Civil Case.docx

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-13438

November 20, 1918

FRANCISCO GUTIERREZ REPIDE, plaintiff-appellant, vs. IVAR O. AFZELIUS and his wife, PATROCINIO R. AFZELIUS, defendants-appellees. Ramon Fernandez for appellant. T. L. McGirr for appellees.

MALCOLM, J.: The subject of Specific Performance, with reference to its common law and civil law status, it to be considered on this appeal. The particular action is for the specific performance of a contract for the sale and purchase of real estate. The plaintiff is the owner of a certain parcel of realty consisting of 2,695.24 square meters, situated in the city of Manila, and fully described in the complaint. About the month of December, 1916, the defendants made a proposition to the plaintiff for the purchase of this property. After negotiating for some time, it was agreed that the defendants would pay plaintiff the sum of P10,000 for the land, P2,000 of which was to be handed over upon the signing of the deed, and the balance of P8,000, paid in monthly installments of P150. The property was to be mortgaged to the plaintiff to secure the payment of this balance of P8,000. The plaintiff proceeded to have survey made of the land and to prepare the deed and mortgage. Expenses to the amount of P83.93 were incurred for these purposes. The deed was ready about December 28, 1916, when the defendants were notified to appear and sign the same. They failed to do this, and instead, the defendant, Patrocinio R. Afzelius, wrote a letter to plaintiff, as follows:

MANILA, January 3, 1917. MR. FRANCISCO GUTIERREZ, Manila. MY DEAR SIR: It is with regret that I inform you that it is now absolutely impossible for us to effect the purchase of the property at Juan Luna Street, as it was our desire to do. The reason for this is that the business has failed, in which we had invested all the money we had and from which he hope to obtain sure gains and to get the P2,000 which we were to give you in advance for the purchase of said property, and consequently, we have lost our savings and our hope of being able to purchase the property for the time being.

Before closing, I request you to pardon us for the troubles we have caused you, for, in truth, we acted in good faith, but, as you will readily realize, without having the P2,000 in our hands, it will be impossible for us to effect the purchase. Reiterating my request that you pardon us for all the trouble, I am Very truly yours. (Sgd.) PATROCINIO R. AFZELIUS. In addition to the letter above quoted, Afzelius testified on the trial that although he and his wife had available the sum of P2,000 to pay the first installment on the purchase price of the land, yet it belonged in part to his wife's sister, and that, as she subsequently needed the money for something else, they had to return it to her, and in order to give excuses to the plaintiff, his wife wrote this letter to the plaintiff. Plaintiff was, and still is, willing to execute the deed in accordance with the terms agreed upon with the defendants. Accordingly, plaintiff, in his action in the Court of First Instance of the city of Manila, asked judgment against the defendants condemning them to sign the deed and mortgage to the land in question, and to pay the purchase price stipulated, with costs. The defendants filed a general denial, alleging that the plaintiff has not sustained damages of any kind or character, and praying that the case be dismissed at the cost of the plaintiff. The trial court, after finding the facts as herein stated, made application thereto of the law of Specific Performance. After stating the general principles of this branch of the law, the court deduced therefrom that the remedy by specific performance is one the granting or denying of which rests in the exercise of sound judicial discretion. The court said: Whether or not the defendants are able to perform the contract is a matter of defense, and there is no special defense on that subject in the answer; but it appears from the evidence that the defendants have not the funds available for the cash payment on the contract, and apparently the performance of the contract in the terms agreed between the plaintiff and defendants would be impracticable; the court would not be able to enforce a decree for specific performance, and such a decree might operate as a great hardship upon the defendants; therefore, the court is of the opinion that it would be useless, unjust and inequitable to render judgment herein for specific performance. lawphil.net

The judgment then was in favor of the defendants, dismissing the plaintiff's complaint, without prejudice to any other remedy which the plaintiff might have, and without any finding as to the costs. The plaintiff and appellant bases his argument on articles 1254, 1258, 1278, 1450, and 1279 of the Civil Code. The provisions of the five articles first cited and others that could be mentioned merely tend to corroborate what is self-evident, namely, the existence of a valid contract between the parties. Indisputably, there has been an offer and an acceptance, and all that remained to effectuate the contract was the execution of the deed and the mortgage. The article of the Civil code chiefly relied upon by appellant, No. 1279, would seem to settle favorably the first branch of the prayer of the complaint, asking that the defendants be required to sign the deed and mortgage to the land in question. This article of the Civil Code appears to have been prepared to meet exactly such a situation, to the end that the contracting parties can reciprocally compel the observance of the necessary formalities.

Other portions of the Civil Code not called to our attention by the appellant, notably articles 1096, 1098, 1124 and 1451, recognize what is denominated in the common law as Specific Performance. Article 1451 provides that, "A promise to sell or buy, when there is an agreement as to the thing and the price, entitles the contracting parties reciprocally to demand the fulfillment of the contract." But the article in recognition of a negative result also provides, "whenever the promise to purchase and sell cannot be fulfilled, the provisions relative to obligations and contracts, contained in this book, shall be applicable in the respective cases to the vendor and the vendee." Turning to these provisions relating to obligations and contracts, we find article 1096 making a distinction between a specific thing to be delivered and an indeterminate or generic thing; article 1098 providing that a person is obligated to do a certain thing according to the tenor of the obligation; and finally, article 1124 in absolute approval of contractual mutually decreeing that "the person prejudiced may choose between exacting the fulfillment of the obligation or its resolution with indemnity for damages and payment of interest in either cases." As to whether the vendor can compel the vendee to perform, which is the point before the court, the jurisprudence of the supreme court of Spain and the commentaries of Manresa do not in the least attempt to distinguish between one or the other party, the vendor or the vendee, but constantly and without exception use the word "reciprocamente." the following decisions of the supreme court of Spain interpretative of these articles can be noted: April 17, 1897; October 10, 1904; February 4, 1905. The vendee is entitled to specific performance essentially as a matter of course. Philippine cases have so held. (Irureta Goyena vs. Tambunting [1902], 1 Phil., 490; Thunga Chui vs. Que Bentec [1903], 2 Phil., 561; Couto Soriano vs. Cortes [1907, 8 Phil., 459; Dievas vs. Co Chongco [1910], 16 Phil., 447.) If the doctrine of mutuality of remedy is to apply, the vendor should likewise be entitled to similar relief. Philippine jurisprudence, however, has never as yet been afforded an opportunity to so hold. The nearest approach to the idea has been, with reference to merchandise, in a decision to the effect that if the purchaser refuses without lawful reason to accept delivery when tendered by the seller in conformity with the contract of sale, the seller may elect to enforce compliance or to rescind. (Matute vs. Cheong Boo [1918], 37 Phil., 372.) Thus far, in this opinion we have discussed the question of whether the vendor as well as the vendee is entitled to the specific performance of the contract for the sale of land, from the standpoint of the civil law. Now, of course, specific performance of contracts is, under this name, an equitable remedy. As such, since there exist no courts of equity and no equity jurisprudence in this jurisdiction, the authority arising from the common law is not of binding force in the Philippines. Nevertheless, as the civil law and the common law seem to arrive at the same goal on this subject, we should at least notice as persuasive authority the jurisprudence of the United States and Great Britain. The American and English cases that relate to specific performance by the vendor are with a few exceptions all one way. In the language of Chief Justice Marshall, "The right of a vendor to come into a court of equity to enforce a specific performance is unquestionable." (Cathcart vs. Robinson [1831], 5 Pet., 264.) The rule in nearly all jurisdictions is that specific performance may be had at the suit of the vendor of land, the vendee being decreed to accept the deed and pay the purchase price. (Freeman vs. Paulson [1909], 107 Minn., 64; Migatz vs. Stieglitz [1905], 166 Ind., 362; Robinson vs. Appleton [1888], 124 Ill., 276; Hodges vs. Kowing [1889], 58 Conn., 12; Curtis Land & Loan Co. vs. Interior Land Co. [1908], 137 Wis., 341; The Maryland Clay Co. vs. Simpers [1903], 96 Md., 1; Old Colony R. Corp. vs. Evans [1856], 6 Gray, 25; Raymond vs. San Gabriel rec. Co. [1893], 53 Fed., 883; 36 Cyc., 565.) The reasoning supporting the authorities is that the performance of contracts must and should be mutual. The contract is ordinarily bilateral. So should the respective rights of the parties be. Nor does an action to recover damages for breach of contract ordinarily afford a complete and adequate remedy. The equitable doctrine is not applied where it will be productive of great hardship.

Here we have presented a good and valid contract, bilateral in character, and free from all taint of fraud. The stability of commercial transactions requires that the rights of the seller be protected just as effectively as the rights of the buyer. If this plaintiff had refused to comply with the contract, specific performance of the obligation could have been asked by the defendants. Just as surely should the plaintiff who has lived up to his bargain and who has been put to expense to do so, be permitted to coerce the defendant into going through with the contract. The excuse of the defendants is that they do not now have the money to pay the first installment. In other words, they plead impossibility of performance. The rule of equity jurisprudence in such a case is that mere pecuniary inability to fulfill an engagement does not discharge the obligation of the contract, not does it constitute any defense to a decree for specific performance. (Hopper vs. Hopper [1863], 16 N. J. Eq., 147.) Now, the courts will not make an order obviously nugatory. But the courts should lend their assistance to the plaintiff to compel the defendants to fulfill their obligation. Besides requiring the defendants to sign the contract and the mortgage, the judgment of the court can be aided by execution on the property of the defendants. If, then, it is found that it is impossible for the defendants to live up to their agreement, naturally the plaintiff will rest content if for no other reason than for the protection of his financial interests. Judgment shall be reversed, and an order shall issue, condemning the defendants to sign the deed and mortgage to the land in question and to pay the first installment of the purchase price as stipulated. The appellant shall recover costs of both instances. The Code of Civil Procedure in its Chapter XXI entitled "Costs in the Several Courts" states in section 487 that "Costs shall ordinarily be allowed to the prevailing party as a matter of course . . . . " Philippine law is, in this respect, identical with the general rule, which is that "On reversal, . . . the costs will generally go to the prevailing party, that is, to the appellant." (7 R. C. L., 801, citing cases.) No special reasons exist in this case for modifying the general rule. So ordered. Johnson, Street, Avanceña and Fisher, JJ., concur.