G.R. No. L-56545, 28 January 1983

FACTS:

On June 3, 1971, a “Contract of Sale” over Lots 1 and 2, Block I, Phase II of the Clarita Subdivision, Cebu City was executed in favor of the Quimbo spouses. The sellers were petitioner company, developer of the subdivision, and Carmen and Helena Siguenza, owners of the property, represented by petitioner. Antonio V. Osmeña signed the contract on behalf of the company.

The spouses had intended to construct a house and were ready to pay the purchase price in full even before the due date of the first installment and advised Helena Siguenza accordingly so that title in their names could be delivered to them. On the pretext that a road would traverse the lots purchased, Helena proposed to exchange another lot (Lot 409) with the same area for the lots purchased by the spouses to which the latter hesitating agreed. Until 1973, however, no title could be given the Quimbo spouses.

It turned out that Lots Nos. 1 and 2 had already been sold to Dr. Francisco Maningo. Discovering this fact only in 1973, respondent spouses instituted this suit for Damages against petitioner company and the Siguenzas on March 25, 1974.

In its judgment, the lower Court ordered petitioner company and the Siguenzas to pay damages to respondent spouses. Furthermore, the Appellate Court affirmed the judgment of the Trial Court in toto.

ISSUE:

Whether or not the new contract was validly executed.

RULING:

The Honorable Court of Appeals seriously erred in not having considered the contract as having been novated by virtue of the change in the subject matter or object of the contract. The courts below seriously erred for having found petitioner to have acted fraudulently where there is no evidence to support such a finding.

The Court of Appeals committed serious error in law when it held petitioner jointly and severally liable to pay P100,000.00 as compensation for the pecuniary loss suffered by Mrs. Quimbo. The Court seriously erred in holding petitioner jointly and severally liable with the Siguenzas to pay moral damages to Quimbo, there being no evidence showing fraud or bad faith perpetrated by petitioner.

*Case digest by Jan Robert M. Corre, JD-4, Andres Bonifacio Law School, SY 2019-2020