Dio v. St. Ferdinand Memorial Park
REITERATIONFacts
The Antecedents: Teresita Dio purchased a memorial lot from St. Ferdinand Memorial Park, Inc. (SFMPI) on December 11, 1973, evidenced by a Pre-Need Purchase Agreement. SFMPI issued a Deed of Sale and Certificate of Perpetual Care on April 1, 1974. Dio interred the remains of her husband and father in the lot at her own expense, engaging a private contractor for improvements, without SFMPI's knowledge. In August 1974, her daughter's remains were also interred. In 1986, Dio planned to build a mausoleum and sought approval from SFMPI's president, Mildred F. Tantoco, presenting plans and specifications prepared by her private contractor. Tantoco insisted that SFMPI or its agents build the mausoleum at a minimum cost of ₱100,000.00, citing Rule 69 of SFMPI's Rules and Regulations, which stipulated that mausoleum construction must be done by Park Personnel, though lot owners could provide designs conforming to park standards. Dio, through counsel, demanded to proceed with her contractor within 10 days, threatening legal action. SFMPI responded on October 17, 1986, reiterating the prohibition against outside contractors under Rule 69. Procedural History: On December 23, 1986, Dio filed a Complaint for Injunction with Damages against SFMPI and Tantoco, averring ignorance of Rule 69 and deeming the ₱100,000.00 construction cost unconscionable. She sought to perpetually restrain defendants from enforcing Rule 69. The RTC issued a cease and desist order. Defendants argued Rule 69 was not oppressive, was adopted prior to the purchase, and Dio was aware and estopped from questioning it. The RTC rendered judgment in favor of defendants, dismissing the complaint, finding Dio aware of the rules as she sought permission to build. The Court of Appeals (CA) affirmed the RTC decision, holding that Dio agreed to be bound by existing and future rules and regulations. The Petition: Dio filed a Petition for Review on Certiorari, assailing the CA's rulings on the validity of Rule 69, her binding obligation to future rules, and the denial of damages.
Issue(s)
Whether petitioner had knowledge of Rule 69 of SFMPI Rules and Regulations at the time of the execution of the Pre-Need Purchase Agreement and Deed of Sale. Whether Rule 69 is valid and binding upon the petitioner. Whether the appellate court erred in ruling that the date "May 25, 1972" could not have been a belated attempt to show that Rule 69 was adopted prior to petitioner’s purchase. Whether the appellate court erred in ruling that petitioner was bound not only by rules existing at the time of the purchase but also by those adopted later. Whether the appellate court erred in ruling that petitioner was bound by the rules because she voluntarily entered into the sale and purchase. Whether the appellate court erred in sustaining the validity of Rule 69 despite it being void for being contrary to law, morals, public order, and public policy. Whether the appellate court erred in not ordering respondents to pay petitioner damages.
Ruling
The petition is denied for lack of merit. The Decision of the Court of Appeals affirming the trial court's dismissal of the complaint is affirmed.
Ratio Decidendi
On the issue of knowledge of Rule 69: The Court held that petitioner is precluded from asserting ignorance of Rule 69. Both the Pre-Need Purchase Agreement and the Deed of Sale and Certificate of Perpetual Care explicitly stated that the purchaser agreed to be bound by existing and future rules and regulations of SFMPI. These rules were kept in the seller's office and were subject to inspection by the purchaser at all times. The Court imputed knowledge to the petitioner, stating that whatever fairly puts a person on inquiry is sufficient notice when the means of knowledge are at hand. The trial court's finding that petitioner informed SFMPI of her intention to construct a mausoleum was considered proof of her awareness of the rules, as she would not have sought permission otherwise. Therefore, petitioner is bound by the terms and conditions of the agreements, including Rule 69. On the validity and binding nature of Rule 69: The Court found Rule 69 to be valid and binding. Contracts, once perfected, bind the parties, provided they are not contrary to law, morals, good customs, public order, or public policy. Article 428 of the Civil Code allows owners to enjoy their property subject to limitations established by law or by the will of the transferor, as long as these limitations are not contrary to the nature of ownership or prohibited by law. Rule 69 was deemed not oppressive or unconscionable because it allowed lot owners to provide their own designs, as long as they conformed to park standards. The management of SFMPI had the power to formulate reasonable rules and regulations for the park. The rule permitted the use of the property for its intended purpose, subject to park standards and rules common to all lot owners. On the issue of belated adoption of Rule 69: The Court did not find merit in the argument that the date "May 25, 1972" was a belated attempt to establish the rule's prior existence. While the NBI Document Examiner testified that the date might have been an intercalation, he also admitted it was possible it was typed on the same occasion or after the page was removed from the typewriter. The appellate court's conclusion that the date could have been typed after the document was prepared was not considered a palpable error warranting review. The Court deferred to the factual findings of the lower courts, which were affirmed by the CA, as they were supported by the records. On the binding effect of future rules: The Deed of Sale and Certificate of Perpetual Care explicitly stated that the purchaser agreed to be bound by rules and regulations that "may hereafter be adopted" by SFMPI. This provision was incorporated by reference and made an integral part of the contract. Therefore, petitioner was bound not only by the rules existing at the time of purchase but also by those subsequently adopted. On the argument of voluntary entry and contracts of adhesion: The Court rejected the claim that the contracts were invalid due to being contracts of adhesion. While acknowledging that such contracts can be struck down if the weaker party is imposed upon, the Court found no reason to apply this stringent treatment. Petitioner was described as an educated and experienced businesswoman, not a disadvantaged party. She entered into the agreements without protest and only assailed Rule 69 when her request for construction was rejected. The Court reiterated that a contract of adhesion is not invalid per se and is binding if the adhering party is free to reject it. On the claim that Rule 69 is void: The arguments that Rule 69 is contrary to law, morals, public order, and public policy were not explicitly addressed separately in the provided ratio. However, the court's finding that Rule 69 is valid and binding implicitly rejects these claims, as a rule contrary to these principles would not be upheld as valid. On the claim for damages: The trial court found that damages were not sufficiently proven, and this finding was affirmed by the appellate court. Consequently, the Supreme Court did not order respondents to pay damages.
Main Doctrine
A contract of adhesion is not invalid per se and is binding if the adhering party had the freedom to reject it. Knowledge of rules and regulations incorporated by reference in a contract will be imputed to the party who had the opportunity to inspect them.