THIRD DIVISION
G.R. No. 185530, April 18, 2018
MAKATI TUSCANY CONDOMINIUM CORPORATION, Petitioner, v. MULTI-REALTY DEVELOPMENT CORPORATION, Respondent.
D E C I S I O N
LEONEN, J.:
Reformation of an instrument may be allowed if subsequent and contemporaneous acts of the parties show that their true intention was not accurately reflected in the written instrument.
This resolves the Petition for Review on Certiorari1 filed by Makati Tuscany Condominium Corporation (Makati Tuscany), assailing the April 28, 2008 Amended Decision2 and December 4, 2008 Resolution3 of the Court of Appeals in CA-G.R. CV No. 44696.
In 1974, Multi-Realty Development Corporation (Multi-Realty) built Makati Tuscany, a 26-storey condominium building located at the corner of Ayala Avenue and Fonda Street, Makati City.4
Makati Tuscany had a total of 160 units, with 156 ordinary units from the 2nd to the 25th floors and four (4) penthouse units on the 26th floor.5 It also had 270 parking slots which were apportioned as follows: one (1) parking slot for each ordinary unit; two (2) parking slots for each penthouse unit; and the balance of 106 parking slots were allocated as common areas.6
On July 30, 1975, Multi-Realty, through its president Henry Sy, Sr., executed and signed Makati Tuscany's Master Deed and Declaration of Restrictions (Master Deed),7 which was registered with the Register of Deeds of Makati in 1977.8
Sometime in 1977, pursuant to Republic Act No. 4726, or the Condominium Act, Multi-Realty created and incorporated Makati Tuscany Condominium Corporation (MATUSCO) to hold title over and manage Makati Tuscany's common areas. That same year, Multi-Realty executed a Deed of Transfer of ownership of Makati Tuscany's common areas to MATUSCO.9
On April 26, 1990, Multi-Realty filed a complaint for damages and/or reformation of instrument with prayer for temporary restraining order and/or preliminary injunction against MATUSCO. This complaint was docketed as Civil Case No. 90-1110 and raffled to Branch 59 of Makati Regional Trial Court.10
Multi-Realty alleged in its complaint that of the 106 parking slots designated in the Master Deed as part of the common areas, only eight (8) slots were actually intended to be guest parking slots; thus, it retained ownership of the remaining 98 parking slots.11
Multi-Realty claimed that its ownership over the 98 parking slots was mistakenly not reflected in the Master Deed "since the documentation and the terms and conditions therein were all of first impression,"12 considering that Makati Tuscany was one of the first condominium developments in the Philippines.13
On October 29, 1993, the Regional Trial Court14 dismissed MultiRealty's complaint. It noted that Multi-Realty itself prepared the Master Deed and Deed of Transfer; therefore, it was unlikely that it had mistakenly included the 98 parking slots among the common areas transferred to MATUSCO. It also emphasized that Multi-Realty's prayer for the reformation of the Master Deed could not be granted absent proof that MATUSCO acted fraudulently or inequitably towards Multi-Realty. Finally, it ruled that Multi-Realty was guilty of estoppel by deed.15 The fallo of its Decision read:
Premises considered, this case is dismissed. [MATUSCO's] counterclaim is likewise dismissed the same not being compulsory and no filing fee having been paid. [Multi-Realty] is however ordered to pay [MATUSCO's] attorney's fees in the amount of P50,000.00Both parties appealed the Regional Trial Court Decision to the Court of Appeals. On August 21, 2000, the Court of Appeals17 dismissed both appeals on the ground of prescription.
Cost against plaintiff.
SO ORDERED.16
WHEREFORE, foregoing premises considered, no merit in fact and in law is hereby ORDERED DISMISSED, and the judgment of the trial court is MODIFIED by deleting the award of attorney's fees not having been justified but AFFIRMED as to its Order dismissing both the main complaint of [Multi-Realty] and the counterclaim of [MATUSCO]. With costs against both parties.Multi-Realty moved for reconsideration,20 but its motion was denied in the Court of Appeals January 18, 2001 Resolution.21 It then filed a petition for review22 before this Court.
SO ORDERED.19
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 44696 is SET ASIDE. The Court of Appeals is directed to resolve [Multi-Realty's] appeal with reasonable dispatch. No costs.On November 5, 2007, the Court of Appeals27 denied both appeals.
ORDERED.26 (Emphasis in the original)
WHEREFORE, the instant appeals are hereby DENIED. The assailed Decision dated October 29, 1993 of the Regional Trial Court (Branch 65), Makati, Metro Manila (now Makati City), in Civil Case No.Multi-Realty moved for the reconsideration of the Court of Appeals November 5, 2007 Decision and on April 28, 2008, the Court of Appeals promulgated an Amended Decision,31 reversing its November 5, 2007 Decision and directing the reformation of the Master Deed and Deed of Transfer.
90-1110 is MODIFIED-in that: (1) the counterclaim of The Makati Tuscany Condominium Corporation is DISMISSED-not on the ground of non-payment of docket fees but on ground of prescription; and, (2) the award of attorney's fees in favor of The Makati Tuscany Condominium Corporation is DELETED for not having been justified. We however AFFIRM in all other aspects. Costs against both parties.
SO ORDERED.30 (Emphasis in the original)
WHEREFORE, premises considered, the present Motion forMATUSCO moved for the reconsideration35 of the Amended Decision, but its motion was denied in the Court of Appeals December 4, 2008 Resolution.36
Reconsideration is PARTLY GRANTED. Our Decision dated November
05, 2007 is hereby MODIFIED-in that We ORDER the reformation of the Master Deed and Declaration of Restrictions of the Makati Tuscany Condominium Project and the Deed of Transfer-to clearly provide that the ownership over the ninety[-]eight (98) extra parking lots be retained by Multi-Realty Development Corporation. We however DENY the damages and attorney's fees prayed for by Multi-Realty Development Corporation. We AFFIRM in all other respects. No costs.
SO ORDERED.34 (Emphasis in the original)
Article 1359. When, there having been a meeting of the minds of the parties to a contract, their true intention is not expressed in the instrument purporting to embody the agreement, by reason of mistake, fraud, inequitable conduct or accident, one of the parties may ask for the reformation of the instrument to the end that such true intention may be expressed.The National Irrigation Administration v. Gamit54 stated that there must be a concurrence of the following requisites for an action for reformation of instrument to prosper:
If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the minds of the parties, the proper remedy is not reformation of the instrument but annulment of the contract.
(1) there must have been a meeting of the minds of the parties to the contract; (2) the instrument does not express the true intention of the parties; and (3) the failure of the instrument to express the true intention of the parties is due to mistake, fraud, inequitable conduct or accident.55The burden of proof then rests upon the party asking for the reformation of the instrument to overturn the presumption that a written instrument already sets out the true intentions of the contracting parties.56
SEC. 5. Accessories to Units. - To be considered as part of each unit and reserved for the exclusive use of its owner are the balconies adjacent thereto and the parking lot or lots which are to be assigned to each unit.A plain and literal reading of Section 7(d) in relation to Section 5 shows that all parking areas which are not assigned to units come under petitioner's authority because they are part of the common areas.
....
SEC. 7. The Common Areas. - The common elements or areas of The Makati Tuscany shall comprise all the parts of the project other than the units, including without limitation the following:
....
(d) All driveways, playgrounds, garden areas and parking areas other than those assigned to each unit under Sec. 5 above[.]57
UNASSIGNED PARKING SLOTSFinally, respondent highlights that it was only in September 1989, when the value of the 72 remaining unallocated parking slots had risen to approximately P250,000.00 each or approximately P18,000,000.00 for the 72 parking slots, that petitioner first claimed ownership of the remaining parking slots.62
Mr. Jovencio Cinco informed the Board of the final proposal of Multi-Realty Development Corp. to sell the condominium corp. all of the unassigned parking lots at a discounted price of P15,000.00 per lot, or some 50% lower than their regular present price of P33,000.00 each.
After discussion, it was agreed to hold in abeyance any decision on the matter for all the members of the Board in attendance to pass upon.61
1. The Petition does not raise questions of fact because no doubt or difference exists between the parties' appreciation of the truth or falsehood of alleged facts, nor does it require the Honorable Court to evaluate the credibility of witnesses or their testimonies. The resolution of the instant controversy rests solely upon the correct application of principles of law and pertinent jurisprudence, as well as hallowed ideals of fairness and public policy which are specific or germane to the undisputed facts. These facts have already been framed by this Honorable Court in a related case brought before it by the same parties, albeit limited to the sole issue of prescription of the action for reformation of instruments initiated by [Multi-Realty]. For the avoidance of doubt, these facts are reproduced hereunder as follows:Just like respondent, petitioner invokes mistake in good faith to explain its seeming recognition of respondent's ownership of the 72 remaining parking slots, showing its acquiescence to respondent's sale of the 26 parking slots and its issuance of the Certificates of Management for the sold condominium units and parking slots.64
....
1.3 Makati Tuscany consisted of 160 condominium units, with 156 units from the 2nd to the 25th floors, and 4 penthouse units in the 26th floor. Two hundred seventy (270) parking slots were built therein for appointment among its unit owners. One hundred sixty-four (164) of the parking slots were so allotted, with each unit at the 2nd to the 25th floors being allotted one ( 1) parking slot each, and each penthouse unit with two slots. Eight (8) other parking slots, found on the ground floor of the Makati Tuscany were designated as guest parking slots, while the remaining ninety[-]eight (98) were to be retained by Multi-Realty for sale to unit owners who would want to have additional slots.
....
1.7. The Master Deed was filed with the Register of Deeds in 1977. Multi-Realty executed a Deed of Transfer in favor of Makati Tuscany over these common areas. However, the Master Deed and the Deed of Transfer did not reflect or specify the ownership of the 98 parking slots. Nevertheless, Multi-Realty sold 26 of them in 19 to 1986 to condominium unit buyers who needed additional parking slots. Makati Tuscany did not object, and certificates of title were later issued by the Register of Deeds in favor of the buyers. Makati Tuscany issued Certificates of Management covering the condominium units and parking slots which Multi-Realty has sold.
1.8 At a meeting of Makati Tuscany's Board of Directors on 13 March 1979, a resolution was approved, authorizing its President, Jovencio Cinco, to negotiate terms under which Makati Tuscany would buy 36 of the unallocated parking slots from Multi-Realty. During another meeting of the Board of Directors on 14 June 1979, Cinco informed the Board members of Multi-Realty's proposal to sell all of the unassigned parking lots at a discounted price of P15,000.00 per lot, or some 50% lower than the then prevailing price of P33,000.00 each. The Board agreed to hold in abeyance any decision on the matter to enable all its members to ponder upon the matter.63 (Emphasis supplied, citations omitted)
"The doctrine of estoppel is based upon the grounds of public policy, fair dealing, good faith and justice, and its purpose is to forbid one to speak against his own act, representations, or commitments to the injury of one to whom they were directed and who reasonably relied thereon. The doctrine of estoppel springs from equitable principles and the equities in the case. It is designed to aid the law in the administration of justice where without its aid injustice might result." It has been applied by this Court wherever and whenever special circumstances of a case so demand.71In this case, except for the words in the contract, all of respondent's acts were consistent with its position in the case.
Not even the registration of the Master Deed with the Makati City Register of Deeds renders Multi-Realty guilty of estoppel by deed. For one, [MATUSCO] was not made to believe that it shall be the owner of the questioned extra parking lots. And for another, [MATUSCO] was not made to rely on any false representation. As we have earlier discussed-evidence is replete that both parties knew at the outset that ownership over the said extra parking lots were to be retained by Multi-Realty. It is sad to note, however, that such fact was not clearly reflected in the Master Deed and the Deed of Transfer. Besides, it was only after the issue of ownership cropped up that Multi-Realty realized that, indeed, there was a mistake in the drafting of the Master Deed.73
Multi-Realty Development Corporation did not take on the merits of the case but only tackled the issue of prescription n.ised to this Court on appeal. After finding that the action had not yet prescribed and was mistakenly dismissed by the Court of Appeals because of a supposedly stale claim, this Court directed that it be remanded to the Court of Appeals for a resolution of the appeal:
a) the former judgment must be final; b) the court which rendered judgment had jurisdiction over the parties and the subject matter; c) it must be a judgment on the merits; d) and there must be between the first and second actions identity of parties, subject matter, and cause of action.75 (Emphasis in the original, citation omitted)
Nevertheless, given the factual backdrop of the case, it was inappropriate for the CA, motu proprio, to delve into and resolve the issue of whether [Multi-Realty's] action had already prescribed. The appellate court should have proceeded to resolve [Multi-Realty's] appeal on its merits instead of dismissing the same on a ground not raised by the parties in the RTC and even in their pleadings in the CA.Clearly, res judicata had not yet set in and this Court was not precluded from evaluating all of the evidence vis-a-vis the issues raised by both parties.
....
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 44696 is SET ASIDE. The Court of Appeals is directed to resolve petitioner's appeal with reasonable dispatch. No costs.
ORDERED.76
| Very truly yours, |
(SGD) | |
WILFREDO V. LAPITAN | |
Division Clerk of Court |
Endnotes:
1Rollo, pp. 59-97.
2 Id. at 98-111. The Decision was penned by Associate Justice Jose L. Sabio, Jr. and concurred in by Associate Justices Rodrigo V. Cosico and Martin S. Villarama, Jr. of the Special Former Special Eighth Division, Court of Appeals, Manila.
3 Id. at 112-113. The Resolution was penned by Associate Justice Jose L. Sabio, Jr. and concurred in by Associate Justices Martin S. Villarama, Jr. and Noel G. Tijam of the Special Former Special Eighth Division, Court of Appeals, Manila.
4 Id. at 200, RTC Decision.
5Multi-Realty Development Corporation v. The Makati Tuscany Condominium Corporation, 524 Phil. 318, 325 (2006) [Per J. Callejo, Sr., First Division].
6Rollo, p. 200, RTC Decision.
7 Id. at 131-146.
8Multi-Realty Development Corporation v. The Makati Tuscany Condominium Corporation, 524 Phil. 318, 326 (2006) [Per J. Callejo, Sr., First Division].
9Rollo, p. 200, RTC Decision.
10Multi-Realty Development Corporation v. The Makati Tuscany Condominium Corporation, 524 Phil. 318, 327 (2006) [Per J. Callejo, Sr., First Division].
11 Id. at 325 and 327.
12 Id. at 327.
13 Id. at 324.
14Rollo, pp. 200-202. The Decision was penned by Judge Salvador S. Abad Santos of Branch 65, Regional Trial Court, Makati City.
15 Id. at 201-202.
16 Id. at 202.
17 Id. at 293-300. The Decision, docketed as CA-G.R. CV No. 44696, was penned by Associate Justice Jose L. Sabio, Jr. and concurred in by Associate Justices Ramon Mabutas, Jr. and Martin S. Villarama, Jr. of the Special Eighth Division, Court of Appeals, Manila.
18 Id. at 297-298.
19 Id. at 299.
20 Id. at 301-320.
21 Id. at 353-356. The Resolution was penned by Associate Justice Jose L. Sabio. Jr. and concurred in by Associate Justices Ramon Mabutas, Jr. and Martin S. Villarama, Jr. of the Special Former Eighth Division of the Court of Appeals, Manila.
22 Id. at 357-40l. The case was docketed as G.R. No. 146726.
23 524 Phil. 318 (2006) [Per J. Callejo, Sr., First Division].
24 Id. at 336-337.
25 Id. at 343-344.
26 Id. at 346.
27Rollo, pp. 460-480. The Decision was penned by Associate Justice Jose L. Sabio, Jr. and concurred in by Associate Justices Rodrigo V. Cosico and Martin S. Villarama, Jr. of the Special Former Special Eighth Division of the Court of Appeals, Manila.
28 Id. at 470.
29 Id. at 475-478.
30 Id. at 478-479.
31 Id. at 98-111.
32 Id. at 103.
33 Id. at 106-107.
34 Id. at 110.
35 Id. at 530-538.
36 Id. at 112-113.
37 Id. at 59-97.
38 Id. at 75-80.
39 Id. at 86-87.
40 Id. at 88-89.
41 Id. at 560-594.
42 Id. at 561 and 563.
43 Id. at 563-566.
44 Id. at 573-574.
45 Id. at 577-579.
46 Id. at 630-648.
47 Id. at 635.
48 Id. at 635-636.
49 Id. at 638.
50 Id. at 639.
51Rosello-Bentir v. Leanda, 386 Phil. 802, 811 (2000) [Per J. Kapunan, First Division].
52Spouses Rosario v. Alvar, G. R. No. 212731, September 6, 2017 <http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2017/september2017/212731.pdf> [Per J. Del Castillo, First Division].
53Multi-Ventures Capital and Management Corp. v. Stalwart Management Services Corp., 553 Phil. 385, 391 (2007) [Per J. Austria-Martinez, Third Division], citing Quiros v. Arjona, 468 Phil. 1000, 1010 (2004) [Per J. Ynares-Santiago, First Division].
54 289 Phil. 914 (1992) [Per J. Padilla, First Division].
55 Id. at 931.
56Multi-Ventures Capital and Management Corp. v. Stalwart Management Services Corp., 553 Phil. 385, 392 (2007) [Per J. Austria-Martinez, Third Division], citing Huibonhoa v. Court of Appeals, 378 Phil. 386, 407 (1999) [Per J. Purisima, Third Division] and BA Finance Corporation v. Intermediate Appellate Court, 291 Phil. 265, 283 (1993) [Per J. Gutierrez, Jr., Third Division].
57Rollo, p. 134.
58Sarming v. Dy, 432 Phil. 685, 699 (2002) [Per J. Quisumbing, Second Division].
59Rollo, p. 563.
60 Id. at 563-564.
61 Id. at 565.
62 Id. at 565-566.
63 Id. at 630-634.
64 Id. at 635-636.
65 Id. at 608-612.
66 Id. at 608.
67 Id. at 630-648.
68Multi-Realty Development Corporation v. The Makati Tuscany Condominium Corporation, 524 Phil. 318, 325 (2006) [Per J. Callejo, Sr., First Division].
69Rollo, pp. 635-636.
70 183 Phil. 54 (1979) [Per J. Melencio-Herrera, First Division].
71 Id. at 63-64, citing 28 Am Jur 2d, Estoppel §28.
72Rollo, p. 635.
73 Id. at 108.
74 Id. at 577-580.
75Heirs of Enrique Diaz v. Virata, 529 Phil. 799, 823-824 (2006) [Per J. Chico-Nazario, First Division].
76Multi-Realty Development Corporation v. The Makati Tuscany Condominium Corporation, 524 Phil. 318, 336-337 and 346 (2006) [Per J. Callejo, Sr., First Division].