GEORGE TIU AND ROSALINA TIU, PETITIONERS, VS. THE HON. COURT OF APPEALS, JUAN GO, SPS. JUANITO LIM AND LIM YEE SHOW FONG, RESPONDENTS.

Before us is a petition seeking the review and the consequent
reversal of the decision of the Court of Appeals in CA-G.R. CV No. 249671
entitled, “George T. Tiu and Rosalina Tiu vs. Juan Go and Sps. Juanito Lim
and Lim Lee Show Fong”, promulgated on September 30, 1992, which affirmed
the summary judgment dated August 21, 1989 and the Order dated October 30, 1989
of the Regional Trial Court of Manila Branch 35 in its Civil Case No. 88-43782.

The facts of the case are as follows:

Petitioner George T. Tiu and his mother, Rosalina Tiu, filed an
action for reformation of contract, delivery of personal property, and damages
before the regional trial court against Juan Go and the Spouses Juanito Lim and
Lim Lee Show Fong.

Among the allegations of the complaint, as quoted by the Court of
Appeals, are the following:

4. That plaintiff George
Tiu is the registered owner of Two (2) CONDOMINIUM UNITS identified and
described as follows ?

“UNIT 9-A of
the Condominium located on the ninth floor, with an area of 133.48 sq. mts.,
more or less, with 3 rooms and 3 comfort rooms, of the Blue Diamond Tower
Condominium Project,

“UNIT 9-B of
the Condominium located on the ninth floor, with an area of 98.26 sq. mts.,
more or less, with 3 rooms and 3 comfort rooms, of the Blue Diamond Tower
Condominium Project,”

covered by CONDOMINIUM CERTIFICATE OF
TITLE NOS. 4583 and 4584, respectively, of the REGISTER OF DEEDS FOR THE CITY
OF MANILA, copies of which are hereto attached as Annexes “A” and
“B”, respectively;

5. That sometime in March,
1986, plaintiff GEORGE TIU and plaintiff ROSALINA TIU, his mother, negotiated a
loan of P300,000.00 with defendant JUAN GO who then asked for a mortgage of the
aforesaid CONDOMINIUM UNITS of plaintiff GEORGE TIU as security for the payment
therefor and in additional thereto, a pledge of jewelries and checks from
plaintiff ROSALINA TIU;

6. That in that
transaction, defendant JUAN GO agreed to extend the loan without any fixed
period of re-payment and with the further condition that the plaintiffs shall have
ample time to pay when demanded and that they can remain in possession of the
said CONDOMINIUM UNITS of plaintiff GEORGE TIU in the event of mortgage;

7. That with that
agreement, defendant JUAN GO then prepared, based on copies of the CONDOMINIUM
CERTIFICATE OF TITLE NOS. 4583 and 4584 of plaintiff GEORGE TIU earlier given
to him, a document denominated as “DEED OF SALE OF A CONDOMINIUM WITH
RIGHT TO REPURCHASE” and another as “CONTRACT OF LEASE”, the
former was prepared in favor of defendant spouses JUANITO LIM AND LIM LEE SHOW,
FONG, while the latter was prepared in favor of plaintiff GEORGE TIU;

8. That when the said
documents were presented to the plaintiffs by defendant JUAN GO, plaintiff
GEORGE TIU asked him why the documents had to be drawn in that form and why was
there a need to involve the defendant spouses JUANITO LIM and LIM LEE SHOW
FONG, both total strangers to the plaintiffs, when the transaction of loan was
purely between GEORGE TIU, plaintiff ROSALINA TIU, his mother, and defendant JUAN
GO, but defendant JUAN GO then said that he can not carry a real estate
property in his own name, as he is a Chinese National, and that there was no
harm in having the covering instruments made that way and in that form, as
their agreement of mortgage intended to secure the loan will always prevail,
stand and govern over the said instruments, for which reason plaintiff GEORGE
TIU agreed to sign the said DEED OF SALE OF A CONDOMINIUM WITH RIGHT TO
REPURCHASE and CONTRACT OF LEASE and after signing them, plaintiff ROSALINA TIU
handed to defendant JUAN GO jewelries with a value of P200,000.00 and PCIB
Check No. 51405, drawn to the sum of P200,000.00, signed by plaintiff ROSALINA
TIU but undated, and another PCIB Check No. 51428, signed by plaintiff ROSALINA
TIU but without any stated amount and date, as additional collateral for the
loan just received and which the defendant JUAN GO then required in their
agreement;

9. That the said DEED OF
SALE OF A CONDOMINIUM WITH RIGHT TO REPURCHASE and CONTRACT OF LEASE were later
verified before a notary public and then later registered by the defendants’
agent with the REGISTER OF DEEDS FOR THE CITY OF MANILA and subsequently
annotated at the back of CONDOMINIUM CERTIFICATE OF TITLE NOS. 4583 and 4584,
as now evidenced by certified true copies hereto attached as Annexes
“C” and “D”, respectively;

10. That, from the date of execution of said documents, Annexes
“C” and “D”, to this time of filing, plaintiff GEORGE TIU,
with plaintiff ROSALINA TIU, has remained and continue to remain in possession
of the said Condominium Units as lessee;

11. That plaintiff GEORGE TIU, in executing the said DEED OF SALE
OF A CONDOMINIUM WITH RIGHT TO REPURCHASE, has merely agreed to a mortgage of
the properties, for which reason reformation is proper, pursuant to the
provisions of the Civil Code which state, thus ?

“ART. 1365. If two parties agree upon the mortgage or pledge
of real or personal property, but the instrument states that the property is
absolutely sold or with a right to repurchase, reformation is proper.”

12. That the said DEED OF SALE OF A CONDOMINIUM WITH RIGHT TO
REPURCHASE executed by plaintiff GEORGE TIU is in law an equitable mortgage at
the same time on two of the specified grounds, for which reformation is also
proper on either one, in accordance with the provisions of the Civil Code, thus
–

“Art. 1602. The contract shall be presumed to be an equitable
mortgage, in any of the following cases:

xxx                     xxx
                   xxx

(2)    When the vendor remains
in possession as lessee or otherwise;

xxx                     xxx
                   xxx

(6)    In any other case where
it may fairly be inferred that the real intention of the parties is that the
transaction shall secure the payment of a debt or the performance of any other
obligation.”

13. That the real intention of the parties on the transaction
covered by the DEED OF SALE OF A CONDOMINIUM WITH RIGHT TO REPURCHASE being a
mortgage, and not a sale, plaintiff GEORGE TIU is entitled to the redemption of
the property as sanctioned by Article 1601 of the Civil Code;

14. That, after the lapse of the unlawful period of repurchase
stated in the DEED OF SALE OF A CONDOMINIUM WITH RIGHT TO REPURCHASE, plaintiff
GEORGE TIU tried to redeem the mortgaged condominium units, but the defendants
refused redemption;

15. That when plaintiff GEORGE TIU tried to redeem the said
properties, plaintiff ROSALINA TIU also attempted to get back the jewelries and
checks given as additional collateral, but defendant JUAN GO who refused
redemption of the mortgaged properties also refused to return the said
jewelries and checks to plaintiff ROSALINA TIU;

16. That, after the redemption offer was made by plaintiff GEORGE
TIU and the return of the personal properties were asked by plaintiff ROSALINA
TIU, defendant JUAN GO, after filing the blanks in PCIB Check No. 51405 and
PCIB Check No. 51428, presented them to the bank for encashment, but were
returned, for which there is now a demand made upon plaintiff ROSALINA TIU for
her to pay for the value thereof;

17. That defendant JUAN GO and JUANITO LIM have acted with evident
bad faith, unlawfully and contrary to the agreement, and in violation of the
plaintiffs’ rights;

18. That by reason of the unlawful acts of the said defendants, the
plaintiffs suffered sleepless nights, anxiety, besmirched reputation and social
humiliation, for which they now seek the sum of not less than P100,000.00 as
payment for moral damages, plus litigation expenses;

19. That the plaintiffs were forced to litigate in this action and
in so doing, they were compelled to engage the services of the undersigned
counsel for an attorney’s fee of P50,000.00;

20. That as corrective measure to those who unlawfully act contrary
to their agreements and in violation of the rights of others, an exemplary
damage to be determined by the Honorable Court is also sought.

(pp. 25-29, Rollo.)

The Spouses Lim filed a separate answer with counterclaim,
denying the material allegations of the complaint and, as special and
affirmative defenses, claimed that by virtue of George Tiu’s failure, as vendor
a retro, to exercise his right to repurchase the condominium units within the
period expressly stipulated in the contract, the spouses thereupon irrevocably
acquired the absolute ownership of said condominium units; that absolute ownership
thereof has been consolidated in their names; that the deed of sale is clear,
without any ambiguity, mistake, or imperfection and the deed is and should be
the only repository of the truth of the contractual relations of the parties
and no parol evidence is admissible to alter the stipulations, terms, and
conditions of the contract (See CA Decision, p. 29, Rollo).

The Tius filed a reply and answer to the counterclaim of the
Spouses Lim.

On the other hand, Go, in his answer with counterclaim, alleged
that while indeed, the Tius had incurred various amounts of loans on different
dates, the totality is much greater than the sum of P200,00.00 alleged in the
complaint, and which remained unpaid; that the two checks mentioned in
Paragraph 8 of the complaint issued in partial payment on the Tius’ various
loans were dishonored when presented by Go for encashment; and that the Tius
had not offered or given any other security to answer for the payment of their
overdue loans and obligations to Go; that he (Go) is merely one of the
instrumental witnesses to, and has nothing to do with, the Tius’ transactions
with the Spouses Lim, which should thus be treated separately and distinctly
from the various loan transactions between the Tius and Go; that Go never
committed the supposed acts of misrepresentation in the execution of the deeds
as alleged in the complaint.

As compulsory counterclaim, Go alleged that Rosalina Tiu had
secured, on different dates, loan advances in the total amount of
P1,060,000.00, which has remained unpaid despite demands.

The Tius filed a reply and answer to the counterclaim of Go,
admitting receipt by Rosalina Tiu of the money stated in respondent Go’s
counterclaim, but alleging that the loans had already been paid for by tobacco
delivered to Go.

Go subsequently filed a motion for leave to admit third
party-complaint for a sum of money and damages against Joaquin Tiu, alleging
that on different dates, the latter had, for himself and in behalf of the Tius,
received the money as loan or advances
in connection with the latter’s tobacco business, in the total amount of
P700,000.00, for which amount Joaquin Tiu should be held jointly and severally
liable with the Tius.

Over the opposition of
the Tius, the motion for leave to admit third-party complaint was granted by
the trial court on June 22, 1988.

Pre-trial was conducted
on May 13 and November 14, 1988.

On August 21, 1989, the
trial court rendered summary judgment, disposing as follows:

WHEREFORE, judgment is hereby rendered as follows:

1. The complaint of the
plaintiffs is DISMISSED;

2. Plaintiff Rosalina Tiu
is ordered to pay defendant Juan Go the sum of P1,060,000.00;

3. The third party
complaint of Juan Go against Joaquin Tiu is DISMISSED;

4. The respective
counterclaim of the two groups of defendants in their separate answers for
moral and exemplary damages, and for
attorney’s fees are DENIED and DISMISSED;

5. Plaintiffs George Tiu
and Rosalina Tiu are ordered to pay the costs of the present action.

SO ORDERED.

(p. 30, Rollo.)

The Tius and
Joaquin Tiu (third-party defendant) appealed while the Lims filed a
“Motion for Supplemental/Additional Relief or Decision”.

Go filed a motion for reconsideration of the summary judgment.

On October 30, 1989, the trial court issued an order resolving
the respective motions of the Lims and Go, thus:

ACCORDINGLY, the motion of defendants-spouses Juanito Lim and Lim
Lee Show Fong is hereby GRANTED, and the Register of Deeds of the City of
Manila is hereby ordered to make the corresponding note of consolidation and
cancel the Condominium Certificates of Title Nos. 4583 and 4584 in the name of
George Tiu, and, in lieu thereof, issue a new Condominium Certificate of Title
in the name of Juanito Lim and Lim Lee Show Fong.

The motion for reconsideration filed by defendant and third party
plaintiff is Denied for lack of merit.

The Tius, including Joaquin, appealed, arguing that the trial
court erred when it (1) accepted the Deed of Sale of Condominium Units with
Right of Repurchase as the true agreement of the contracting parties; and (2)
held Rosalina Tiu liable for the total amount of P1,060,000.00 claimed by Go.

Go, who also appealed, on the other hand, lamented the failure of
the trial court to hold George Tiu and Joaquin Tiu jointly and solidarily
liable with Rosalina Tiu on the amount of P1,060,000.00, and for dismissing
both his third-party complaint and counterclaim for moral and exemplary
damages, and for attorney’s fees.

The Court of Appeals (Paras[P], Ordonez-Benitez, Montenegro, JJ.)
upheld and affirmed the summary judgment rendered by the trial court. Hence,
the instant petition anchored on the general assertion that the decision of
respondent Court of Appeals is not in accord with law.

We vote to sustain the appellate court. The summary judgment of the trial court was properly rendered.

A summary judgment is one granted by the court, upon motion by
either party, for an expeditious settlement of the case, there appearing
from the pleadings, depositions, admissions, and affidavits that there are no genuine questions or issues of fact
involved (except as to the amount of damages) — and that, therefore, the
moving party is entitled to a judgment as a matter of law (Sections 1, 2, and
3, Rule 34; Justice E.L. Paras, Revised Rules of Court, Ann., Vol. I,
1989 Ed., p. 632.)

In the present case, the Tius maintain that there are as yet
unresolved questions of fact that preclude summary judgment, such as whether
there was indeed a loan contract between the Tius and Go, which was secured by
a mortgage on the condominium units owned by George Tiu and a pledge by
Rosalina Tiu of her pieces of jewelry and checks; and, assuming the existence
of a loan, whether reformation is feasible in order that the true agreement of
the parties on an equitable mortgage may be reflected in the deed of sale.

In the instant petition, the Tius narrate a series of events and
loan transactions between Rosalina Tiu and Juan Go that would negate, in their
opinion, the sale transaction between the Tius and the Spouses Lim, and would
thus necessitate trial on the merits to determine the true agreement or
intention of the parties. The appellate court, however, brushed aside this
argument thusly:

Under Rule 34 of the Rules of Court, summary judgment may be rendered
by the court upon application of a party when there is no genuine issue as to
any material fact and that the moving party is entitled to a judgment as a
matter of law. By genuine issue is
meant an issue of fact which calls for the presentation of evidence as
distinguished from an issue which is sham, fictitious, contrived, set up in bad
faith and patently unsubstantial so as not to constitute a genuine issue for
trial. The court can determine this on
the basis of the pleadings, admissions, documents, affidavits and/or counter
affidavits submitted by the parties to the Court. Where the facts pleaded by the parties are disputed or contested,
proceedings for a summary judgment cannot take the place of a trial. (Paz vs. CA, 181 SCRA 26).

(p. 32, Rollo)