Macasaet vs. R. Transport Corporation

A perfected contract of sale may be rescinded under Article 1191 of the Civil Code for failure to pay the purchase price, and upon rescission, the seller is entitled to recover possession of the thing sold and to receive reasonable compensation for the buyer’s use of the property, even in the absence of a lease agreement, provided the amount of compensation is proved by competent evidence. The right to rescind need not be invoked through a separate action if the complaint’s allegations sufficiently make out a case for rescission.

R. Transport Corporation, a holder of Certificates of Public Convenience, and Alexander Macasaet, proprietor of New Mindoro Transport Classic, entered into a “Deed of Sale with Assumption of Mortgage” on 11 October 1995 covering four passenger buses for a total price of ₱12,000,000.00. Macasaet also agreed to assume the existing mortgage on the buses with Phil. Hino Sales Corporation. Prior to execution, the parties signed a “Special Trip Contract” on 8 October 1995, leasing the same four buses to Macasaet for ₱10,000.00 per bus per day for one week to facilitate immediate delivery. Respondent delivered two buses to petitioner in Calapan, Oriental Mindoro. Petitioner failed to pay the purchase price despite demands, prompting respondent to file an action for recovery of possession and damages.

• The Deed of Sale and Delivery: On 11 October 1995, respondent R. Transport Corporation (vendor) and petitioner Alexander Macasaet (vendee, doing business as New Mindoro Transport Classic) executed a “Deed of Sale with Assumption of Mortgage” over four passenger buses for a stated price of ₱12,000,000.00. Macasaet also undertook to assume the existing mortgage with Phil. Hino Sales Corporation. Pursuant to the deed, respondent delivered two buses to petitioner in Calapan, Oriental Mindoro, but withheld the other two pending payment.

• The Special Trip Contract: On 8 October 1995, three days before the deed of sale, the parties signed a “Special Trip Contract” whereby respondent leased the same four buses to petitioner for ₱10,000.00 per bus per day from 15 to 22 October 1995, for a total of ₱280,000.00. Respondent’s finance officer testified that this contract was intended to support the delivery of the first two buses pending formal execution of the deed of sale.

• Non-Payment and Seizure: Petitioner never paid the ₱12,000,000.00 purchase price. Respondent made repeated demands, but petitioner refused. On 3 January 1996, respondent filed a complaint for recovery of possession and damages, alleging that petitioner wrongfully detained the two buses. On 8 January 1996, the trial court issued a writ of seizure upon respondent’s posting of a ₱12,000,000.00 bond. The sheriff recovered the two buses on 16 January 1996.

• Petitioner’s Defense: Petitioner claimed that he had paid the full consideration and had agreed to assume the mortgage, asserting ownership over all four buses. He alleged he had remitted ₱120,000.00 as partial payment of the mortgage obligation, admitted earning at least ₱7,000.00 per day per bus, and counterclaimed for the return of the seized buses, delivery of the remaining two units, and damages.

• RTC Decision: The RTC upheld respondent’s right to possess the two buses but dismissed the claim for unpaid rentals covering 16 October 1995 to 16 January 1996, because respondent failed to formally offer the records of operational expenses marked as Exhibits “W” and “W-1” to “W-3.” The RTC did not rule on the counterclaim or the validity of the deed of sale, reasoning that the writ of replevin effectively disposed of the recovery-of-possession cause of action.

• Court of Appeals Decision: The CA declared that the deed of sale was not perfected because no payment was made, leaving ownership with respondent. It ordered petitioner to remit income derived from the buses, fixed at ₱7,000.00 per day (based on petitioner’s own admission in his answer) for the period 16 October 1995 to 16 January 1996, less the ₱120,000.00 already remitted.

• Formal Offer of Evidence: Petitioner argued that the trial court correctly dismissed the claim for unpaid rentals because the exhibits tending to prove the rental claim were not formally offered in evidence, citing Section 34, Rule 132 of the Rules of Court. He maintained that the Court of Appeals had no legal or factual basis to order remittance of income in the absence of formally offered evidence.

• Absence of Lease Agreement: Petitioner contended that respondent’s complaint did not allege a lease agreement, and no competent evidence supported the claim for unpaid rentals. He insisted that his bare admission of earning ₱7,000.00 per day could not substitute for proof of actual damages.

• Ownership and Payment: Petitioner claimed ownership over the buses by virtue of full payment of the consideration, asserting that the deed of sale obligated respondent to deliver all four units.

• Right to Income as Owner: Respondent asserted that it remained the lawful owner of the buses because petitioner never paid the purchase price. As owner, it was entitled to the fruits of the property, including the income petitioner derived from using the buses.

• Non-Perfection of Sale: Respondent maintained that the deed of sale was never consummated due to lack of consideration and the disapproval of the security finance needed for the assumption of mortgage.

• Perfection and Rescission of the Deed of Sale: Whether the deed of sale was perfected, and whether respondent was entitled to rescind it due to petitioner’s failure to pay the purchase price.

• Entitlement to Reasonable Compensation: Whether respondent could recover income or reasonable rentals for the period the buses were in petitioner’s possession, despite the absence of a lease agreement and the failure to formally offer rental exhibits.

• Quantum of Damages: Whether the Court of Appeals’ award of ₱7,000.00 per day as income was supported by competent evidence, and if not, what the proper measure of damages should be.

• Formal Offer Rule: Whether Section 34, Rule 132 of the Rules of Court precluded the appellate court from awarding compensation based on evidence not formally offered.

• Perfection and Rescission of the Deed of Sale: The contract of sale was perfected upon the meeting of the minds on the object and price, conformably with Articles 1318 and 1475 of the Civil Code. However, it was not consummated because petitioner failed to pay the purchase price. The distinction between failure to pay consideration and lack of consideration was controlling; the former gives rise to a right to demand fulfillment or rescission under Article 1191, not to a void contract. Respondent’s complaint sufficiently alleged non-payment and made out a case for rescission, curing the absence of a separate judicial action. The necessary consequence of rescission is restitution of the object and payment of damages.

• Entitlement to Reasonable Compensation: Petitioner’s possession became unlawful upon his failure to pay and his refusal to return the buses after demand. Under Article 1191, damages may be awarded upon rescission. Although no lease agreement existed for the period after delivery, it would constitute unjust enrichment for petitioner to retain the income from property he had no legal right to use. The Court of Appeals properly found petitioner liable for reasonable compensation but erred in characterizing it merely as income remittance; it was properly treated as damages in the form of reasonable rentals.

• Quantum of Damages: Actual damages must be proved with reasonable certainty and cannot rest on speculation. The appellate court’s reliance on petitioner’s unsubstantiated allegation of earning ₱7,000.00 per day was insufficient. Instead, the Special Trip Contract, which was duly executed, marked, and formally offered in evidence, fixed a rental of ₱10,000.00 per bus per day. That rate provided a competent and reasonable basis for compensation. The award was recalculated at ₱1,580,000.00 (₱20,000.00 per day × 79 days), less ₱120,000.00 already remitted, resulting in ₱1,460,000.00.

• Formal Offer Rule: The objection was unavailing because the Special Trip Contract had been formally offered and admitted in evidence, providing competent proof of a reasonable rental rate. The exhibits that the trial court excluded for lack of formal offer pertained to operational expense records, not to the rental rate fixed in the Special Trip Contract.

• Distinction Between Lack and Failure of Consideration: Lack of consideration prevents the existence of a valid contract and renders a deed null and void ab initio. Failure to pay the consideration, on the other hand, presupposes a valid and binding contract and gives the aggrieved party the right to demand fulfillment or rescission under Article 1191. (Montecillo v. Reynes applied.)

• Rescission Under Article 1191 (Reciprocal Obligations): In reciprocal obligations, the power to rescind is implied. The injured party may choose between fulfillment and rescission, with damages in either case. Rescission must be invoked judicially, but the filing of a complaint that sufficiently alleges non-performance and seeks repossession effectively constitutes a demand for rescission. The consequences of rescission are mutual restitution and the payment of damages.

• Actual Damages Must Be Proved with Reasonable Certainty: Courts cannot award actual damages based on speculation, conjecture, or bare allegations. Competent proof of the fact and amount of pecuniary loss is required. (Saguid v. Security Finance, Inc. applied.)

• Unjust Enrichment: A party who uses and derives income from another’s property without legal right is obliged to pay reasonable compensation, consistent with the equitable principle that no one shall unjustly enrich himself at the expense of another.

• Additional Filing Fees as Lien: When a court awards a claim not alleged or a relief different from or greater than that claimed in the pleading, the party concerned must pay additional filing fees, which constitute a lien on the judgment. (Nestle Phils. v. FY Sons, Incorporated; Section 2, Rule 141, Rules of Court.)

• “Failure to pay the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or cancellation of the obligation under an existing contract, while the latter prevents the existence of a valid contract.” — This passage, taken from Montecillo v. Reynes, is the ratio distinguishing the parties’ rights under a perfected but non-consummated sale.

• “It would be against the equitable proscription against unjust enrichment for the defendant-appellee to keep the income from a property over which he has no legal right.” — This excerpt explains why compensation was due even without an express lease agreement.

• “Absent proof of the amount of actual damages sustained, the court cannot rely on speculations, conjectures, or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have been suffered by the injured party and on the best obtainable evidence of the actual amount thereof.” — The controlling standard that invalidated the appellate court’s award based on petitioner’s bare admission.

• Montecillo v. Reynes, G.R. No. 138018, 26 July 2002 — The Court relied on this case to distinguish between lack of consideration (void contract) and failure to pay consideration (right to rescind or demand performance under an existing contract). Applied to uphold the validity of the deed of sale and the propriety of rescission.

• Palma Gil v. Court of Appeals, 457 Phil. 804 (2003) — Cited for the rule that non-payment of the purchase price constitutes a very good reason to rescind a sale because it violates the essence of the contract.

• Saguid v. Security Finance, Inc., G.R. No. 159467, 9 December 2005 — Applied for the principle that actual damages must be proven with reasonable certainty and cannot rest on speculation.

• Nestle Phils. v. FY Sons, Incorporated., G.R. No. 150780, 5 May 2006 — Used as authority for imposing additional filing fees as a lien on the judgment when the award exceeds the amount pleaded.

• Article 1191, New Civil Code — Governs rescission in reciprocal obligations. The Court applied paragraph 1 (power to rescind implied) and paragraph 3 (rescission to be invoked judicially), finding that respondent’s complaint effectively sought rescission and was entitled to restitution and damages.

• Article 1318, New Civil Code — Enumerates the essential requisites of a contract. The Court held that all requisites were present, thus the sale was perfected.

• Article 1475, New Civil Code — Defines the perfection of a contract of sale by mere consent on the thing and the price. Applied to confirm that the deed of sale was perfected despite non-payment.

• Article 1458, New Civil Code — Defines sale as a contract where the vendor obligates himself to transfer ownership and deliver a determinate thing to the buyer who pays a price certain. Referenced to illustrate the reciprocal nature of the obligations.

• Section 34, Rule 132, Rules of Court — Provides that the court shall consider no evidence not formally offered. Petitioner invoked this rule; the Supreme Court found it inapplicable because the Special Trip Contract, which supplied the reasonable rate, had been formally offered.

• Section 2, Rule 141, Rules of Court — Mandates the assessment and collection of additional filing fees as a lien on the judgment when the award exceeds the claim. Applied to require the RTC Clerk of Court to assess the additional fees on the ₱1,460,000.00 judgment.

Quisumbing, Carpio, Carpio-Morales, Velasco, Jr., JJ., concurred.

None.