Goñi v. Vicente
REITERATIONFacts
The Antecedents: Compania General de Tabacos de Filipinas (TABACALERA) originally owned three haciendas. Praxedes T. Villanueva, predecessor-in-interest of petitioners, negotiated to purchase these haciendas. Due to insufficient funds, Villanueva, with TABACALERA's consent, offered to sell Hacienda Sarria to Santiago Villegas, later substituted by Joaquin Villegas. Private respondent Gaspar Vicente acted as guarantor for Villegas in favor of TABACALERA. In consideration of this guaranty or due to a shortfall in the purchase price, Villanueva contracted to sell fields nos. 3, 4, and 13 of Hacienda Dulce Nombre de Maria to Vicente for P13,807.00, evidenced by a written agreement signed by petitioner Genaro Goni as Villanueva's attorney-in-fact. Vicente paid P12,460.24 directly to TABACALERA as part of the balance. Petitioners allege that Villanueva later raised funds and intended to rescind the contract. An agreement was then reached whereby fields nos. 4 and 13 would be leased to Vicente for five years (crop-year 1950-51 onwards) at 15% annual rental, deductible from the P12,460.24 advanced. On December 10, 1949, TABACALERA executed a deed of sale for the three haciendas in favor of Villanueva. Fields nos. 3, 4, and 13 were registered in Villanueva's name and later mortgaged. Fields nos. 4 and 13 were delivered to Vicente after the 1949-1950 milling season. Villanueva died on November 12, 1951, and intestate proceedings were instituted. Among the inventoried properties were fields nos. 3, 4, and 13. On October 7, 1954, Vicente filed a complaint against petitioner Goni (as administrator) seeking to recover field no. 3 based on the October 24, 1949 contract. He also prayed for damages and attorney's fees. Petitioners counterclaimed for accounting and surrender of fields nos. 4 and 13, plus damages. Vicente amended his complaint to include damages for the produce of field no. 3. The heirs of Villanueva were later included as defendants. Procedural History: A stipulation of facts was entered into, and the case proceeded to trial. The trial court ordered the defendants-heirs to deliver field no. 3 to Vicente, execute a deed of sale for fields nos. 3, 4, and 13, pay actual damages of P81,204.48 (15% of the total gross income of field no. 3 from 1950-51 to 1958-59) plus subsequent amounts until delivery, and P2,000.00 as attorney's fees. Petitioner Goni was relieved of civil liability. Both parties appealed. The Court of Appeals affirmed the trial court's decision with modification, ordering payment of total net income from field no. 3 from crop year 1950-51 until delivery, plus interest. Petitioners' motion for reconsideration was denied. The Petition: Petitioners appealed to the Supreme Court, raising questions regarding the admissibility of Vicente's testimony, the novation of the written promise to sell into a verbal lease agreement, and the propriety of the damages awarded.
Issue(s)
Whether private respondent Gaspar Vicente was disqualified from testifying on matters occurring before the death of Praxedes T. Villanueva under the Dead Man's Statute. Whether the written promise to sell was novated into a verbal agreement of lease. Whether the damages awarded to private respondent Vicente were proper.
Ruling
The Supreme Court reversed the decision of the Court of Appeals. The judicial administrator of the estate of Gaspar Vicente and/or his successors-in-interest were ordered to surrender possession of fields nos. 4 and 13 of Hacienda Dulce Nombre de Maria to the petitioners, render an accounting of the produce of said fields from crop year 1950-51 until complete possession is delivered, and pay the corresponding annual rent equivalent to 15% of the gross produce, deducting the P12,460.24 advanced by Vicente.
Ratio Decidendi
On the admissibility of Vicente's testimony: The Court held that while Vicente would ordinarily be disqualified under the Dead Man's Statute (Section 20(a), Rule 130) from testifying on matters occurring before Villanueva's death, this disqualification was waived. The waiver occurred when petitioners' counsel cross-examined Vicente on such matters. Furthermore, petitioners filed a counterclaim against Vicente, placing him in the dual capacity of plaintiff and defendant. As a defendant in the counterclaim, he was not disqualified from testifying as to matters occurring before Villanueva's death, as the action was not brought against the estate. The presence of petitioner Goni, who signed the contract as attorney-in-fact and was privy to the transaction, also mitigated the inequality sought to be avoided by the rule, as he could testify regarding the contract. On the novation of the contract: The Court found that the written promise to sell was clearly and convincingly proven to have been novated into a verbal agreement of lease. This was substantiated not only by the testimony of petitioner Goni but also by the subsequent acts and conduct of the parties. Specifically, only fields nos. 4 and 13 were delivered to Vicente after the 1949-1950 milling season, while fields nos. 3, 4, and 13 were registered in Villanueva's name and mortgaged. Vicente's inaction in asserting his claim over field no. 3, despite these circumstances and the lapse of time before filing suit, indicated an acceptance of the lease agreement. The Court noted that novation requires unequivocal terms or incompatibility between obligations, and while novation is not presumed, the evidence presented demonstrated the parties' intent to change the original obligation. On the damages awarded: Given the finding that the written promise to sell was novated into a verbal lease agreement, the Court concluded that petitioners were entitled to a favorable decision on their counterclaim. The original award of damages based on the promise to sell was therefore set aside. The Court ordered the surrender of fields nos. 4 and 13, an accounting of their produce, and payment of rent at 15% of the gross produce, with credit for the P12,460.24 advanced by Vicente. The discussion of the third issue regarding the propriety of the damages awarded to Vicente became unnecessary in light of the reversal of the lower courts' findings on the nature of the agreement.
Main Doctrine
The testimony of a party against the estate of a deceased person, which would be barred under the Dead Man's Statute, may be admitted if the opposing party waives the disqualification by cross-examination or by filing a counterclaim, thereby placing the witness in a dual capacity. Furthermore, a written promise to sell can be novated into a verbal lease agreement if the intention to novate is clearly established by unequivocal terms or by acts and circumstances incompatible with the original obligation.