Case Digest (G.R. No. 70310-11)
Facts:
Massive Construction, Inc., Enrique P. Syquia, Ramon P. Syquia, Jose Ma. Mendieta, Jaime Santamaria, and Jesus P. Syquia v. The Honorable Intermediate Appellate Court and Jaime C. Uy, G.R. Nos. 70310-11, June 01, 1993, Supreme Court First Division, Bellosillo, J., writing for the Court.The dispute springs from an Agreement dated December 16, 1971 under which Jaime C. Uy (First Party) agreed to purchase the entire outstanding shares of Massive Construction, Inc. (MASSIVE) from its stockholders (Second and Third Parties) for P250,000, subject to staged payments and other reciprocal obligations. The Agreement required Uy to pay P20,000 as earnest money upon signing, to pay an additional P30,000 on or before January 5, and to make monthly P50,000 installments thereafter; it also required Uy immediately to make available materials and capital for on‑going projects (paragraph 3(h)), and contemplated that upon payment of the initial P20,000 the sellers would transfer P25,000 worth of shares and elect Uy as director.
MASSIVE had existing projects requiring roughly P100,000 in materials. Uy issued a postdated check for P20,000 which bounced but he later paid P20,000 in cash on December 29, 1971; however he borrowed P2,000 from that amount and later was sued in the City Court of Manila for the unpaid P2,000. Uy delivered only P6,085.69 worth of materials to MASSIVE instead of the substantial supplies promised. MASSIVE sent demand letters (14 and 18 January 1972) complaining of Uy’s nonperformance; Uy replied contending he was relieved from paying the P30,000 installment because the stockholders failed to deliver the P25,000 worth of shares and to elect him director.
Two civil actions followed. In Civil Case No. 87006 (Massive v. Uy), the Court of First Instance of Manila found Uy breached paragraph 3(h) by failing to supply the needed materials and funds, awarded MASSIVE P20,000 for the Republic Flour Mills project, P80,000 for the Queens Row Subdivision project, and P10,000 attorneys’ fees, and denied recovery for the B.F. Homes project; the trial court reserved the question of rescission to Civil Case No. 87511. In Civil Case No. 87511 (Uy v. Enrique P. Syquia, et al.), the trial court held Uy entered the Agreement freely, found no fraud or undue influence by the stockholders and no concealment of the corporation’s finances, and declined to award monetary damages because it could not determine which party first defaulted.
Uy appealed both judgments to the Court of Appeals. The Court of Appeals reversed both trial-court decisions, concluding the stockholders of MASSIVE were the first to default by failing to assign the P25,000 worth of shares and to elect Uy director; it ordered MASSIVE to refund Uy the P20,000 and to pay P6,085.69 (materials) plus P5,000 attorneys’ fees and costs, and made the stockholders subsidiarily liabl...(Subscriber-Only)
Issues:
- Did the Court of Appeals commit reversible error in its factual findings and conclusions by holding that the stockholders of MASSIVE were the first to default?
- Was the rescission/monetary relief ordered by the Court of Appeals warranted on the facts, or should the trial-court awards and dismissal of monet...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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