Marmont Resort Hotel Enterprises v. Guiang
REITERATIONFacts
The Antecedents: Petitioner Marmont Resort Hotel Enterprises, Inc. (Marmont) entered into a Memorandum of Agreement with Maris Trading for the installation of a water supply facility for its hotel. Maris Trading drilled a well and installed a pump on a portion of land occupied by respondent spouses Federico and Aurora Guiang. Subsequently, Maris Trading and Aurora Guiang executed a second Memorandum of Agreement, with Federico Guiang signing as witness, wherein the spouses sold their possessory rights over the portion of the lot where the water source was located to Maris Trading for P1,500.00. Later, Marmont's water supply became inadequate, and it sought to install additional equipment, but the Guiang spouses refused entry to the site. Marmont filed a complaint for damages against the Guiang spouses for their refusal. Procedural History: The Regional Trial Court (RTC) dismissed Marmont's complaint, finding that while Aurora Guiang validly alienated her rights, there was no proof that Maris Trading transferred these rights to Marmont. The Court of Appeals (CA) affirmed the RTC's decision, holding that the Memoranda of Agreement were not formally offered in evidence and that Marmont had not acquired rights from Maris Trading. The Petition: Marmont filed a Petition for Review, arguing that the CA erred in not considering the Memoranda of Agreement admitted in the pre-trial order and in ruling that ownership belonged to the Guiang spouses, thus allowing them to prohibit Marmont's entry.
Issue(s)
Whether the Court of Appeals erred in not considering the Memoranda of Agreement as part of the record, despite their admission in the pre-trial order. Whether the respondent spouses had the right to prohibit Marmont from entering the land to make repairs and improvements on the water facility, and the validity of the second Memorandum of Agreement. Whether the respondent spouses are liable for damages under the human relations provision of the Civil Code.
Ruling
The Supreme Court granted the Petition for Review, reversed the decisions of the Court of Appeals and the Regional Trial Court, and remanded the case to the trial court for determination of the amount of damages. The Court held that the stipulation of facts during pre-trial constituted a judicial admission, that the second Memorandum of Agreement contained a stipulation pour autrui in favor of Marmont, and that the respondent spouses acted contrary to good faith and fair dealing.
Ratio Decidendi
On the admissibility of the Memoranda of Agreement: The Court held that the Court of Appeals erred in not considering the Memoranda of Agreement. The stipulation of facts entered into by the parties at the pre-trial conference constituted a judicial admission, which requires no further proof and cannot be controverted unless shown to have been made through palpable mistake. Since no such mistake was demonstrated, the respondent spouses were estopped from questioning the existence and admissibility of these documents, which were properly part of the record even if not formally offered after trial. The Court emphasized that judicial admissions are conclusive on the parties and are not subject to further proof. On the right of the respondent spouses to prohibit entry and the validity of the second Memorandum of Agreement: The Court found that the second Memorandum of Agreement, wherein the Guiang spouses sold their possessory rights over the portion of the land to Maris Trading, was valid. The Court noted that Federico Guiang signed as a witness, indicating his consent to the agreement executed by his wife, Aurora Guiang, thereby satisfying the requirements of Articles 165 and 172 of the Civil Code. The fact that the land was public land was deemed inconsequential, as the spouses possessed assignable rights. Furthermore, the Court stated that even if the alienation were objectionable, the spouses were not the proper parties to raise the issue as they were in pari delicto with Maris Trading; only the government could raise such an issue. The Court also clarified that Marmont was not a stranger to the second agreement, as it contained stipulations pour autrui for the benefit of Marmont, making it enforceable by Marmont. On the liability for damages: The Court ruled that the respondent spouses acted contrary to the principles of honesty, good faith, and fair dealing embodied in Articles 19 and 21 of the Civil Code when they refused Marmont access to the water facility. The Court found that the purpose of acquiring possessory rights by Maris Trading was solely to supply water to Marmont's hotel, a fact known to the respondent spouses. Therefore, Marmont's interest was not merely incidental, and the spouses' refusal caused Marmont to incur expenses and potential revenue loss. However, due to insufficient evidence on the amount of damages, the case was remanded to the trial court for further proceedings.
Main Doctrine
A stipulation of facts agreed upon by parties during pre-trial constitutes a judicial admission that requires no further proof and cannot be controverted unless shown to have been made through palpable mistake. Furthermore, a contract may contain a stipulation pour autrui, a stipulation in favor of a third person conferring a clear and deliberate favor upon him, which is enforceable by the third person if the intention to benefit is clear.