Case Digest (G.R. No. 85869)
Case Digest (G.R. No. 85869)
Facts:
The National Irrigation Administration (NIA) v. Estanislao Gamit, G.R. No. 85869, November 06, 1992, the Supreme Court First Division, Padilla, J., writing for the Court.The plaintiff/respondent Estanislao Gamit sued the defendant/petitioner National Irrigation Administration (NIA) in the Regional Trial Court (RTC) of Roxas, Isabela (Civil Case No. 4), filing on January 23, 1985 a complaint for reformation of contract, recovery of possession and damages. Gamit alleged that on June 6, 1975 he and NIA (through its Magat River Multi-Purpose Project officers) executed a written Contract of Lease With Right to Purchase covering 30,000 sq. m. (25,000 sq. m. expressly leased), that certain stipulations (paragraphs 4, 8 and 9) were surreptitiously inserted making rentals part of the purchase price and fixing the price at P25,000, and that he signed under mistake, financial distress and undue influence. He sought reformation to reflect the parties’ true agreement (lease for ten years with option to negotiate price later), possession of the 5,000 sq. m. allegedly occupied beyond the lease, damages, and attorneys’ fees.
NIA answered denying fraud and mistake, maintaining the written contract reflected the parties’ agreement and asserting defenses including that money claims against the State should first be presented to the Commission on Audit and that administrative remedies were not exhausted. After pre-trial the RTC issued an order finding no genuine issue of material fact and, invoking Section 3, Rule 20 (summary judgment), the trial court on March 20, 1986 held the agreement to be a lease with right to purchase (not a sale), declared the clause making rentals the purchase price illegal as pactum commissorium, and denied reformation as unnecessary because the contract had already expired; the court also awarded specified damages and attorney’s fees.
NIA appealed to the Court of Appeals (docketed CA-G.R. CV No. 11538). On November 14, 1988 the Court of Appeals affirmed with modification: if NIA exercised its option the total purchase price for the 2.5 hectares was P25,000 and it reduced attorney’s fees to P30,000. NIA filed a petition for review on certiorari with the Supreme Court seeking further relief, framing three issues concerning proper interpretation of the contract, whether the rentals-as-purchase-price stipulation (pactum commissorium) was null and void, and whether damages and attorney’s fees were properly awarded. The Supreme Court resolved the case by setting aside the decisions below and remanding for trial.
Issues:
- Whether the Court of Appeals properly interpreted the contract and whether the RTC correctly resolved the case without trial by summary judgment.
- Whether the stipulation that rentals paid shall be considered part of the purchase price is null and void as a pactum commissorium.
- Whether the Court of Appeals erred in awarding damages and attorney’s fees.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)