Ascano-Cupino v. Pacific Rehouse
REITERATIONFacts
1. The Antecedents: Pacific Rehouse Corporation (Pacific) entered into a Deed of Conditional Sale with Honorlita Ascano-Cupino and Flaviana Ascano-Colocado (petitioners) for a parcel of land measuring 59,753 square meters in General Trias, Cavite, for P5,975,300. Pacific paid a down payment and additional amounts totaling P3,405,180, with a remaining balance conditional upon the vendors' fulfillment of certain obligations. These obligations included clearing the land of tenants and squatters, providing necessary transfer documents, and submitting an Affidavit of Non-Tenancy. The petitioners allegedly requested and received further sums from Pacific, purportedly for fulfilling these conditions, but failed to deliver the required documents and remove the occupants. Instead, they sought to rescind the contract, while Pacific attempted to tender the remaining balance and later filed a complaint. 2. Procedural History: Pacific Rehouse Corporation initially filed a complaint for cancellation of contract and damages before the Regional Trial Court (RTC) of Trece Martires City. However, upon discovering that the petitioners had withdrawn a significant deposit made by Pacific, the complaint was amended to one for specific performance. The RTC ruled in favor of the petitioners, ordering the cancellation of the contract and the return of a portion of the payments made, along with damages and attorney's fees for the petitioners. Pacific moved for reconsideration, which was denied, prompting an appeal to the Court of Appeals (CA). The CA reversed the RTC's decision, ordering Pacific to pay the remaining balance upon the execution of the Deed of Absolute Sale and delivery of necessary documents, and requiring the petitioners to clear the property of occupants at their own expense. The petitioners' motion for reconsideration was subsequently denied. 3. The Petition: The petitioners filed a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to overturn the CA's decision and reinstate the RTC's ruling, albeit with a modification to exclude the order for the return of payments. They argue that the CA erred in ordering specific performance instead of rescission, asserting that Pacific was remiss in its obligations and that they are the injured parties. The petitioners contend that Pacific is bound by an Addendum to the Deed of Conditional Sale, which they claim was signed by Pacific's authorized representative, and that Pacific failed to pay the agreed-upon purchase price and the tenants' disturbance compensation. They also sought a temporary restraining order (TRO) to prevent Pacific from moving for a writ of execution, which was initially granted but later withdrawn by the petitioners due to their inability to afford the required bond.
Issue(s)
Whether the RTC erred in deciding the case based on the original complaint instead of the amended complaint. Whether rescission of the Deed of Conditional Sale is warranted due to Pacific's alleged failure to fulfill its obligations, and whether petitioners are the injured parties entitled to rescission. Whether the Addendum to the Deed of Conditional Sale is valid and binding. Whether the agreed purchase price is P5,975,300.00 or P11,950,600.00. Whether Pacific is entitled to specific performance.
Ruling
The petition is denied. The Court affirms the decision of the Court of Appeals. The RTC erred in deciding the case based on the original complaint instead of the Amended Complaint which changed the cause of action to specific performance. Pacific, as the injured party who had fulfilled or was ready to fulfill its obligations, is entitled to specific performance, not rescission, as petitioners failed to perform their obligations under the Deed of Conditional Sale. The purchase price is P5,975,300.00 as stated in the Deed of Conditional Sale and supported by check vouchers.
Ratio Decidendi
On the RTC's error in deciding based on the original complaint: The Supreme Court held that the RTC committed a reversible error by deciding the case based on Pacific's original complaint praying for rescission, instead of its Amended Complaint which changed the cause of action to specific performance. The Court emphasized that an amended pleading supersedes the pleading it amends, and the case should have proceeded based solely on the Amended Complaint and the corresponding Amended Answer. Admissions in superseded pleadings may be received in evidence, but claims or defenses not incorporated in the amended pleading are deemed waived. Therefore, the RTC's decision, which granted rescission, was flawed because it did not consider the proper cause of action presented in the Amended Complaint. On rescission, the parties' obligations, and entitlement to specific performance: The Court meticulously examined the Deed of Conditional Sale and found that Pacific's obligations included paying the down payment and the balance upon completion of necessary documents by the vendors. Petitioners' obligations, on the other hand, were to furnish necessary documents, guarantee the removal of tenants and shoulder their disturbance compensation, and provide an Affidavit of Non-Tenancy. The Court found that petitioners failed to fulfill these obligations, specifically the removal of tenants and the submission of required documents. Since the petitioners failed to comply with their undertakings in the Deed of Conditional Sale, they could not validly claim rescission. The principle of pari delicto or mutual fault does not apply here, as Pacific was found to be the party ready and willing to perform its obligations, making it the injured party entitled to specific performance. The Court's decision to affirm the CA's grant of specific performance was based on Pacific's election of this remedy and petitioners' clear breach of contract. Pacific, having fulfilled its obligations or being ready and willing to do so, was deemed the injured party entitled to choose between fulfillment and rescission. Pacific elected fulfillment through specific performance as stated in its Amended Complaint. On the validity of the Addendum: The Supreme Court affirmed the CA's ruling that the Addendum relied upon by petitioners was not valid. The Court noted that the Addendum was not signed by any authorized officer or representative of Pacific, and the signatory for Pacific in the original Deed of Conditional Sale, Dee Hua T. Gatchalian, did not sign it. Furthermore, Melecio Fortuno, who petitioners claimed was Pacific's authorized representative, signed the Addendum merely as a witness. The Court clarified that signing as a witness does not automatically convert a person into a party to the contract or prove their authority to amend it. Consequently, the Addendum did not alter the obligations stipulated in the original Deed of Conditional Sale. On the agreed purchase price: The Court upheld the finding of both the RTC and the CA that the agreed purchase price was P5,975,300.00, as stated in the Deed of Conditional Sale. This was supported by the Pre-trial Order where parties stipulated this amount and by check vouchers issued by Pacific, which were acknowledged and signed by petitioners, indicating a consideration of P100 per square meter. The Court found no other evidence to support petitioners' claim of a higher purchase price of P11,950,600.00. Therefore, the balance to be paid by Pacific was based on the P5,975,300.00 purchase price. On the entitlement to specific performance: Pacific, having fulfilled its obligations or being ready and willing to do so, was deemed the injured party entitled to choose between fulfillment and rescission. Pacific elected fulfillment through specific performance as stated in its Amended Complaint.
Main Doctrine
When a pleading is amended, the original pleading is deemed abandoned and the case proceeds based on the amended pleading. The injured party in a reciprocal obligation may choose between fulfillment (specific performance) and rescission, but rescission is not allowed in favor of a party who failed to perform their obligations.