Escano v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioners are successors-in-interest to the reversionary right over ten lots sold by Mamerto Escano, Inc. to the Republic of the Philippines in 1964 for P31,977. The sale was subject to a resolutory condition: title would revert to the seller upon reimbursement of the price when the lots were no longer used as part of the Lahug Airport. In 1966, petitioners acquired this right. Mactan Airport commenced operations in 1966, leading to the cessation of Lahug Airport's use for major commercial flights. Procedural History: On October 2, 1972, petitioners tendered the repurchase price, asserting the resolutory condition was fulfilled. The Director of Civil Aviation rejected this, stating Lahug Airport was still used for general aviation. Petitioners filed a reconveyance suit in the Court of First Instance (CFI) of Cebu. The CFI ordered reconveyance upon payment of the repurchase price, finding the lots no longer needed for the airport. Petitioners appealed, seeking compensation for the use of the lots from the tender date. The Government appealed, arguing the resolutory condition was not met. The Appeal: The Court of Appeals (CA) affirmed the CFI's decision allowing repurchase but imposed five conditions, similar to those in a 1961 resale of nearby lots to General Isagani Campo. These conditions included payment of taxes, allowing continued use by the Civil Aeronautics Administration (CAA) for airfield purposes until transfer to Mactan Airport, no rent payment by CAA, repurchase price based on original acquisition, and no resale until Lahug Airport transfer. Petitioners appealed to the Supreme Court, challenging the imposed conditions and the denial of compensation.
Issue(s)
Whether the Court of Appeals erred in imposing conditions on the reconveyance of the lots that were not raised in the pleadings or assigned as errors. Whether the petitioners are entitled to compensation for the use and occupancy of the lots by the Civil Aeronautics Administration from the date of their tender of the repurchase price.
Ruling
The Supreme Court modified the decision of the Court of Appeals by deleting the five conditions imposed on the reconveyance of the ten lots. The trial court's judgment ordering the reconveyance upon payment of the repurchase price was affirmed. No costs were awarded.
Ratio Decidendi
On Issue 1: The Supreme Court held that the Court of Appeals committed an error in imposing the five conditions on the reconveyance of the ten lots. These conditions were not raised in the pleadings filed by the parties in the lower courts, nor were they included in the assignment of errors in the Government's brief on appeal. The appellate court is bound by the issues framed by the parties and cannot unilaterally introduce new matters or create a new contract for them. The imposition of these conditions departed from the accepted and usual course of an appeal, as it adjudicated a point not raised by the parties and not properly argued in the briefs. The Court stressed that the 1964 contract of sale, which did not mention these conditions, was the law between the parties, and the appellate court could not gratuitously add stipulations that were not contemplated. On Issue 2: The Supreme Court affirmed the trial court's denial of the petitioners' claim for reasonable compensation for the Civil Aeronautics Administration's (CAA) use and occupancy of the lots from the date of the tender of the redemption price. While acknowledging that the claim might be justified on the ground that the CAA should have reconveyed the lots upon tender, the Court found it inequitable to require compensation when the CAA had not derived any benefit from the lots. Conversely, the petitioners had the use of the repurchase price of P31,977 for their own purposes during the period of delay. The Court considered this situation as potentially damnum absque injuria, meaning damage without injury or a loss without the violation of a legal right, especially when dealing with a governmental entity whose actions are presumed to be dictated by policy and public interest. The Court also noted that the compensation was not stipulated in the contract and that the claim was inconsistent with the petitioners' assertion that the CAA never used the lots for aviation purposes.
Main Doctrine
The Supreme Court held that the Court of Appeals erred in imposing conditions on the reconveyance of expropriated lots that were not raised in the pleadings or assigned as errors by the parties. The Court emphasized that the contract of sale, as agreed upon by the parties, is the law between them, and courts cannot unilaterally impose new stipulations. Additionally, the Court found no basis for awarding compensation for the use of the lots by the government, considering that the petitioners had the use of the repurchase price and the government had not derived undue benefit from the continued possession.