Case Summary (G.R. No. 196251)
Contract Terms and Conditions
• Total Purchase Price: ₱19,080,490.00
• Down Payment: ₱5,000,000.00 in scheduled monthly installments (April–November 2000)
• Balance: ₱14,080,490.00 payable in 30 equal monthly installments, beginning upon judicial voiding of PTA’s title
• Petitioner’s Obligations:
– File legal action to annul PTA’s title (Paragraph C)
– Pay disturbance compensation to legitimate tenants (up to ₱1,500,000; separate from purchase price)
• Respondent’s Obligations:
– Assist in the case against PTA
– Clear tenants from the land within six months of contract signing (April 5–October 5, 2000)
• Possession and Improvements:
– Immediate possession to purchaser; forfeiture of improvements upon contract cancellation (Paragraph I)
Procedural History
- Castillo filed for rescission (September 2, 2004) citing petitioner’s failure to:
– Fully pay purchase price (only ₱2,500,000 paid)
– File action against PTA
– Clear tenants and pay disturbance compensation - Petitioner’s Answer raised affirmative defenses:
– Castillo failed to assist in suing PTA
– Castillo failed to clear tenants
– Alleged subsequent sale of property to a third party - Castillo moved for summary judgment (March 8, 2006); attached affidavits establishing no genuine issue of material fact
- Trial Court granted summary judgment (April 23, 2007):
– Rescinded contract; forfeited ₱2,500,000 to Castillo
– Awarded ₱500,000 moral, ₱50,000 exemplary damages, and ₱50,000 costs - Court of Appeals affirmed in toto (July 20, 2010); denied reconsideration (March 18, 2011)
- Petitioners filed certiorari with the Supreme Court raising two issues:
– Validity of summary judgment
– Jurisdiction based on docket fees
Applicable Law
• 1987 Philippine Constitution (due process)
• Rule 35, Rules of Civil Procedure (summary judgment; no genuine issue of material fact)
• Rule 34, Rules of Civil Procedure (judgment on the pleadings)
• Civil Code Articles on obligations and sales (Arts. 1179, 1191, 1193, 1315)
• Civil Code Articles on damages (Arts. 2208, 2217, 2229, 2232)
Issues for Resolution
- Whether the trial court correctly rendered summary judgment
- Whether the correct docket fees were paid, thereby conferring jurisdiction
Supreme Court’s Analysis and Findings
• Petitioner’s defenses were “sham” or unsubstantial because the deed of conditional sale expressly assigned to it the duty to sue PTA and to pay disturbance compensation. Castillo’s alleged failure to assist did not excuse petitioner’s nondelivery of these obligations.
• The obligations to pay disturbance compensation (pure obligation; immediately demandable) and to clear tenants within six months (obligation with resolutory period) were distinct but both fell due without condition. Petitioner breached by withholding payments prematurely.
• Petitioner’s claim of a subsequent sale was unsupported and lacked detail, thus not a genuine issue of fact.
• Castillo’s alternative prayer for reformation and rescission did not mandate dismissal; alternative or hypothetical claims are permissible under Rule 8.
• The summary judgment procedure under Rule 35 was correctly invoked and followed. All material facts were established in affidavits and pleadings, justifying dispensation of trial.
• The contract was properly classified as a contract to sell (title transfers only upon execution of a deed of absolute sale after full payment), not a conditional sale. Remedies for failure to pay in a con
Case Syllabus (G.R. No. 196251)
Facts
- Benjamin Castillo owned a 346,918-square-meter parcel of land in Laurel, Batangas (TCT No. T-19972), which the Philippine Tourism Authority also claimed under TCT No. T-18493.
- On April 5, 2000, Castillo and Olivarez Realty Corporation (represented by Dr. Pablo R. Olivarez) executed a deed of conditional sale for ₱19,080,490.00.
- The contract provided a ₱5,000,000.00 down payment in scheduled installments from April to November 2000, with the remaining ₱14,080,490.00 payable in 30 monthly installments after a court decision voiding the PTA’s title.
- Under paragraph C, Olivarez Realty Corporation assumed the obligation to file suit against the PTA (with Castillo’s assistance), and if the suit failed, Castillo would reimburse all amounts paid.
- Paragraphs E and F addressed legitimate tenants and fishermen: the corporation would pay disturbance compensation (capped at ₱1,500,000.00, excluded from the purchase price) and Castillo would clear the land within six months, failing which the corporation could suspend payments.
- Paragraph I entitled the corporation to immediate possession and development, with forfeiture of improvements in favor of Castillo upon contract cancellation.
Procedural History
- September 2, 2004: Castillo filed for rescission under Article 1191 before the RTC of Tanauan City, alleging:
- The corporation paid only ₱2,500,000.00.
- It did not file action to void the PTA title or clear tenants and pay disturbance compensation.
- The deed was a contract of adhesion, prepared and explained inadequately by Dr. Olivarez.
- Defendants admitted partial payment but defended on grounds that Castillo failed to assist in the PTA suit and to clear tenants, and claimed a separate sale to a third party. They counterclaimed for litigation expenses (₱100,000.00) and attorney’s fees (₱50,000.00).
- Discovery included requests for admission on the deed’s genuineness, factual undertakings, and depositions.
- March 8, 2006: Castillo moved for summary judgment/judgment on the pleadings, submitting affidavits attesting to breach. Defendants opposed, asserting genuine issues and contract