Melendez v. Lavarias
REITERATIONFacts
The Antecedents: On September 27, 1944, defendants Tomasa Lavarias de Sajonas and Brigida Estrada de Sajonas executed two (2) deeds of "sale with right to repurchase" (Annexes A and B) in favor of Rodolfo Sajonas for P1,000.00 and P700.00, respectively, covering a residential lot they co-owned. The period for repurchase was two (2) years from the date of execution. Over eight (8) years later, on April 7, 1953, Rodolfo Sajonas executed an "absolute deed of sale" (Annex C) of the same lot in favor of plaintiff Ramon Melendez. Plaintiff instituted an action on July 22, 1954, claiming ownership due to the absolute sale and the defendants' failure to exercise their right of redemption within the stipulated period. The defendants, who remained in possession, began claiming ownership around November 25, 1953. Plaintiff prayed to be declared owner, to have defendants vacate the premises, and to pay for products and damages. Procedural History: The case originated from the Court of First Instance of Pangasinan. It was initially certified to the Court of Appeals but was forwarded to the Supreme Court as only questions of law were raised. The Appeal: Plaintiff-appellant Ramon Melendez appealed the decision of the lower court, which held that the Ballantyne scale was applicable and ordered defendants to pay P180.00 with interest, considering the depreciated value of the peso. Plaintiff's main arguments on appeal were: (1) that the lower court erred in denying his motion to be relieved from a stipulation made in open court regarding the sums received and the nature of the deeds, and (2) that defendants could no longer avail of the Ballantyne scale due to their failure to pay the obligation within the stipulated period.
Issue(s)
Whether the plaintiff-appellant should be relieved from the stipulation made in open court. Whether the defendants-appellees may still avail of the benefits of the Ballantyne scale despite failing to pay their obligation within the stipulated period.
Ruling
The Supreme Court affirmed the decision of the lower court. The costs of the instance were against the plaintiff-appellant.
Ratio Decidendi
On the issue of relief from stipulation: The Court found no merit in the plaintiff's pretense to be relieved from the stipulation. The stipulation, made in open court, established that the sums of P1,000 and P700 were received in Japanese money and that the deeds of sale with right to repurchase were executed merely as security. The plaintiff's counsel's claim of improvident, inadvertent, or mistaken agreement, or fraudulent inducement, was not sufficiently proven to warrant setting aside the stipulation. The Court noted that while the plaintiff sought to collect P1,700 on a peso-to-peso basis, the core issue was the applicability of the Ballantyne scale. The Court also pointed out that the plaintiff's claim of being a purchaser in good faith was contradicted by defendants' allegations (though not proven) that he had knowledge of their ownership as he had notarized a deed involving the property previously. On the applicability of the Ballantyne scale: The Court held that the defendants' failure to pay their obligation within the stipulated period of two years from September 27, 1944, did not deprive them of the benefits of the Ballantyne scale. The non-payment merely gave the creditor the right to sue for the recovery of the amount due, plus damages for the default, as provided by Articles 1170 and 1193 of the Civil Code of the Philippines. The expiration of the redemption period did not automatically forfeit their right to settle the debt under the prevailing currency valuation rules.
Main Doctrine
The Court affirmed the application of the Ballantyne scale in determining the value of obligations incurred during the Japanese occupation, considering the depreciated value of the Japanese currency. It also held that stipulations entered into by parties in open court are binding, and relief therefrom is not granted absent proof of fraud, mistake, or undue influence. The failure to pay an obligation within the stipulated period does not extinguish the right to pay but gives the creditor the right to sue for recovery plus damages.