmed voidness of the contract under Section 6 of the CARL for failure to register the contract within the three-month period required by law. The CA rejected the trial court’s pari delicto finding, applied the rule against unjust enrichment, and ordered petitioners to return P713,000.00 (P1,200,000.00 less P487,000.00 already paid), with interest; it denied exemplary dama...(Pro-only)
Issues:
- Was respondent’s counterclaim properly retained and adjudicated by the trial court, or should it have been dismissed upon petitioners’ motion to withdraw the complaint?
- Are petitioners liable to respondent for the return of the down payment?
- If liable, what is the extent of petitioners’ res...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)