G.R. No. L-24300. February 28, 1978
MARIA LOCSIN VDA. DE ARANETA, PETITIONER, VS. EDITH PEREZ DE TAGLE-MARCELO, FELIX GONZALES, AND THE HON. COURT OF APPEALS, RESPONDENTS.
FERNANDEZ, J.:
Perez de Tagle-Marcelo, Plaintiff and Appellant, versus Maria Locsin
Vda. de Araneta, Defendant and Appellee, Maria Locsin Vda. de Araneta,
Third-Party Plaintiff and Appellee, versus Felix Gonzales, Third-Party
Defendant and Appellant,” as amended by its resolution promulgated on January 26, 1965.[1]
The dispositive part of the original decision of the Court of Appeals promulgated on September 24, 1964 reads:
“WHEREFORE, the judgment appealed from is hereby modified by
absolving the plaintiff from paying the defendant damages and attorney’s
fees; ordering the third-party defendant to pay the defendant the sum
of P2,805.95, with legal interest thereon from August 1, 1958, moral and
exemplary damages in the sum of P10,000.00 and attorney’s fees in the
sum of P5,000.00. Costs against the third-party defendant-appellant.SO ORDERED.
SALVADOR V. ESGUERRA
Associate JusticeCONRADO V. SANCHEZ JUAN P. ENRIQUEZ
Presiding Justice Associate Justice”[2]
Said decision was modified by the resolution promulgated on January
26, 1965, which held “that defendant-appellee is not entitled to recover
any amount for moral and exemplary damages, as well as the amount of
P2,805.95, from the third-party defendant.”[3]
On March 4, 1958, Edith Perez de Tagle-Marcelo instituted against Maria Locsin Vda. de
Araneta Civil Case No. Q-2869 in the Court of First Instance of Rizal
at Quezon City for accounting of the harvest on a parcel of land located
in Bago, Occidental Negros and for recovery of actual and moral
damages, as well as attorney’s fees and expenses of litigation.
The complaint[4] stated
that the plaintiff is the owner of a parcel of land together with all
the improvements thereon, situated in the Municipality of Bago, Province
of Negros Occidental, identified as Lot No. 850 of the Cadastral Survey
of Bago, with an area of 1,066,475 square meters, more or less, having
acquired the same by purchase on or about February 6, 1957 of the former
owner’s rights and interest thereon; that sometime in June of 1957, the
defendant Maria Locsin Vda. de Araneta, knowing full well that
plaintiff was already the owner of the aforesaid parcel of land and
acting in gross and evident bad faith and in utter disregard of
plaintiff’s rights in the premises, worked and cultivated and/or caused
to be worked and cultivated and subsequently planted to rice the
aforesaid parcel of land, without obtaining plaintiff’s previous
consent; that during the months of December 1957 and January 1958,
defendant, likewise without obtaining plaintiff’s previous consent and
without even informing plaintiff, and acting again in gross and evident
bad faith and in complete disregard of plaintiff’s rights, harvested
and/or caused to be harvested and appropriated as her own all the
produce of the aforesaid parcel of land; that in December 1957, upon
receiving information that defendant had worked and cultivated the
aforesaid land, sown thereon and was gathering the products therefrom,
the plaintiff demanded an accounting and delivery of the harvest to her,
which amounted to about 1,400 cavanes of palay, at a value of P12.00
per cavan or a total of P16,800.00; that defendant ignored plaintiff’s
demands and up to that date had refused to deliver the harvest and/or
render an accounting to the plaintiff; that on account of defendant’s
acts as aforestated, the plaintiff sustained moral damages in the sum of
P50,000.00; that in order to avoid this action, plaintiff sent an
attorney-in-fact to Bago, Negros Occidental, for the purpose of
demanding an accounting from defendant and when the latter refused to
deal with him, plaintiff herself went to Bago for the same purpose, all
of which efforts at amicable settlement were rebuffed by the defendant;
that incidental to these efforts at settlement, the plaintiff incurred
actual damages by way of transportation to and from Bago and living
expenses thereat of herself and her attorney-in-fact in the total amount
of P2,000.00; and that for the institution of this action, the
plaintiff agreed to pay her counsel a fee of P5,000.00, and plaintiff
also incurred an additional expense of P60.00 for the filing of this
complaint.
In her amended answer[5] dated June 17, 1958, the defendant alleged that Lot No. 850 of the Cadastral Survey of Bago, Negros Occidental (hacienda)
was the absolute property of one Felix Gonzales who had mortgaged the
same to the Philippine National Bank as well as to the Rehabilitation
Finance Corporation; that the Rehabilitation Finance Corporation
subsequently foreclosed the mortgage and acquired the hacienda
in ownership as a result of the foreclosure of the mortgage inasmuch as
no redemption of the land was made; that defendant was the lessee of the
aforesaid hacienda from Gonzales in a stipulated annual rental
of P3,000.00; that as such lessee, she planted, cultivated and raised
the corresponding palay crop on the hacienda; that defendant had never dealt with anybody else concerning the hacienda
except with Gonzales or his wife, as lessors; that to accommodate them,
the defendant signed on March 3, 1956 a joint and several promissory
note for P5,000.00 with these lessors in favor of the Philippine
National Bank; that the Philippine National Bank attempted to withhold
P3,000.00 out of the P75,000,00 time loan subsequently extended by the
said bank to the defendant; that the money to be withheld was to be
applied to the P5,000.00 joint and several promissory note executed by
the defendant with these lessors should the latter not pay the
obligation within the time or extension allowed by the bank; and that
the defendant was in possession of the property as lessee of Gonzales
from the crop year 1955-56 and the lease was renewed for the 1957-58
crop year on the request of the lessors. The defendant interposed a
counterclaim against the plaintiff for moral and exemplary damages as
well as attorney’s fees.
The defendant, Maria Locsin Vda. de Araneta, filed
against Felix Gonzales a third party complaint dated June 17, 1958,
which alleged that the third-party defendant was formerly the owner of
Lot No. 850 of the Cadastral Survey of Bago, Negros Occidental, formerly
covered by Transfer Certificate of Title No. T-2955 of the land records
of Negros Occidental, issued by the Register of Deeds on May 6, 1948 in
the name of said third-party defendant; that Lot No. 850 of Bago (hacienda) is suitable for the production of palay,
and for the crop years 1955-56 and 1956-57, the third-party defendant
leased the same to the third-party plaintiff who accepted the possession
thereof in lease, on a stipulated rental of P3,000.00 per crop year;
that after the expiration of the 1956-57 crop year, the third-party
plaintiff wanted to return the hacienda to the third-party
defendant, and in this manner terminate the lease, but the third-party
defendant earnestly urged and begged the third-party plaintiff to
continue the lease thereof at the same rate of rental as the previous
crop years and the third-party plaintiff agreed and continued as lessee
thereof for the 1957-58 crop year, it being understood that the rental
would be payable at the end of the 1957-58 crop year should the
third-party defendant not have any accounts with the third-party
plaintiff; that on March 3, 1956, the third-party defendant and his wife
applied for a loan in the sum of P5,000.00 from the Philippine National
Bank, Manila; that on the earnest request and solicitation of the
third-party defendant, the third-party plaintiff became a co-maker on
the corresponding promissory note for P5,000.00 in favor of said bank
which granted the said loan to third-party defendant and his wife, only
upon the third-party plaintiff’s signing and binding herself as joint
solidary co-maker of the corresponding promissory note for P5,000.00;
that the third-party defendant and his wife received the proceeds of the
aforesaid loan of P5,000.00 from the Philippine National Bank; that the
loan matured on July 17, 1956, but notwithstanding several demands on
and extensions granted by the Philippine National Bank to the
third-party defendant and his wife, they did not pay the principal and
interests of the said loan; that according to the last demand letter of
the said bank dated May 5, 1958, the loan amounted to P5,720.00
including interests as of said date; that on November 19, 1957, the
Philippine National Bank, Bacolod Branch, granted and approved a time
loan in the amount of P75,000.00 in favor of the third-party plaintiff
who had a hard time obtaining a release by said bank of the full amount
of said loan because the Philippine National Bank wanted to withhold
P3,000.00, equivalent to the rentals for the hacienda corresponding to
the 1957-58 crop year; that it was after repeated and sincere
representations effected by the third-party plaintiff with the
Philippine National Bank, Bacolod Branch, that the full amount of the
loan was released; that meantime, the abovementioned hacienda
was mortgaged by the third-party defendant to the Rehabilitation Finance
Corporation and by reason of the non-payment of the RFC Loan, the RFC
foreclosed the mortgage and on January 30, 1957 acquired at
extra-judicial foreclosure sale the said property subject to a one-year
right of redemption; that by reason of the filing by the original
plaintiff Marcelo, in collusion with the third-party defendant, of this
action, the third-party plaintiff has suffered mental anguish, serious
anxiety, loss of sleep, besmirched reputation, wounded feelings, moral
shock and social humiliations which should be compensated by the
third-party defendant, jointly and severally with the original plaintiff
Marcelo, in the total amount of P50,000.00 by way of moral damages;
that because of the institution of this malicious and unfounded action,
springing from the conspiracy and collusion between the original
plaintiff Marcelo and the third-party defendant, exemplary damages in
the sum of P25,000.00, in addition to the moral damages, should likewise
be imposed jointly and severally against the third-party defendant
Gonzales and original plaintiff Marcelo, in favor of the third-party
plaintiff, by way of example or correction for the public good; that due
to the institution of this action, the third-party plaintiff has had to
incur expenses to protect her interest, obtaining the services of
counsel in the sum of P5,000.00 to protect, preserve and enforce her
rights, which attorney’s fees should likewise be borne or otherwise paid
for jointly and severally by third-party defendant and original
plaintiff Marcelo, who had demonstrated gross and evident bad faith,
particularly there scheme at the utilization of judicial processes as an
instrument or weapon for the perpetration of a fraud.[6]
The third-party defendant, Felix Gonzales, alleged as affirmative
defenses that the third party complaint is improper because the same
does not arise out of the transaction or occurrence subject of the
plaintiff’s complaint, which is an ordinary action for accounting
instituted by the landlord’s successor-in-interest against one who was
admittedly a tenant; that the third party complaint is also improper in
so far as it assails the validity of the transfer of rights made by the
third-party defendant in favor of the plaintiff over the hacienda
in question for the reason that a person who is not a party to the
contract and who is not principally or subsidiarily bound thereby has no
capacity to challenge the legality of the same; and that the
third-party plaintiff is not entitled to the relief prayed for in her
third party complaint for the reason that the same is a false and sham
pleading. The third-party defendant interposed a counterclaim for
damages and attorney’s fees. As alternative counterclaim, the
third-party defendant asked that the third-party plaintiff be ordered to
pay the stipulated rent corresponding to the crop year 1957-58.[7]
The trial court rendered its decision dated August 31, 1959, the dispositive part of which reads:
“WHEREFORE, the court renders judgment, one in favor of the defendant, Maria Locsin Vda. de
Araneta, and against the plaintiff, Edith Perez de Tagle-Marcelo, and
the third-party-defendant, Felix M. Gonzales, by dismissing both the
complaint as well as the counterclaim of the third-party-defendant,
against the third-party-plaintiff, for said defendant, Mrs. Araneta to
recover the sum of P10,000.00 with legal rate of interest against the
plaintiff and the third-party-defendant, jointly and severally, for both
moral and exemplary damages, plus P5,000.00 as attorney’s fees, with
costs against plaintiff and third-party defendant.SO ORDERED.
Quezon City, August 31, 1959.
(Sgd.) NICASIO YATCO
Judge”[8]
The plaintiff and third-party defendant appealed to the Court of Appeals where the action was docketed as CA-G.R. No. 26659-R.
From the amended decision of the Court of Appeals, Maria Locsin Vda. de Araneta appealed to this Court assigning the following errors:
“I
THE COURT OF APPEALS ERRED IN ELIMINATING FROM ITS ORIGINAL
DECISION THE AWARD OF P2,805.95 AGAINST THIRD-PARTY DEFENDANT FELIX
GONZALES IN FAVOR OF THIRD-PARTY PLAINTIFF (NOW PETITIONER) MARIA LOCSIN
VDA. DE ARANETA, THERE BEING NO VALID GROUNDS FOR DOING SO.II
THE COURT OF APPEALS ALSO ERRED IN ELIMINATING FROM ITS ORIGINAL
DECISION THAT PORTION THEREOF SENTENCING THIRD-PARTY DEFENDANT FELIX
GONZALES TO PAY THIRD-PARTY PLAINTIFF (NOW PETITIONER) MARIA LOCSIN VDA. DE
ARANETA MORAL AND EXEMPLARY DAMAGES, IT HAVING EXPRESSLY AND DEFINITELY
FOUND THAT SAID THIRD-PARTY DEFENDANT WAS GUILTY OF FRAUD AND BAD FAITH
VIS A VIS SAID THIRD-PARTY PLAINTIFF.”[9]
The facts, as found by the Court of Appeals, are:
“The facts of this case as established by the documentary evidence
on record are as follows: Lot No. 850 of the Cadastral Survey of Bago,
Negros Occidental, with Transfer Certificate of Title No. T-2955 in the
name of Felix Gonzales, was leased by the latter in favor of Maria
Locsin Vda. de Araneta for a period of three years covering the
agricultural years 1955-56, 1956-57 and 1957-58 at an annual rental of
P3,000.00 payable in advance. The lessee paid the rentals for the first
two crop years (Exhibits 1, 1-A, 1-B-Araneta).At the time, the land was mortgaged in favor of the now defunct
Rehabilitation Finance Corporation as security for a loan of P29,031.67
obtained by Gonzales in 1951.On March 3, 1956, Gonzales obtained a loan of P5,000.00 from the
Philippine National Bank for which Mrs. Araneta signed the promissory
note as an accommodation co-maker.On October 26, 1956, Mrs. Araneta received a notice of garnishment issued in Civil Case No. 1912 (Felix Gonzales vs. Bibiana Infante, et al., CFI, Negros Occidental),
advising her that judgment was rendered in said case against Gonzales
for the sum of P27,050.56 and enjoining her not to deliver, transfer or
otherwise dispose of the rents payable by her to said Gonzales (Exhibits
D and D-1).On January 30, 1957, the mortgage on the land in question was
foreclosed extra-judicially and was sold at public auction, wherein the
Rehabilitation Finance Corporation was the purchaser and the certificate
of sale was correspondingly issued in favor of said Corporation,
subject to mortgagor Gonzales’ right of redemption in one year, to
expire on January 3, 1958.On February 6, 1957, Gonzales executed a deed of assignment
whereby, in consideration of the sum of P5,000.00, he transferred his
right of redemption over the property in favor of plaintiff Edith Perez
de Tagle-Marcelo (Exhibit A).In January, 1958, Mrs. Marcelo, on the strength of the deed of
assignment, paid the Rehabilitation Finance Corporation the amount of
P3,605.76 as ‘deposit to repurchase the property’ and in a letter to the
Corporation requested that she be allowed to pay the consideration of
the sale on a ten percent down payment and the balance on a ten-year
annual amortization plan, which offer was accepted by the Board of
Governors of the Corporation in its Resolution No. 1520, adopted on
February 19, 1958 (Exhibits M, N, N-1, O, P). Pursuant to said
Resolution, a deed of conditional sale of the property was executed on
December 17, 1958, in favor of Mrs. Marcelo, although the title thereto,
Transfer Certificate of Title No. 22914 issued upon the consolidation
of title, remained in the name of the Rehabilitation Finance Corporation
‘as security for the payment of the price, advances and interest.’
(Exhibit E).In the meantime, on December 27, 1957, Mrs. Marcelo wrote Mrs.
Araneta her first letter, which was followed by several others,
informing the latter of the assignment in her favor of Gonzales’ right
of redemption over the property and demanding that she (Mrs. Araneta)
pay her the P3,000.00 rental for the crop year 1957-58 (Exhibits E, F,
G, J).On March 4, 1958, Mrs. Marcelo instituted the instant action
against Mrs. Araneta for ‘an accounting of the harvest gathered by her
from the land, damages and attorney’s fees.’Mrs. Araneta impleaded Gonzales as third-party defendant and
demanded moral and exemplary damages from said third-party defendant and
the plaintiff. She alleged in her answer and in her third-party
complaint that said parties acted in collusion in executing the deed of
assignment, Exhibit A, which is void for being fictitious and in fraud
of creditors and was executed particularly to enable Gonzales to collect
from defendant the rental for the crop year 1957-58 without his paying
first his indebtedness to the Philippine National Bank in the amount of
P5,000.00 which matured on July 17, 1956, and for which she (Mrs.
Araneta) may have to pay as accommodation co-maker, since Gonzales was
then already insolvent. Mrs. Araneta, in fact paid said loan on August
1, 1958, when the amount of P5,805.95, representing the principal and
the interests on said loan, was deducted from her own loan from the
Philippine National Bank in the amount of P75,000.00, which payment was
one of the conditions for the approval thereof.”[10]
The contention of the petitioner that the Court of Appeals erred in
eliminating from its original decision the award of P2,805.95 against
the third-party defendant, Felix Gonzales, in favor of said petitioner,
Maria Locsin Vda. de Araneta, is not meritorious.
It is a fact that the petitioner co-signed with the third-party
defendant, Felix Gonzales, a promissory note for P5,000.00 in favor of
the Philippine National Bank. Felix Gonzales received the full amount
of P5,000.00. He failed to pay said amount. The total amount of
P5,805.95 consisting of the principal and accrued interest was deducted
by the Philippine National Bank from the proceeds of the loan of
P75,000.00 obtained from said bank by the petitioner. After deducting
the amount of P3,000.00 due from the petitioner as rental for the
agricultural year 1957-58, there remained the amount of P2,805.95 which
the Court of Appeals in its original decision ordered Felix Gonzales to
pay to the petitioner. The only reason why the Court of Appeals
eliminated the payment of this amount in its resolution promulgated on
January 26, 1965 is that the petitioner did not appeal from the judgment
of the trial court which failed to order the third-party defendant to
reimburse her the amount of P2,805.95.
It is true that the petitioner did not appeal from the decision
of the trial court. Hence she may not now ask that Felix Gonzales be
ordered to pay her the sum of P2,805.95. It is to be noted, however,
that the trial court awarded the petitioner the amount of P10,000.00 as
moral and exemplary damages. We maintain the said award of P10,000.00
in so far as Felix Gonzales is concerned.
The Court of Appeals found that Felix Gonzales, the third-party defendant, now private respondent, was guilty of fraud because:
“On the other hand, the bad faith of the third-party defendant is
patent. His corresponding liability for damages and attorney’s fees is,
therefore, clear (Article 2220 and Art. 2203, par. 11). He was in
admitted financial straits when he transferred his right of redemption
for a valuable consideration, thereby placing said right beyond the
reach of his creditors. His loan with the Philippine National Bank, for
which defendant had signed as accommodation co-maker, had matured on
July 17, 1956 and remained unpaid when he made the assignment. Gonzales
knew that the Bank would demand payment from defendant as such
accommodation co-maker. He should have taken the necessary steps to
compensate such payment with the rental due from defendant by so
informing the assignee. Had he clearly given such information to the
assignee as well as the fact that his lease agreement with the defendant
included the crop year 1957-58, plaintiff would have no basis or reason
to bring the instant suit against defendant. But he did not, and
plaintiff should not be penalized thereby.”[11]
The petitioner had done Felix Gonzales a favor by co-signing with him
the promissory note in favor of the Philippine National Bank. The
petitioner was prejudiced by the failure of Felix Gonzales to pay the
amount of P5,000.00. Indeed, the amount of P5,805.95 was deducted from
the proceeds of the loan granted by the Philippines National Bank to the
petitioner. The act of Felix Gonzales in assigning to Edith Perez de
Tagle-Marcelo his right to redeem the land mortgaged to the
Rehabilitation Finance Corporation constituted a wanton disregard of the
rights of the petitioner. Under the circumstances, Felix Gonzales
should be made to pay to the petitioner moral and exemplary damages in
the amount of P10,000.00 and the amount of P5,000.00 as attorney’s fees.
WHEREFORE, the decision of the Court of Appeals
as modified by the resolution promulgated on January 26, 1965 is hereby
modified and judgment is rendered ordering the private respondent, Felix
Gonzales, to pay the petitioner the amount of P10,000.00 as moral and
exemplary damages and the sum of P5,000.00 as attorney’s fees, with
costs against the said private respondent.
SO ORDERED.
Teehankee, (Chairman), Makasiar, Muñoz Palma, and Guerrero, JJ., concur.
[1] Annex “A” and Annex “B”
to petition, Rollo, pp. 17-30. Justice Salvador V. Esguerra wrote the
decision and resolution and concurred in by Justice Conrado V. Sanchez
and Justice Juan P. Enriquez.
[2] Rollo, p. 25.
[3] Rollo, p. 30.
[4] Record on Appeal, pp. 2-5, Rollo, p. 34.
[5] Ibid., pp. 7-29, Rollo, p. 34.
[6] Record on Appeal, pp. 19-28, Rollo, p. 34.
[7] Ibid., pp. 29-39, Rollo, p. 34.
[8] Ibid., p. 65, Rollo, p. 34.
[9] Brief for the Petitioner, pp. 1-2.
[10] Annex “A” to petition, Rollo, pp. 17-20.
[11] Rollo, pp. 24-25.