SPOUSES RODOLFO CAOILI AND IMELDA CAOILI, PETITIONERS, VS. COURT OF APPEALS AND ROSITA VDA. DE SANTIAGO, RESPONDENTS.

Caoili versus Court of Appeals

The Case

This is a petition for review on certiorari brought by the spouses Rodolfo and Imelda Caoili against Rosita Vda. de Santiago, arising from a complaint for collection of a sum of money. The Caoili spouses were lessees of a small parcel of land with an apartment unit in Tondo, Manila, owned by Rosita. The central question is whether the transaction between them was a contract of sale of the property, as the spouses claim, or a mere loan, as Rosita insists. The case matters because it shows how the Supreme Court treats the findings of the Court of Appeals when they contradict those of the trial court, and how a notarized receipt can prove the existence of a contract of sale even without a formal deed.

Procedural History

The Caoili spouses filed a complaint for collection of a sum of money before the Regional Trial Court of Manila, Branch 31. The trial court ruled in their favor, ordering Rosita to pay 489,520 pesos with legal interest, plus attorney's fees and costs, and maintaining the status quo until the amounts were fully paid.

Rosita appealed to the Court of Appeals. The Court of Appeals set aside the trial court's decision and ordered Rosita to pay only 33,600 pesos with legal interest. The Caoili spouses filed a Motion for Reconsideration, and later a Supplemental Motion for Reconsideration with Leave of Court. The Supplemental Motion was denied and expunged from the record for having been filed beyond the reglementary period, and the Motion for Reconsideration was denied. Hence, the spouses filed this petition for review on certiorari before the Supreme Court.

Facts

The Caoili spouses were lessees of a parcel of land with an area of 42.90 square meters, including a one-door apartment unit at 1752 Tecson de Guia Street, Tondo, Manila, belonging to Rosita Vda. de Santiago. On March 30, 1987, Rosita secured a loan of 30,000 pesos from the spouses, with the understanding that they would not pay their monthly rentals as long as the loan remained unpaid.

On or about July 10, 1990, the parties agreed on the sale of the property the spouses were occupying, although the agreement was not formal or written. On December 14, 1990, a Receipt denominated as an Addendum to Agreement dated August 8, 1990 was signed by Rosita before witnesses and acknowledged before a notary public. It stated that Rosita received from the spouses 140,000 pesos, in addition to a partial payment of 60,000 pesos, for the sale of the property for a total of 250,000 pesos, with the balance payable when a good title in the name of the vendor is delivered to the spouses.

The spouses sent two letters demanding delivery of the title within fifteen days, or a refund of double the amount received, or a total of 430,000 pesos. Rosita refused. The spouses then filed the complaint. Rosita denied receiving the 140,000 pesos and claimed she signed the receipt only upon the spouses' assurance that they would show her the receipts for the improvements, which they never did.

Issues

• Whether or not the Court of Appeals erred in reducing the amount awarded by the trial court.
• Whether or not there was a contract of sale of the subject property, as the spouses claim, or merely a loan, as Rosita asserts.
• Whether or not the Supplemental Motion for Reconsideration was properly denied and expunged from the record.

Applicable Provisions

Article 1358 of the Civil Code provides:

Article 1358. The following must appear in a public document: (1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein are governed by Articles 1403, No. 2, and 1405; (2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains; (3) The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person; (4) The cession of actions or rights proceeding from an act appearing in a public document. All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one. But sales of goods, chattels or things in action are governed by Articles 1403, No. 2 and 1405.

This provision bears on the case because the Court held that the absence of a formal deed of sale does not render the agreement null and void, since a public document is required only for convenience, not for validity or enforceability.

Article 1545 of the Civil Code provides:

Article 1545. Where the obligation of either party to a contract of sale is subject to any condition which is not performed, such party may either refuse to proceed with the sale or waive the condition.

This provision bears on the case because the Court held that since Rosita did not deliver a good title, the spouses had the right to refuse to proceed or to waive that condition.

Ruling

On the first issue, the Court held that the question of whether the Court of Appeals erred in reducing the award is a question of fact, since it involves an examination of the probative value of the evidence. As a general rule, findings of fact of the Court of Appeals are conclusive and not reviewable, except in certain instances. The Court found that this case falls under the exception where the findings of the Court of Appeals are contrary to those of the trial court.

On the second issue, the Court held that there was indeed a contract of sale. The notarized Receipt, Exhibit B, signed by Rosita herself, indubitably showed that the agreement was to convey the property to the spouses for 250,000 pesos. It confirmed a meeting of the minds on the object and the price. The Court noted that the absence of a formal deed of sale does not render the agreement null and void, since the provision on the necessity of a public document is only for convenience, not for validity or enforceability. Being a notarized document, Exhibit B is a public document and prima facie evidence of the facts stated therein, and it enjoys the presumption of regularity. The Court also found that the receipts marked as Exhibits C to J corroborated the existence of the sale agreement. Since Rosita failed to deliver a good title, she was obligated to pay double the amount she received. The Court computed the total received as 295,700 pesos, but since the spouses themselves alleged in their complaint that they had paid 244,760 pesos, they were deemed under estoppel to claim more than what they had prayed for. Thus, the trial court's award of 489,520 pesos, which is double 244,760 pesos, was upheld.

On the third issue, the Court held that the admission or non-admission of a supplemental pleading is not a matter of right but is discretionary on the court. A supplemental pleading does not replace the original but exists side by side with it. The Court found that the arguments in the Supplemental Motion for Reconsideration had already been substantially discussed and passed upon by the Court of Appeals, so even if it had been admitted, the Court of Appeals would not have decided otherwise.

Doctrine

A contract of sale is perfected by the concurrence of consent of the contracting parties, object, and cause of the obligation. The absence of a formal deed of sale does not render the agreement null and void or without effect, since the requirement of a public document under Article 1358 of the Civil Code is only for convenience, not for validity or enforceability. A notarized document is a public document and prima facie evidence of the facts stated therein, and it enjoys the presumption of regularity, which can only be contradicted by evidence that is clear, convincing, and more than merely preponderant. Where the obligation of either party to a contract of sale is subject to a condition which is not performed, such party may either refuse to proceed with the sale or waive the condition, as provided in Article 1545 of the Civil Code. The admission or non-admission of a supplemental pleading is discretionary on the court, not a matter of right.

Disposition

The Court granted the petition, set aside the decision of the Court of Appeals, and reinstated the decision of the trial court ordering Rosita to pay the Caoili spouses 489,520 pesos with legal interest, attorney's fees, and costs, with no pronouncement as to costs.

Remember This

The single line worth memorizing is that the absence of a formal deed of sale does not invalidate a contract of sale, since a public document is required only for convenience, not for validity. Examiners like to use this case to test the rule on the conclusiveness of the findings of fact of the Court of Appeals and the exceptions thereto, and the probative value of a notarized document as prima facie evidence of the facts stated therein.