Sta. Romana vs. Imperio

A vendor under a valid contract of sale is bound by the warranty against eviction and must return to the vendee the value of the thing sold at the time of eviction, even if greater or less than the price; the pari delicto rule under Article 1412 does not apply to such valid sale. Upon payment of a cross-claim adjudged against both seller and buyer, the buyer is subrogated to the claimants' rights against the seller.

Silvio R. Viola owned registered parcels in San Miguel, Bulacan, including Lot No. 622, and appointed his brother Dr. Jose R. Viola as agent under a power of attorney to manage and convert the parcels into a residential subdivision until all lots were sold. The land was covered by transfer certificates of title, and the dispute implicated the Torrens system and the effects of a double sale. Republic Act No. 2613, approved on August 1, 1959, increased the Court of Appeals' appellate jurisdiction in civil cases from P50,000 to P200,000, a statutory change material to the appeal.

On January 6, 1946, Silvio R. Viola, referred to as the Principal, executed in favor of his brother Dr. Jose R. Viola, the Agent, a power of attorney, Exhibit A-1, authorizing the Agent to take charge of, manage, and administer seven registered parcels of land in San Miguel, Bulacan, to be converted into a residential subdivision until all subdivision lots were sold. Some of the parcels, including Lot No. 622 of the Cadastral Survey of San Miguel, Bulacan, were covered by Transfer Certificates of Title Nos. 19556 and 19559. On April 26, 1946, the Principal asked the Court of First Instance of Bulacan to order the issuance of a second owner's duplicate of the transfer certificate of title on the ground that his duplicates had been lost; on June 25, 1946, he amended the motion to exclude TCT No. 19559 because his copy had been located; and on June 29, 1946, the court granted the amended motion and ordered the Register of Deeds to issue a second owner's duplicate of TCT No. 19556.

On June 18, 1946, the Agent executed in favor of Pablo Ignacio a deed, Exhibit A, undertaking to sell on installments six lots covered by TCT No. 19556, with an aggregate area of 3,804 square meters. The deed and the Agent's power of attorney were filed with the Office of the Register of Deeds and annotated on TCT No. 19556 on July 2, 1946. Four months later, on October 18, 1946, the Principal sold about thirty hectares, including Lot No. 622, to appellant Diosdado Sta. Romana under Exhibit B. A week later, on October 25, 1946, Sta. Romana conveyed the land to appellee Carlos Imperio by deed Exhibit C, which was filed with the Register of Deeds on November 4, 1946. TCT No. 19556 was then cancelled, and TCT No. 28946 was issued in Imperio's name.

On December 14, 1946, Imperio sold portions of Lot No. 622 to occupants who had been and were holding, as lessees, the portions respectively purchased by them: 665 square meters to Domingo Manabat, Patricia Lopez, and Calixta Bautista, to whom TCT No. T-1635 was issued; 600 square meters to Conrado Manabat and Eladio Sioson, to whom TCT No. T-1634 was issued; Lot No. 14 of Block 13 of the subdivision to Reynaldo Salvador and Graciano Garcia, to whom TCT No. T-1633 was issued; and 682 square meters to Hilario de Jesus, Apolonio Pablo, and Ismaela Jimenez, to whom TCT No. T-1632 was issued.

Having failed to take possession of the land sold to him by the Agent, Pablo Ignacio commenced an action on April 22, 1947, in the Court of First Instance of Bulacan against the occupants, Imperio, Sta. Romana, and the Principal to annul the sales made by the Principal to Sta. Romana, by Sta. Romana to Imperio, and by Imperio to the occupants, as well as for possession of the land and damages. On May 7, 1947, a pleading purporting to be the defendants' answer alleged, among other things, that Imperio and the occupants had purchased in good faith and for value from Sta. Romana, whose title was free from any lien or encumbrance in favor of Ignacio; that the occupants had purchased their portions from Imperio under similar conditions; that the sale in favor of Ignacio was fraudulent; and that Ignacio knew the occupants were in possession and had a right of pre-emption. On June 20, 1947, the Principal filed his own answer alleging that the land he conveyed to Ignacio was different from the land covered by the sale made by the Agent to Sta. Romana and that he had instituted Civil Case No. 137 in the Court of First Instance of Bulacan against Sta. Romana to annul the sale by the Agent. On January 5, 1949, Imperio and the occupants filed a cross-claim against the Principal, the Agent, and Sta. Romana; on January 24, 1949, the occupants filed a cross-claim against Imperio, which was amended on October 17, 1949.

The land in dispute was established to be worth at least P8,463 at the time of eviction, the aggregate amount charged by Imperio from the occupants.

• Jurisdiction: Petitioner Sta. Romana maintained that the Court of Appeals erred in taking cognizance of the case because the occupants' amended cross-claim sought P8,463.00, P45,960.00, P4,700.00, and P80,000.00, or a total of P140,303.00, which was beyond the jurisdiction of the Court of Appeals when it rendered the decision appealed from, on appeals taken directly from courts of first instance in civil cases originating therefrom.
• Due Process and Cross-Claim: Petitioner argued that the Court of Appeals erred in amending its original decision without giving him a chance to answer appellee's motion for reconsideration and in entertaining appellee's supposed cross-claim.
• Pari Delicto: Petitioner contended that appellee was not entitled to reimbursement from him because they were in pari delicto, citing Article 1412 of the Civil Code of the Philippines.

• Jurisdiction of the Court of Appeals: Whether the Court of Appeals had appellate jurisdiction over the case when the occupants' amended cross-claim allegedly exceeded its jurisdictional threshold at the time of the decision.
• Due Process and Cross-Claim: Whether the Court of Appeals erred in amending its original decision without allowing appellant to answer appellee's motion for reconsideration and in entertaining appellee's supposed cross-claim.
• Reimbursement and Pari Delicto: Whether appellant must reimburse appellee P8,463 despite appellee not having filed a cross-claim against him and despite the claim that they were in pari delicto.

• Jurisdiction of the Court of Appeals: No. Republic Act No. 2613 increased the Court of Appeals' appellate jurisdiction from P50,000 to P200,000, so the decision cannot be annulled for want of jurisdiction.
• Due Process and Cross-Claim: No. Appellant was allowed to and did file a printed motion for reconsideration, which the Court of Appeals considered and denied, satisfying substantial justice.
• Reimbursement and Pari Delicto: Yes. The vendor's warranty against eviction under Articles 1495, 1547, and 1555 made appellant liable, and appellee became subrogated to the occupants' cross-claim against appellant upon payment; Article 1412 did not apply because the sale was valid.

• Jurisdiction of the Court of Appeals: The occupants' amended cross-claim sought P8,463.00, P45,960.00, P4,700.00, and P80,000.00, or P140,303.00, which appellant claimed exceeded the Court of Appeals' jurisdiction when it rendered the decision on appeals taken directly from courts of first instance in civil cases originating therefrom. The Court held that Republic Act No. 2613, approved on August 1, 1959, increased the Court of Appeals' appellate jurisdiction from P50,000 to P200,000. Because of that increase, the decision could not be annulled for want of jurisdiction, and the Supreme Court could not entertain the appeal from the court of origin as if it had been taken directly to the Supreme Court, since the Supreme Court now had no such jurisdiction. The Court noted that upon the passage of Republic Act No. 2613, it had remanded to the Court of Appeals a number of civil cases pending decision before it in which the value of the controversy did not exceed P200,000, although those cases had been forwarded directly by courts of first instance when the Court of Appeals had exclusive appellate jurisdiction over civil cases involving not more than P50,000.
• Due Process and Cross-Claim: Appellant was allowed to and did file a printed motion for reconsideration of the amended decision of the Court of Appeals. In that motion, consisting of 62 printed pages, appellant discussed extensively the alleged demerits of appellee's motion for reconsideration, and after due consideration the Court of Appeals denied the motion. The demands of substantial justice were thus satisfied in the appellate court. As to the supposed cross-claim, the Court observed that appellee had not filed a cross-claim against appellant; the occupants, however, had filed a cross-claim against both of them.
• Reimbursement and Pari Delicto: Although appellee did not file a cross-claim against appellant, the occupants had filed a cross-claim against both, and upon payment to the occupants of the amount adjudged due to them, appellee became subrogated into their rights under that cross-claim against appellant. Independently, Articles 1495, 1547, and 1555 of the Civil Code, as well as justice and equity, provide that unless a contrary intention appears, the vendor warrants his title to the thing sold, and in the event of eviction the vendee is entitled to the return of the value which the thing sold has at the time of the eviction, be it greater or less than the price of the sale. The land in dispute was established to be worth at least P8,463 at the time of eviction, the aggregate amount charged by appellee from the occupants. Appellant's reliance on Article 1412 was misplaced: that provision is part of Title II of Book IV of the Civil Code, on contracts in general, and refers to contracts that are null and void ab initio under Article 1409. The contract between appellant and appellee did not fall under that provision and was beyond the purview of Article 1412; it was governed by Title VI of the same Book, on Sales in particular, especially Articles 1495, 1547, and 1555, regarding breach of the warranty arising from a valid contract of sale, due to the application of Article 1544 regulating the effects of double sales. Those provisions also suggested the remedies available to appellant.

• Vendor's Warranty Against Eviction — Under Articles 1495, 1547, and 1555 of the Civil Code, unless a contrary intention appears, the vendor warrants title to the thing sold; in the event of eviction, the vendee is entitled to the return of the value of the thing sold at the time of eviction, whether greater or less than the price. The Court applied this to hold Sta. Romana liable to reimburse Imperio P8,463, the value of the land at the time of eviction and the aggregate amount Imperio was ordered to refund to the occupants.
• Subrogation to a Cross-Claim — A party ordered to pay an amount adjudged on a cross-claim filed against both it and another becomes subrogated to the claimants' rights under that cross-claim against the other upon payment. The Court applied this to allow Imperio to recover from Sta. Romana even though Imperio had not filed a cross-claim against Sta. Romana, because the occupants had filed a cross-claim against both and Imperio's payment would subrogate him to the occupants' rights.
• Pari Delicto Under Article 1412 Is Limited to Void Contracts — Article 1412 of the Civil Code applies to contracts that are null and void ab initio under Article 1409 and does not govern a valid contract of sale. The Court held that the sale between Sta. Romana and Imperio was a valid contract governed by the Sales title, so the pari delicto defense did not bar Imperio's claim for reimbursement.
• Appellate Jurisdiction Under Republic Act No. 2613 — Republic Act No. 2613 increased the Court of Appeals' appellate jurisdiction from P50,000 to P200,000. The Court applied the increase to uphold the Court of Appeals' jurisdiction over the case, notwithstanding that the cross-claim originally exceeded the former jurisdictional threshold, and declined to annul the decision for want of jurisdiction.
• Substantial Justice in Motion for Reconsideration — Where appellant was allowed to and did file a 62-page printed motion for reconsideration discussing the opposing motion, and the appellate court considered and denied it, the demands of substantial justice are satisfied. The Court used this to reject the procedural due process challenge to the amended decision.

• "unless a contrary intention appears, the vendor warrants his title to the thing sold, and that, in the event of eviction, the vendee shall be entitled to the return of the value which the thing sold has at the time of the eviction, be it greater or less than the price of the sale." — States the vendor's warranty against eviction and the measure of the vendee's recovery, which the Court applied to hold Sta. Romana liable for P8,463.
• "upon payment to the occupants of the amount of the cross-claim adjudged to be due to them, the appellee becomes subrogated into their rights, under said cross-claim, against the appellant." — Provides the basis for Imperio's reimbursement despite his not having filed a cross-claim against Sta. Romana, because the occupants had filed a cross-claim against both.
• "This provision is part of Title II of Book IV of the Civil Code, on contracts in general, and it refers to contracts which are null and void ab initio, pursuant to Article 1409 of the Civil Code. The contract between appellant and appellee does not fall, however, under this provision, and is, accordingly, beyond the purview of the aforementioned Article 1412." — Rejects the pari delicto defense by distinguishing Article 1412, which applies only to void contracts, from the valid sale between Sta. Romana and Imperio.
• "The fact is, however, that the appellate jurisdiction of the Court of Appeals has been increased by Republic Act No. 2613 (approved on August 1, 1959) from P50,000 to P200,000." — Supplies the controlling statutory basis for upholding the Court of Appeals' jurisdiction over the case.

• Article 1495, Civil Code of the Philippines — Cited as part of the vendor's warranty under a valid contract of sale; the Court used it to hold appellant liable for the value of the land upon eviction.
• Article 1547, Civil Code of the Philippines — Cited with Articles 1495 and 1555; the Court stated that in the event of eviction the vendee is entitled to the return of the value of the thing sold at the time of eviction, whether greater or less than the price.
• Article 1555, Civil Code of the Philippines — Cited as part of Title VI on Sales, governing breach of warranty arising from a valid contract of sale.
• Article 1412, Civil Code of the Philippines — Cited by appellant to support the pari delicto defense; held inapplicable because it is part of Title II on contracts in general and refers to contracts null and void ab initio under Article 1409.
• Article 1409, Civil Code of the Philippines — Referred to by the Court as the provision defining contracts that are null and void ab initio, to which Article 1412 applies.
• Article 1544, Civil Code of the Philippines — Cited as regulating the effects of double sales; the Court noted that the contract between appellant and appellee was governed by the Sales title due to the application of Article 1544.
• Republic Act No. 2613 — Approved on August 1, 1959; increased the Court of Appeals' appellate jurisdiction from P50,000 to P200,000, which the Court applied to uphold the Court of Appeals' jurisdiction over the case.

Bengzon, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concurred. Bautista Angelo and Barrera, JJ., took no part.