Ocampo v. Lim
REITERATIONFacts
1. The Antecedents: In 1904, plaintiffs sold four parcels of land (A, B, C, and D) to Hermogena Romero under a right to repurchase within ten years for P8,000. Subsequently, P700 was paid on account of the repurchase price, reducing the amount to just under P7,000. Parcel C, appraised at P1,620, comprised lots 5 and 6. 2. Procedural History: In 1908, a contract was executed where Romero would resell the lands to the plaintiffs, who would then sell them to Mariano Lim. Lim executed a promissory note for P6,580 to Romero, which was later endorsed to Warner, Barnes & Co. Warner, Barnes & Co. sued Lim for non-payment. In 1910, a new contract was made, canceling the 1908 agreement and the promissory note due to an issue with Ramon Custodio's representation of the plaintiffs. Romero transferred her rights to the lands to Lim, without prejudice to the plaintiffs' repurchase right at P7,000. The plaintiffs initiated this action to compel Lim to resell the lands based on the 1910 contract. The trial court ruled that Lim was obliged to resell the lands at P7,000, but allowed the plaintiffs 30 days to decide whether to buy improvements made by Lim on lot 6 of parcel C or compel Lim to buy the land. The plaintiffs elected to compel Lim to buy the lot at P3 per square meter. When Lim disagreed, the court appointed commissioners to appraise the lot, and Lim appealed this order. 3. The Petition: The defendant, Mariano Lim, appealed the trial court's judgment and order. His assignments of error were: (1) the court should have ordered the plaintiffs to sell parcel C (lots 5 and 6) to the defendant, fulfilling a promise made by Ramon Custodio, despite the plaintiffs' subsequent notification of this promise; and (2) the court erred in fixing the value of lot 6 of parcel C based on a commissioner's appraisal, ignoring other evidence. The Supreme Court addressed the appeal, finding that the 1908 contract was invalid as Custodio lacked authority and was subsequently canceled by the parties in 1910. The Court also found the appointment of commissioners to appraise lot 6 to be illegal, as it was not an eminent domain or authorized referee proceeding. The Court then re-evaluated the evidence, determining the value of lot 6 to be P1,951.52, and modified the judgment accordingly.
Issue(s)
Whether the plaintiffs are bound by the unauthorized 1908 contract executed by Ramon Custodio. Whether the trial court's appointment of commissioners to appraise the property in an ordinary action of recovery was legally authorized.
Ruling
The Supreme Court affirmed the judgment in part and reversed it in part. It held that the defendant is obliged to resell parcels A, B, and D, and lot 5 of parcel C to the plaintiffs. It further held that the defendant is obliged to buy parcel C, lot 6, from the plaintiffs at the price of P1,951.52.
Ratio Decidendi
On Issue 1: The plaintiffs are not bound by the 1908 contract because Ramon Custodio lacked the legal authority to represent them, a fact explicitly admitted by the defendant in the 1910 contract. The 1910 contract served as a formal cancellation of the 1908 agreement by the defendant and Hermogena Romero, thereby rendering any previous obligations under the 1908 instrument null and void. The letter (Exhibit 10) signed by Mariano G. Custodio in 1909 could not be considered a ratification because it lost all legal efficacy once the underlying 1908 contract was cancelled in 1910. Therefore, the defendant cannot invoke the terms of a cancelled agreement to bind the plaintiffs to a sale they did not authorize. The 1910 contract remains the governing instrument, which specifically preserved the plaintiffs' right to repurchase the properties originally sold in 1904. On Issue 2: The appointment of commissioners to appraise the land was illegal because the power to judge is a non-delegable duty that cannot be transferred to another unless expressly permitted by law. The Court emphasized that the commissioners' appointment did not fall under Section 243 of the Code of Civil Procedure, which is restricted to the extraordinary proceeding of eminent domain, whereas the present case is an ordinary action for recovery. Furthermore, they could not be considered referees under Section 136 of the same Code because they were appointed on the court's own motion against the express objection of the defendant. Because the appointment was illegal, the judgment based on the commissioners' report fixing the value at P1.50 per square meter was also illegal. In the absence of valid evidence from the plaintiffs, the Court accepted the defendant's admission that P4,000 was a reasonable value for the entire Parcel C, resulting in a calculated value of P1,951.52 for Lot 6.
Main Doctrine
The Supreme Court held that the appointment of commissioners to appraise property in an ordinary civil action, against the objection of a party, is illegal and renders any judgment based on their report likewise illegal. The Court also clarified that a valuation in a contract of sale with right of repurchase is not necessarily the just value of the property, and the burden of proving the value lies upon the party seeking to compel the purchase.