Case Digest (G.R. No. 188467)
Facts:
Renato Ma. R. Peralta v. Jose Roy Raval, G.R. Nos. 188467 and 188764, March 29, 2017, Supreme Court Third Division, Reyes, J., writing for the Court.The dispute arises from a 1974 40-year lease of two residential lots (Lot Nos. 9128-A and 9128-B) owned by spouses Flaviano and Magdalena Arzaga to Renato Ma. R. Peralta (lessee). The lease required monthly rentals, construction of improvements (which would become lessors’ property upon termination), payment of realty taxes, and development of a water system. In 1988 Flaviano Arzaga, Jr. (the lone heir) sued Peralta for annulment of the lease; that action was dismissed by the RTC in 1990 and that dismissal was affirmed by the Court of Appeals in CA-G.R. CV No. 30396 (no appeal to the Supreme Court).
In 1995 Flaviano Jr. executed a notarized Deed of Assignment conveying all his rights and interests in the lots to Jose Roy B. Raval for P500,000. Raval began demanding compliance with the lease in 1995; Peralta, however, deposited rental payments into bank accounts opened by his wife marked “Gloria F. Peralta ITF: Flaviano Arzaga, Jr.” Raval pressed extrajudicial demands and barangay conciliation, and in 1998 filed a complaint for rescission of lease against Peralta, alleging breaches including failure to render accounting, failure to vacate the second floor, unauthorized improvements, failure to provide the water system, and refusal to refund taxes.
Peralta challenged Raval’s capacity to sue based on the assignment’s validity, denied breach, and counterclaimed for moral, exemplary damages and attorney’s fees. The Regional Trial Court (RTC), Branch 14, Laoag City, dismissed Raval’s complaint and Peralta’s counterclaim (May 17, 2005), finding among others that Peralta had been depositing rentals into ITF bank accounts and that breaches alleged were minor. Raval and Peralta separately appealed to the Court of Appeals (CA).
The CA, in CA-G.R. CV No. 85685 (Oct. 8, 2008), affirmed with modification: it denied rescission as impracticable but held the Deed of Assignment valid and awarded Raval unpaid rentals from August 1998 to present, 12% interest, and P10,000 moral damages; it dismissed Peralta’s appeal. Both parties’ motions for reconsideration at the CA were denied (Resolution, June 30, 2009). Thereafter Raval and Peralta filed consolidated petitions for review o...(Pro-only)
Issues:
- Is Raval a proper real party in interest and is the Deed of Assignment valid such that it cannot be collaterally attacked in this rescission action?
- Did Raval’s action for rescission prescribe when filed in 1998?
- Should rescission be granted, or alternatively, was the CA correct to award unpaid rentals and moral damages to Raval?
- Was Peralta entitled to his counterclaim for moral, exe...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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