G.R. No. 107737 - Perez vs. Court of Appeals

Case Summary (G.R. No. 107737)

Factual Background

The subject was a large parcel known as the Papaya Fishpond, covered by TCT No. 8498, located in Sto. Rosario, Hagonoy, Bulacan, held in usufruct by several persons including petitioner Juan L. Perez and others. In 1975 the usufructuaries leased the fishpond to Luis Keh for five years with a renewal option for another five years and a contractual prohibition against subleasing or assignment. In late 1977 and early 1978 respondent Luis Crisostomo agreed to take over operation of the fishpond, paid P75,000 and later additional sums that together satisfied the annual rental then agreed to, and received a receipt dated June 6, 1978 acknowledging payment of P150,000 for the June 1978–May 1979 year that bore the notation “JUAN L. PEREZ ET AL. By: (Sgd.) Rosendo G. Tansinsin, Jr.” Respondent Crisostomo expended P486,562.65 in repairs and improvements. In June 1979 usufructuaries asserted their right to possession, armed men confronted Crisostomo, and he filed Civil Case No. 5610-M for injunction and damages on June 14, 1979.

Trial Court Proceedings

The Court of First Instance of Bulacan (later Regional Trial Court, Branch 9) issued a temporary restraining order on June 14, 1979 but lifted it on January 11, 1980. The parties entered partial stipulations regarding the deposit of rental funds and the supervised harvest and deposit of proceeds, approved by the court on February 14, 1980. On September 6, 1989 the trial court found for plaintiff Luis Crisostomo, concluded that the defendants conspired to defraud him and wrongfully deprived him of possession, and awarded relief including direction to allow Crisostomo to occupy and operate the fishpond for a specified period at stated rental rates, awards of actual, moral and exemplary damages and attorneys’ fees, release of deposits held by the clerk and dismissal of defendants’ counterclaims.

Court of Appeals Decision

The Court of Appeals affirmed the trial court’s judgment on February 18, 1992, declared intervenor Vicente Asuncion a co-usufructuary, and sustained findings that defendants knew of and acquiesced in Crisostomo’s possession, that the receipts and conduct evidenced a scheme to induce him to improve the fishpond and then to dispossess him, and that appellants were liable for damages. The appellate court rejected the appellants’ contention that res judicata barred the action on account of an earlier certiorari proceeding (CA-G.R. No. 10415-R), and it allowed the intervention pro interesse suo of Asuncion to protect his usufructuary interest.

Subsequent Procedural History

Petitioners filed a motion for reconsideration before the Court of Appeals, which was denied on October 30, 1992. They then filed the present petition for review on certiorari under Rule 45 raising mainly points on res judicata, alleged prematurity of the CA decision for lack of service of intervenor’s brief, and the asserted legal status of Crisostomo as not being an assignee or sublessee.

Issues on Review

The issues framed for this Court were whether the appellate decision was erroneous as a matter of law in (a) failing to apply res judicata; (b) being prematurely promulgated because petitioners did not receive a copy of the intervenor’s brief prior to the decision; and (c) treating respondent Crisostomo as an assignee or transferee entitled to possess the fishpond or otherwise imposing liability on petitioners as a matter of law.

Petitioners’ Contentions

Petitioners maintained that the earlier appellate decision in CA-G.R. No. 10415 and the denial of certiorari in G.R. No. 64354 had already decided the possession issue against Crisostomo, invoking res judicata. They argued that the Court of Appeals’ promulgation was premature because intervenor Asuncion had not furnished them his brief, that Crisostomo was not a sublessee because the lease expressly prohibited assignment or sublease, and that material facts such as who paid the rental and the existence of a valid transfer to Crisostomo were matters of law the Court should correct.

Respondents’ Contentions and Procedural Defenses

Respondents and the Court of Appeals contended that the earlier decisions addressed interlocutory relief—primarily whether to restore a temporary restraining order—and did not adjudicate the merits of the main action; therefore res judicata did not apply. The appellate court noted that the intervention pro interesse suo sought to protect a usufructuary interest distinct from the main relief and that any failure to serve a brief did not render the decision null, since the court had directed the intervenor to furnish the brief and allowed replies.

Supreme Court’s Analysis on res judicata and Prematurity

This Court held that the earlier proceedings were interlocutory in nature and did not dispose of the main action on the merits; therefore the requisites of res judicata—finality and judgment on the merits—were lacking and the doctrine did not bar the subsequent adjudication. The Court also found that the alleged failure to supply petitioners with intervenor’s brief did not vitiate the appellate decision because the court had issued an order requiring production of the brief and had afforded opportunity to reply; an omission of a brief does not automatically void an appeal.

Supreme Court’s Findings on Possession, Estoppel, and Improvements

The Supreme Court confined its review to questions of law and accepted the factual findings of the trial court and the Court of Appeals as binding where supported by substantial evidence. The Court found that although the lease prohibited subleasing, Luis Keh had, by written cession to Charlie Lee and by negotiating the pakiao-buwis arrangement with Crisostomo, effectively transferred operative rights; petitioners Perez and Tansinsin had knowledge of and accepted rental payment from Crisostomo as shown by the June 6, 1978 receipt, and therefore were estopped to deny Crisostomo’s possession. The Court nevertheless declined to restore possession to Crisostomo because supervening contractual arrangements and changed circumstances made restitution inequitable, but it held Keh liable for the value of improvements.

Damages and Equitable Relief Ordered

The Court affirmed the release of deposits of P128,572.00 and P123,993.85 to Luis Crisostomo and directed Crisostomo to pay petitioner Juan Perez rental for June 1979–January 1980 at the contracted rate less P21,428.00 previously paid to usufructuary Maria Perez. The Court modified the monetary awards: it ordered

Case Syllabus (G.R. No. 107737)

Parties and Procedural Posture

Petitioners were Juan L. Perez, Luis Keh, Charlie Lee and Rosendo G. Tansinsin, Jr., who appealed from the Court of Appeals decision affirming the trial court in Civil Case No. 5610-M.
Respondents were the Court of Appeals, private respondent Luis Crisostomo, and intervenor Vicente Asuncion.
The trial court was the Regional Trial Court of Bulacan, Branch 9, which rendered judgment on September 6, 1989 in favor of Luis Crisostomo.
The Court of Appeals affirmed the RTC decision and declared intervenor Vicente Asuncion a co-usufructuary in a decision rendered February 18, 1992.
Petitioners filed a petition for review on certiorari under Rule 45 challenging the Court of Appeals decision on six grounds distilled into three principal legal issues.
The Supreme Court resolved the petition by affirming the Court of Appeals with specified modifications to the damages awards and monetary relief.

Key Factual Allegations

The subject property is the Papaya Fishpond covered by TCT No. 8498 located in Sto. Rosario, Hagonoy, Bulacan and was held by several usufructuaries including petitioner Juan Perez and others.
On June 5, 1975, the usufructuaries leased the fishpond to Luis Keh for five years with a prohibited clause against sublease or assignment and a renewal option for another five years at specified rental rates.
In December 1977 and January 1978, Luis Crisostomo allegedly entered into a pakiao-buwis agreement to operate the fishpond and paid a total consideration including P75,000 as rental and later paid P150,000 for the 1978–1979 year evidenced by a receipt dated June 6, 1978.
On January 9, 1978, a written document was executed wherein Keh purportedly ceded his rights to Charlie Lee up to June 1985, which induced Crisostomo to assume operation.
Crisostomo incurred P486,562.65 in repairs and improvements to the fishpond.
In June 1979, usufructuaries demanded possession and, accompanied by armed men, sought to oust Crisostomo, who then filed an action for injunction and damages on June 14, 1979.
A temporary restraining order was granted June 14, 1979 and lifted January 11, 1980, after which the parties executed a partial compromise concerning deposits and harvesting rights on February 14, 1980.
The usufructuaries later leased the fishpond to third parties at substantially higher rentals after 1981.

Issues Presented

Whether the principle of res judicata precluded relitigation of possession because of prior decisions in CA-G.R. No. 10415 and G.R. No. 64354.
Whether the Court of Appeals decision was prematurely promulgated and therefore void due to alleged failure to furnish petitioners with intervenor Vicente Asuncion's brief.
Whether private respondent Luis Crisostomo was an assignee or sub-lessee entitled to possess the fishpond or whether his possession was without legal authority.

Contentions of the Parties

Petitioners contended that the prior CA decision in CA-G.R. No. 10415 and the denial of review in G.R. No. 64354 resolved the possession issue and thus invoked res judicata.
Petitioners alleged the Court of Appeals rendered its decision prematurely because they lacked intervenor Vicente Asuncion's brief prior to promulgation.
Petitioners maintained that Crisostomo was not a sub-lessee because the lease expressly prohibited subleasing and because no valid written transfer to Crisostomo was shown.
Crisostomo maintained he paid the agreed rentals, operated the fishpond under the pakiao-buwis arrangement, and made substantial improvements for which he sought compensation and d