G.R. No.

196251 July 9, 2014

OLIVAREZ REALTY CORPORATION and DR.

PABLO R. OLIVAREZ, Petitioner,
vs.
BENJAMIN CASTILLO, Respondent.

DECISION

LEONEN, J.:

Trial may be dispensed with and a summary judgment

rendered if the case can be resolved judiciously by
plain resort to the pleadings, affidavits, depositions, and
other papers filed by the parties.

This is a petition for review on certiorari1 of the Court of

Appeals' decision2 dated July 20, 2010 and
resolution3 dated March 18, 2011 in CAG.R. CV No.
91244.

The facts as established from the pleadings of the

parties are as follows:

Benjamin Castillo was the registered owner of a

346,918-squaremeter parcel of land located in Laurel,
Batangas, covered by Transfer Certificate of Title No.
T-19972.4 The Philippine Tourism Authority allegedly
claimed ownership of the sameparcel of land based on
Transfer Certificate of Title No. T-18493.5 On April 5,
2000, Castillo and Olivarez Realty Corporation,
represented by Dr. Pablo R. Olivarez, entered into a
contract of conditional sale6 over the property. Under
the deed of conditional sale, Castillo agreed to sell his
property to Olivarez Realty Corporation for
₱19,080,490.00. Olivarez Realty Corporation agreed
toa down payment of ₱5,000,000.00, to be paid
according to the following schedule:

DATE AMOUNT

April 8, 2000 500,000.00

May 8, 2000 500,000.00

May 16, 2000 500,000.00

1,000,000.0
June 8, 2000
0

July 8, 2000 500,000.00

August 8, 2000 500,000.00
September 8, 2000 500,000.00

October 8, 2000 500,000.00

November 8, 2000 500,000.00 7
As to the balance of ₱14,080,490.00, Olivarez Realty
Corporation agreed to pay in 30 equal monthly
installments every eighth day of the month beginning in
the month that the parties would receive a decision
voiding the Philippine Tourism Authority’s title to the
property.8 Under the deed of conditional sale, Olivarez
RealtyCorporation shall file the action against the
Philippine Tourism Authority "with the full assistance of
[Castillo]."9 Paragraph C of the deed of conditional sale
provides:

C. [Olivarez Realty Corporation] assumes the

responsibility of taking necessary legal action thru
Court to have the claim/title TCT T-18493 of Philippine
Tourism Authority over the above-described property
be nullified and voided; with the full assistance of
[Castillo][.]10

Should the action against the Philippine Tourism

Authority be denied, Castillo agreed to reimburse all the
amounts paid by Olivarez Realty Corporation.
Paragraph D of the deed of conditional sale provides:

D. In the event that the Court denie[s] the petition

against the Philippine Tourism Authority, all sums
received by [Castillo] shall be reimbursed to [Olivarez
Realty Corporation] without interest[.]11

As to the "legitimate tenants" occupying the property,

Olivarez Realty Corporation undertook to pay them
"disturbance compensation," while Castillo undertook to
clear the land of the tenants within six months from the
signing of the deed of conditional sale. Should Castillo
fail to clear the land within six months, Olivarez Realty
Corporation may suspend its monthly down payment
until the tenants vacate the property. Paragraphs E and
F of the deed of conditional sale provide: E. That
[Olivarez Realty Corporation] shall pay the disturbance
compensation to legitimate agricultural tenants and
fishermen occupants which in no case shall exceed
ONE MILLION FIVE HUNDRED THOUSAND
(₱1,500,000.00) PESOS. Said amountshall not form
part of the purchase price. In excess of this amount, all
claims shall be for the account of [Castillo];

F. That [Castillo] shall clear the land of [the] legitimate

tenants within a period of six (6) months upon signing
of this Contract, and in case [Castillo] fails, [Olivarez
Realty Corporation] shall have the right to suspend the
monthly down payment until such time that the tenants
[move] out of the land[.]12

The parties agreed thatOlivarez Realty Corporation

may immediately occupy the property upon signing of
the deed of conditional sale. Should the contract be
cancelled, Olivarez RealtyCorporation agreed to return
the property’s possession to Castillo and forfeit all the
improvements it may have introduced on the property.
Paragraph I of the deed of conditional sale states:

I. Immediately upon signing thisContract, [Olivarez

Realty Corporation] shall be entitled to occupy, possess
and develop the subject property. In case this Contract
is canceled [sic], any improvement introduced by [the
corporation] on the property shall be forfeited in favor of
[Castillo][.]13

On September 2, 2004, Castillo filed a

complaint14 against Olivarez Realty Corporation and Dr.
Olivarez with the Regional Trial Court of Tanauan City,
Batangas.

Castillo alleged that Dr. Olivarez convinced him into

selling his property to Olivarez Realty Corporation on
the representation that the corporation shall be
responsible in clearing the property of the tenants and
in paying them disturbance compensation. He further
alleged that Dr. Olivarez solely prepared the deed of
conditional sale and that he was made to sign the
contract with its terms "not adequately explained [to
him] in Tagalog."15

After the parties had signed the deed of conditional

sale, Olivarez Realty Corporation immediately took
possession of the property. However, the corporation
only paid 2,500,000.00 ofthe purchase price. Contrary
to the agreement, the corporation did not file any action
against the Philippine Tourism Authority to void the
latter’s title to the property. The corporation neither
cleared the land of the tenants nor paid them
disturbance compensation. Despite demand, Olivarez
Realty Corporation refused to fully pay the purchase
price.16

Arguing that Olivarez Realty Corporation committed

substantial breach of the contract of conditional sale
and that the deed of conditional sale was a contract of
adhesion, Castillo prayed for rescission of contract
under Article 1191 of the Civil Code of the Philippines.
He further prayed that Olivarez Realty Corporation and
Dr. Olivarez be made solidarily liable for moral
damages, exemplary damages, attorney’s fees, and
costs of suit.17

In their answer,18 Olivarez Realty Corporation and Dr.

Olivarez admitted that the corporation only paid
₱2,500,000.00 ofthe purchase price. In their defense,
defendants alleged that Castillo failed to "fully
assist"19 the corporation in filing an action against the
Philippine Tourism Authority. Neither did Castillo clear
the property of the tenants within six months from the
signing of the deed of conditional sale. Thus, according
to defendants, the corporation had "all the legal right to
withhold the subsequent payments to [fully pay] the
purchase price."20

Olivarez Realty Corporation and Dr. Olivarez

prayedthat Castillo’s complaint be dismissed. By way of
compulsory counterclaim, they prayed for ₱100,000.00
litigation expenses and ₱50,000.00 attorney’s fees.21

Castillo replied to the counterclaim,22 arguing that

Olivarez Realty Corporation and Dr. Olivarez had no
right to litigation expenses and attorney’s fees.
According to Castillo, the deed of conditional sale
clearly states that the corporation "assume[d] the
responsibility of taking necessary legal action"23 against
the Philippine Tourism Authority, yet the corporation did
not file any case. Also, the corporation did not pay the
tenants disturbance compensation. For the
corporation’s failure to fully pay the purchase price,
Castillo claimed that hehad "all the right to pray for the
rescission of the [contract],"24 and he "should not be
held liable . . . for any alleged damages by way of
litigation expenses and attorney’s fees."25

On January 10, 2005, Castillo filed a request for

admission,26 requesting Dr. Olivarez to admit under oath
the genuineness of the deed of conditional sale and
Transfer Certificate of Title No. T-19972. He likewise
requested Dr. Olivarez to admit the truth of the
following factual allegations:

1. That Dr. Olivarez is the president of Olivarez

Realty Corporation;

2. That Dr. Olivarez offered to purchase the

parcel of land from Castillo and that he
undertook to clear the property of the tenants
and file the court action to void the Philippine
Tourism Authority’s title to the property;

3. That Dr. Olivarez caused the preparation of

the deed of conditional sale;

4. That Dr. Olivarez signed the deed of

conditional sale for and on behalf of Olivarez
Realty Corporation;

5. That Dr. Olivarez and the corporation did not

file any action against the Philippine Tourism
Authority;

6. That Dr. Olivarez and the corporation did not

pay the tenants disturbance compensation and
failed to clear the property of the tenants; and
 7. That Dr. Olivarez and the corporation only
paid ₱2,500,000.00 of the agreed purchase
price.27

On January 25, 2005, Dr. Olivarez and Olivarez Realty

Corporation filed their objections to the request for
admission,28 stating that they "reiterate[d] the
allegations [and denials] in their [answer]."29

The trial court conducted pre-trial conference on

December 17, 2005.

On March 8, 2006, Castillo filed a motion for summary

judgment and/or judgment on the pleadings.30 He
argued that Olivarez Realty Corporation and Dr.
Olivarez "substantially admitted the material allegations
of [his] complaint,"31 specifically:

1. That the corporation failed to fully pay the

purchase price for his property;32

2. That the corporation failed to file an action to

void the Philippine Tourism Authority’s title to
his property;33 and

3. That the corporation failed to clear the

property of the tenants and pay them
disturbance compensation.34

Should judgment on the pleadings beimproper, Castillo

argued that summary judgment may still be rendered
asthere is no genuine issue as to any material fact.35 He
cited Philippine National Bank v. Noah’s Ark Sugar
Refinery36 as authority.

Castillo attached to his motion for summary judgment

and/or judgment on the pleadings his affidavit37 and the
affidavit of a Marissa Magsino38 attesting to the truth of
the material allegations of his complaint.

Olivarez Realty Corporation and Dr. Olivarez

opposed39 the motion for summary judgment and/or
judgment on the pleadings, arguing that the motion was
"devoid of merit."40 They reiterated their claim that the
corporation withheld further payments of the purchase
price because "there ha[d] been no favorable decision
voiding the title of the Philippine Tourism
Authority."41 They added that Castillo sold the property
to another person and that the sale was allegedly
litigated in Quezon City.42

Considering that a title adverse to that of Castillo’s

existed, Olivarez Realty Corporation and Dr. Olivarez
argued that the case should proceed to trial and
Castillo be required to prove that his title to the property
is "not spurious or fake and that he had not sold his
property to another person."43

In reply to the opposition to the motion for summary

judgment and/or judgment on the pleadings,44 Castillo
maintained that Olivarez Realty Corporation was
responsible for the filing of an action against the
Philippine Tourism Authority. Thus, the corporation
could not fault Castillo for not suing the
PhilippineTourism Authority.45 The corporation illegally
withheld payments of the purchase price.

As to the claim that the case should proceed to trial

because a title adverse to his title existed, Castillo
argued that the Philippine Tourism Authority’s title
covered another lot, not his property.46

During the hearing on August 3, 2006, Olivarez Realty

Corporation and Dr. Olivarez prayed that they be given
30 days to file a supplemental memorandum on
Castillo’s motion for summary judgment and/or
judgment on the pleadings.47

The trial court granted the motion. Itgave Castillo 20

days to reply to the memorandum and the corporation
and Dr. Olivarez 15 days to respond to Castillo’s reply.48

In their supplemental memorandum,49 Olivarez Realty

Corporation and Dr. Olivarez argued that there was "an
obvious ambiguity"50 as to which should occur first —
the payment of disturbance compensation to the
tenants or the clearing of the property of the
tenants.51 This ambiguity, according to defendants, is a
genuine issue and "oughtto be threshed out in a full
blown trial."52

Olivarez Realty Corporation and Dr. Olivarez added

that Castillo prayed for irreconcilable reliefs of
reformation of instrument and rescission of
contract.53 Thus, Castillo’s complaint should be
dismissed.

Castillo replied54 to the memorandum, arguing that there

was no genuine issue requiring trial of the case.
According to Castillo, "common sense dictates . . . that
the legitimate tenants of the [property] shall not vacate
the premises without being paid any disturbance
compensation . . ."55 Thus, the payment of disturbance
compensation should occur first before clearing the
property of the tenants.

With respect to the other issuesraised in the

supplemental memorandum, specifically, that Castillo
sold the property to another person, he argued that
these issues should not be entertained for not having
been presented during pre-trial.56
In their comment on the reply memorandum,57 Olivarez
Realty Corporation and Dr. Olivarez reiterated their
arguments that certain provisions of the deed of
conditional sale were ambiguous and that the complaint
prayed for irreconcilable reliefs.58

As to the additional issues raised in the supplemental

memorandum, defendants argued that issues not
raised and evidence not identified and premarked
during pre-trial may still be raised and presented during
trial for good cause shown. Olivarez Realty Corporation
and Dr. Olivarez prayed that Castillo’s complaint be
dismissed for lack of merit.59

Ruling of the trial court

The trial court found that Olivarez Realty Corporation

and Dr. Olivarez’s answer "substantially [admitted the
material allegations of Castillo’s] complaint and [did] not
. . . raise any genuine issue [as to any material fact]."60

Defendants admitted that Castillo owned the parcel of

land covered by Transfer Certificate of Title No. T-
19972. They likewise admitted the genuineness of the
deed of conditional sale and that the corporation only
paid ₱2,500,000.00 of the agreed purchase price.61

According to the trial court, the corporation was

responsible for suing the Philippine Tourism Authority
and for paying the tenants disturbance compensation.
Since defendant corporation neither filed any case nor
paid the tenants disturbance compensation, the trial
court ruled that defendant corporation had no right to
withhold payments from Castillo.62

As to the alleged ambiguity of paragraphs E and F of

the deed of conditional sale, the trial court ruled that
Castillo and his witness, Marissa Magsino, "clearly
established"63 in their affidavits that the deed of
conditional sale was a contract of adhesion. The true
agreement between the parties was that the
corporation would both clear the land of the tenants
and pay them disturbance compensation.

With these findings, the trial court ruled that Olivarez

Realty Corporation breached the contract ofconditional
sale. In its decision64 dated April 23, 2007, the trial
1âwphi 1

court ordered the deed of conditional sale rescinded

and the ₱2,500,000.00 forfeited in favor of Castillo "as
damages under Article 1191 of the Civil Code."65

The trial court declared Olivarez Realty Corporation

and Dr. Olivarez solidarily liable to Castillo for
500,000.00 as moral damages, ₱50,000.00 as
exemplary damages, and ₱50,000.00 as costs of suit.66
 Ruling of the Court of Appeals

Olivarez Realty Corporation and Dr. Olivarez appealed

to the Court of Appeals.67

In its decision68 dated July 20, 2010, the Court of

Appeals affirmed in totothe trial court’s decision.
According to the appellate court, the trial court "did not
err in its finding that there is no genuine controversy as
to the facts involved [in this case]."69 The trial court,
therefore, correctly rendered summary judgment.70

As to the trial court’s award of damages, the

appellatecourt ruled that a court may award damages
through summary judgment "if the parties’ contract
categorically [stipulates] the respective obligations of
the parties in case of default."71 As found by the trial
court,paragraph I of the deed of conditional sale
categorically states that "in case [the deed of
conditional sale] is cancelled, any
improvementintroduced by [Olivarez Realty
Corporation] on the property shall be forfeited infavor of
[Castillo]."72 Considering that Olivarez Realty
Corporation illegally retained possession of the
property, Castillo forewent rentto the property and "lost
business opportunities."73 The ₱2,500,000.00 down
payment, according to the appellate court, shouldbe
forfeited in favor of Castillo. Moral and exemplary
damages and costs ofsuit were properly awarded.

On August 11, 2010, Olivarez RealtyCorporation and

Dr. Olivarez filed their motion for
reconsideration,74 arguing that the trial court exceeded
its authority in forfeiting the ₱2,500,000.00 down
payment and awarding ₱500,000.00 in moral damages
to Castillo. They argued that Castillo only prayed for a
total of ₱500,000.00 as actual and moral damages in
his complaint.75 Appellants prayed that the Court of
Appeals "take a second hard look"76 at the case and
reconsider its decision.

In the resolution77 dated March 18, 2011, the Court of

Appeals denied the motion for reconsideration.

Proceedings before this court

Olivarez Realty Corporation and Dr. Olivarez filed their

petition for review on certiorari78 with this court.
Petitionersargue that the trial court and the Court of
Appeals erred in awarding damages to Castillo. Under
Section 3, Rule 35 of the 1997 Rules ofCivil Procedure,
summary judgment may be rendered except as to the
amountof damages. Thus, the Court of Appeals
"violated the procedural steps in rendering summary
judgment."79

Petitioners reiterate that there are genuine issues

ofmaterial fact to be resolved in this case. Thus, a full-
blown trial is required, and the trial court prematurely
decided the case through summary judgment. They cite
Torres v. Olivarez Realty Corporation and Dr. Pablo
Olivarez,80 a case decided by the Ninth Division of the
Court of Appeals.

In Torres, Rosario Torres was the registeredowner of a

parcel of land covered by Transfer Certificate of Title
No. T-19971. Under a deed of conditional sale, she
sold her property to OlivarezRealty Corporation for
₱17,345,900.00. When the corporation failed to fully
pay the purchase price, she sued for rescission of
contractwith damages. In their answer, the corporation
and Dr. Olivarez argued thatthey discontinued payment
because Rosario Torres failed to clear the land of the
tenants.

Similar to Castillo, Torres filed a motion for summary

judgment, which the trial court granted. On appeal, the
Court of Appeals set aside the trial court’s summary
judgment and remanded the case to the trial court for
further proceedings.81 The Court of Appeals ruled that
the material allegations of the complaint "were directly
disputed by [the corporation and Dr. Olivarez] in their
answer"82 when they argued that they refused to pay
because Torres failed to clear the land of the tenants.

With the Court of Appeals’ decision in Torres,Olivarez

Realty Corporation and Dr. Olivarez argue that this
case should likewise be remanded to the trial court for
further proceedings under the equipoise rule.

Petitioners maintain that Castillo availed himself of the

irreconcilable reliefs of reformation of instrument and
rescission of contract.83 Thus, the trial court should have
dismissed the case outright.

Petitioners likewise argue that the trial court had no

jurisdiction to decide the case as Castillo failed topay
the correct docket fees.84 Petitioners argue that Castillo
should have paid docket fees based on the property’s
fair market value since Castillo’s complaint is a real
action.85

In his comment,86 Castillo maintains that there are no

genuine issues as to any material fact inthis case. The
trial court, therefore, correctly rendered summary
judgment.

As to petitioners’ claim that the trial court had no

jurisdiction to decide the case, Castillo argues that he
prayed for rescission of contract in his complaint. This
action is incapable of pecuniary estimation, and the
Clerk of Court properly computed the docket fees
based on this prayer.87 Olivarez Realty Corporation and
Dr. Olivarez replied,88 reiterating their arguments in the
petition for review on certiorari.
The issues for our resolution are the following:

I. Whether the trial court erred in rendering

summary judgment;

II. Whether proper docket fees were paid in this

case.

The petition lacks merit.

I
The trial court correctly rendered
summary judgment, as there were no

genuine issues of material fact in this case

Trial "is the judicial examination and determination of

the issues between the parties to the action."89 During
trial, parties "present their respective evidence of their
claims and defenses."90 Parties to an action have the
right "to a plenary trial of the case"91 to ensure that they
were given a right to fully present evidence on their
respective claims.

There are instances, however, whentrial may be

dispensed with. Under Rule 35 of the 1997 Rules of
Civil Procedure, a trial court may dispense with trial and
proceed to decide a case if from the pleadings,
affidavits, depositions, and other papers on file, there is
no genuine issue as to any material fact. In such a
case, the judgment issued is called a summary
judgment.

A motion for summary judgment is filed either by the

claimant or the defending party.92 The trial court then
hears the motion for summary judgment. If indeed there
are no genuine issues of material fact, the trial court
shall issue summary judgment. Section 3, Rule 35 of
the 1997 Rules of Civil Procedure provides:

SEC. 3. Motion and proceedings thereon. – The motion

shall be served at least ten (10) days beforethe time
specified for the hearing. The adverse party may serve
opposing affidavits, depositions, or admission at least
three (3) days before the hearing. After the hearing, the
judgment sought shall be rendered forthwith ifthe
pleadings, supporting affidavits, depositions, and
admissions on file, showthat, except as to the amount
of damages, there is no genuine issue as to any
material fact and that the moving party is entitled to a
judgment as a matter of law.

An issue of material fact exists if the answer or

responsive pleading filed specifically denies the
material allegations of fact set forth in the complaint or
pleading. If the issue offact "requires the presentation
of evidence, it is a genuine issue of fact."93 However, if
the issue "could be resolved judiciously by plain
resort"94 to the pleadings, affidavits, depositions, and
other paperson file, the issue of fact raised is sham,
and the trial court may resolve the action through
summary judgment.

A summary judgment is usually distinguished from a

judgment on the pleadings. Under Rule 34 of the 1997
Rules of Civil Procedure, trial may likewise be
dispensed with and a case decided through judgment
on the pleadings if the answer filed fails to tender an
issue or otherwise admits the material allegations of the
claimant’s pleading.95

Judgment on the pleadings is proper when the answer

filed fails to tender any issue, or otherwise admitsthe
material allegations in the complaint.96 On the other
hand, in a summary judgment, the answer filed tenders
issues as specific denials and affirmative defenses are
pleaded, but the issues raised are sham, fictitious, or
otherwise not genuine.97

In this case, Olivarez Realty Corporation admitted that

it did not fully pay the purchase price as agreed upon
inthe deed of conditional sale. As to why it withheld
payments from Castillo, it set up the following
affirmative defenses: First, Castillo did not filea case to
void the Philippine Tourism Authority’s title to the
property; second,Castillo did not clear the land of the
tenants; third, Castillo allegedly sold the property to a
third person, and the subsequent sale is currently being
litigated beforea Quezon City court.

Considering that Olivarez RealtyCorporation and Dr.

Olivarez’s answer tendered an issue, Castillo properly
availed himself of a motion for summary judgment.

However, the issues tendered by Olivarez Realty

Corporation and Dr. Olivarez’s answer are not genuine
issues of material fact. These are issues that can be
resolved judiciously by plain resort to the pleadings,
affidavits, depositions, and other papers on file;
otherwise, these issues are sham, fictitious, or patently
unsubstantial.

Petitioner corporation refused to fully pay the purchase

price because no court case was filed to void the
Philippine Tourism Authority’s title on the property.
However, paragraph C of the deed of conditional sale is
clear that petitioner Olivarez Realty Corporation is
responsible for initiating court action against the
Philippine Tourism Authority:

C. [Olivarez Realty Corporation] assumes the

responsibility of taking necessary legal action thru
Court to have the claim/title TCT T-18493 of Philippine
Tourism Authority over the above-described property
be nullified and voided; with the full assistance of
[Castillo].98

Castillo’s alleged failureto "fully assist"99 the corporation

in filing the case is not a defense. As the trial court
said, "how can [Castillo] assist [the corporation] when
[the latter] did not file the action [in the first place?]"100

Neither can Olivarez Realty Corporation argue that it

refused to fully pay the purchase price due to the
Philippine Tourism Authority’s adverse claim on the
property. The corporation knew of this adverse claim
when it entered into a contract of conditional sale. It
even obligated itself under paragraph C of the deed of
conditional sale to sue the Philippine Tourism Authority.
This defense, therefore, is sham.

Contrary to petitioners’ claim, there is no "obvious

ambiguity"101 as to which should occur first — the
payment of the disturbance compensation or the
clearing of the land within six months from the signing
of the deed of conditional sale. The obligations must be
performed simultaneously. In this case, the parties
should have coordinated to ensure that tenants on the
property were paid disturbance compensation and were
made to vacate the property six months after the
signingof the deed of conditional sale.

On one hand, pure obligations, or obligations whose

performance do not depend upon a future or
uncertainevent, or upon a past event unknown to the
parties, are demandable at once.102 On the other hand,
obligations with a resolutory period also take effect at
once but terminate upon arrival of the day certain.103

Olivarez Realty Corporation’s obligation to pay

disturbance compensation is a pure obligation. The
performance of the obligation to pay disturbance
compensation did not depend on any condition.
Moreover, the deed of conditional sale did not give the
corporation a period to perform the obligation. As such,
the obligation to pay disturbance compensation was
demandable at once. Olivarez RealtyCorporation
should have paid the tenants disturbance
compensation upon execution of the deed of
conditional sale.

With respect to Castillo’s obligation to clear the land of

the tenants within six months from the signing of the
contract, his obligation was an obligation with a
resolutory period. The obligation to clear the land of the
tenants took effect at once, specifically, upon the
parties’ signing of the deed of conditional sale. Castillo
had until October 2, 2000, six months from April 5,
2000 when the parties signed the deed of conditional
sale, to clear the land of the tenants.
Olivarez Realty Corporation, therefore, had no right to
withhold payments of the purchase price. As the trial
court ruled, Olivarez Realty Corporation "can only claim
non-compliance [of the obligation to clear the land of
the tenants in] October 2000."104 It said:

. . . it is clear that defendant [Olivarez Realty

Corporation] should have paid the installments on the
₱5 million downpayment up to October 8, 2000, or a
total of ₱4,500,000.00. That is the agreement because
the only time that defendant [corporation] can claim
non-compliance of the condition is after October, 2000
and so it has the clear obligation topay up to the
October 2000 the agreed installments. Since it paid
only 2,500,000.00, then a violation of the contract has
already been committed. . . .105

The claim that Castillo sold the property to another is

fictitious and was made in bad faith to prevent the trial
court from rendering summary judgment. Petitioners
did not elaborate on this defense and insisted on
revealing the identity of the buyer only during
trial.106 Even in their petition for review on certiorari,
petitioners never disclosed the name of this alleged
buyer. Thus, as the trial court ruled, this defense did
not tender a genuine issue of fact, with the defense
"bereft of details."107

Castillo’s alleged prayer for the irreconcilable reliefs of

rescission of contract and reformation of instrument is
not a ground to dismiss his complaint. A plaintiff may
allege two or more claims in the complaint alternatively
or hypothetically, either in one cause of action or in
separate causes of action per Section 2, Rule 8 of the
1997 Rules of Civil Procedure.108 It is the filing of two
separatecases for each of the causes of action that is
prohibited since the subsequently filed case may be
dismissed under Section 4, Rule 2 of the 1997 Rules of
Civil Procedure109 on splitting causes of action.

As demonstrated, there are no genuineissues of

material fact in this case. These are issues that can be
resolved judiciously by plain resort to the pleadings,
affidavits, depositions, and other papers on file. As the
trial court found, Olivarez Realty Corporation illegally
withheld payments of the purchase price. The trial court
did not err in rendering summary judgment.

II
Castillo is entitled to cancel the contract
of conditional sale

Since Olivarez Realty Corporation illegally withheld

payments of the purchase price, Castillo is entitled to
cancel his contract with petitioner corporation.
However, we properly characterize the parties’ contract
as a contract to sell, not a contract of conditional sale.
In both contracts to sell and contracts of conditional
sale, title to the property remains with the seller until
the buyer fully pays the purchase price.110 Both
contracts are subject to the positive suspensive
condition of the buyer’s full payment of the purchase
price.111

In a contract of conditional sale, the buyer automatically

acquires title to the property upon full payment of the
purchase price.112 This transfer of title is "by operation of
law without any further act having to be performed by
the seller."113 In a contract to sell, transfer of title to the
prospective buyer is not automatic.114 "The prospective
seller [must] convey title to the property [through] a
deed of conditional sale."115

The distinction is important to determine the applicable

laws and remedies in case a party does not fulfill his or
her obligations under the contract. In contracts of
conditional sale, our laws on sales under the Civil Code
of the Philippines apply. On the other hand, contracts to
sell are not governed by our law on sales116 but by the
Civil Code provisions on conditional obligations.

Specifically, Article 1191 of the Civil Code on the right

to rescind reciprocal obligations does not apply to
contracts to sell.117 As this court explained in Ong v.
Court of Appeals,118 failure to fully pay the purchase
price in contracts to sell is not the breach of contract
under Article 1191.119 Failure to fully pay the purchase
price is "merely an event which prevents the [seller’s]
obligation to convey title from acquiring binding
force."120 This is because "there can be no rescission of
an obligation that is still nonexistent, the suspensive
condition not having [happened]."121

In this case, Castillo reserved his title to the property

and undertook to execute a deed of absolute sale upon
Olivarez Realty Corporation’s full payment of the
purchase price.122 Since Castillo still has to execute a
deed of absolute sale to Olivarez RealtyCorporation
upon full payment of the purchase price, the transfer of
title is notautomatic. The contract in this case is a
contract to sell.

As this case involves a contract tosell, Article 1191 of

the Civil Code of the Philippines does not apply. The
contract to sell is instead cancelled, and the parties
shall stand as if the obligation to sell never existed.123

Olivarez Realty Corporation shall return the possession

of the property to Castillo. Any improvement that
Olivarez Realty Corporation may have introduced on
the property shall be forfeited in favor of Castillo per
paragraph I of the deed of conditional sale:

I. Immediately upon signing thisContract, [Olivarez

Realty Corporation] shall be entitled to occupy, possess
and develop the subject property. In case this Contract
is cancelled, any improvement introduced by [Olivarez
Realty Corporation] on the property shall be forfeited in
favor of [Castillo.]124

As for prospective sellers, thiscourt generally orders the

reimbursement of the installments paidfor the property
when setting aside contracts to sell.125 This is true
especially ifthe property’s possession has not been
delivered to the prospective buyer prior to the transfer
of title.

In this case, however, Castillo delivered the possession

of the property to Olivarez Realty Corporation prior to
the transfer of title. We cannot order the reimbursement
of the installments paid.

In Gomez v. Court of Appeals,126 the City of Manila and

Luisa Gomez entered into a contract to sell over a
parcel of land. The city delivered the property’s
possession to Gomez. She fully paid the purchase
price for the property but violated the terms of the
contract to sell by renting out the property to other
persons. This court set aside the contract to sell for her
violation of the terms of the contract to sell. It ordered
the installments paid forfeited in favor of the City of
Manila "as reasonable compensation for [Gomez’s] use
of the [property]"127 for eight years.

In this case, Olivarez Realty Corporation failed to fully

pay the purchase price for the property. It only paid
₱2,500,000.00 out of the ₱19,080,490.00 agreed
purchase price. Worse, petitioner corporation has been
in possession of Castillo’s property for 14 years since
May 5, 2000 and has not paid for its use of the
property.

Similar to the ruling in Gomez, we order the

₱2,500,000.00 forfeited in favor of Castillo as
reasonable compensation for Olivarez Realty
Corporation’s use of the property.

III
Olivarez Realty Corporation is liable for
moral and exemplary damages and
attorney’s fees

We note that the trial court erred in rendering summary

judgment on the amount of damages. Under Section 3,
Rule 35 of the 1997 Rules of Civil Procedure, summary
judgment may be rendered, except as to the amount of
damages.

In this case, the trial court erred in forfeiting the

₱2,500,000.00 in favor of Castillo as damages under
Article 1191 of the Civil Code of the Philippines. As
discussed, there is nobreach of contract under Article
1191 in this case.

The trial court likewise erred inrendering summary

judgment on the amount of moral and exemplary
damages and attorney’s fees.

Nonetheless, we hold that Castillois entitled to moral

damages, exemplary damages, and attorney’s fees.

Moral damages may be awarded in case the claimant

experienced physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar
injury.128

As for exemplary damages, they are awarded in

addition to moral damages by way of example or
correction for the public good.129 Specifically in
contracts, exemplary damages may be awarded if the
defendant acted in a wanton, fraudulent,reckless,
oppressive, or malevolent manner.130

Under the deed of conditional sale, Olivarez Realty

Corporation may only suspend the monthly down
payment in case Castillo fails to clear the land of the
tenants six months from the signing of the instrument.
Yet, even before the sixth month arrived, Olivarez
Realty Corporation withheld payments for Castillo’s
property. It evenused as a defense the fact that no
case was filed against the PhilippineTourism Authority
when, under the deed of conditional sale, Olivarez
Realty Corporation was clearly responsible for initiating
action against the Philippine Tourism Authority. These
are oppressive and malevolent acts, and we find
Castillo entitled to ₱500,000.00 moral damages and
₱50,000.00 exemplary damages:

Plaintiff Castillo is entitled to moral damages because

of the evident bad faith exhibited by defendants in
dealing with him regarding the sale of his lot to
defendant [Olivarez Realty Corporation]. He suffered
much prejudice due to the failure of defendants to pay
him the balance of purchase price which he expected
touse for his needs which caused him wounded
feelings, sorrow, mental anxiety and sleepless nights
for which defendants should pay ₱500,000.00 as moral
damages more than six (6) years had elapsed and
defendants illegally and unfairly failed and refused to
pay their legal obligations to plaintiff, unjustly taking
advantage of a poor uneducated man like plaintiff
causing much sorrow and financial difficulties. Moral
damages in favor of plaintiff is clearly justified . . .
[Castillo] is also entitled to ₱50,000.00 as exemplary
damages to serve as a deterrent to other parties to a
contract to religiously comply with their prestations
under the contract.131
We likewise agree that Castillo is entitled to attorney’s
fees in addition to the exemplary
damages.132 Considering that Olivarez Realty
Corporation refused to satisfy Castillo’splainly valid,
just, and demandable claim,133 the award of ₱50,000.00
as attorney’s fees is in order. However, we find that Dr.
Pablo R.Olivarez is not solidarily liable with Olivarez
Realty Corporation for the amount of damages.

Under Article 1207 of the Civil Code of the Philippines,

there is solidary liability only when the obligation states
it or when the law or the nature of the obligation
requires solidarity.134 In case of corporations, they are
solely liable for their obligations.135 The directors or
trustees and officers are not liable with the corporation
even if it is through their acts that the corporation
incurred the obligation. This is because a corporation is
separate and distinct from the persons comprising it.136

As an exception to the rule, directors or trustees and

corporate officers may be solidarily liable with the
corporation for corporate obligations if they acted "in
bad faith or with gross negligence in directing the
corporate affairs."137

In this case, we find that Castillo failed to prove with

preponderant evidence that it was through Dr.
Olivarez’s bad faith or gross negligence that Olivarez
Realty Corporation failed to fully pay the purchase price
for the property. Dr. Olivarez’s alleged act of making
Castillo sign the deed of conditional sale without
explaining to the latter the deed’s terms in Tagalog is
not reason to hold Dr. Olivarez solidarily liable with the
corporation. Castillo had a choice not to sign the deed
of conditional sale. He could have asked that the deed
of conditional sale be written in Tagalog. Thus, Olivarez
Realty Corporation issolely liable for the moral and
exemplary damages and attorney’s fees to Castillo.

IV
The trial court acquired jurisdiction over
Castillo’s action as he paid the correct
docket fees

Olivarez Realty Corporation and Dr. Olivarez claimed

that the trial court had no jurisdiction to take
cognizance of the case. In the reply/motion to dismiss
the complaint138 they filed with the Court of Appeals,
petitioners argued that Castillo failed to pay the correct
amount of docket fees. Stating that this action is a real
action, petitioners argued that the docket fee Castillo
paid should have been based on the fair market value
of the property. In this case, Castillo only paid 4,297.00,
which is insufficient "if the real nature of the action was
admitted and the fair market value of the property was
disclosed and made the basis of the amount of docket
fees to be paid to the court."139 Thus, according to
petitioners, the case should be dismissed for lack of
jurisdiction.

Castillo countered that his action for rescission is an

action incapable of pecuniary estimation. Thus, the
Clerk of Court of the Regional Trial Court of Tanauan
City did not err in assessing the docket fees based on
his prayer.

We rule for Castillo. In De Leon v. Court of

Appeals,140 this court held that an action for rescission
of contract of sale of real property is an action
incapable of pecuniary estimation. In De Leon, the
action involved a real property. Nevertheless, this court
held that "it is the nature of the action as one for
rescission of contract which is
controlling."141 Consequently, the docket fees to be paid
shall be for actions incapableof pecuniary estimation,
regardless if the claimant may eventually recover the
real property. This court said:

. . . the Court in Bautista v.Lim, held that an action for

rescission of contract is one which cannot be estimated
and therefore the docket fee for its filing should be the
flat amount of ₱200.00 as then fixed in the former Rule
141, §141, §5(10). Said this Court:

We hold that Judge Dalisay did not err in considering

Civil Case No. V-144 as basically one for rescission or
annulment of contract which is not susceptible of
pecuniary estimation (1 Moran's Comments on the
Rules of Court, 1970 Ed, p. 55; Lapitan vs. Scandia,
Inc., L-24668, July 31, 1968, 24 SCRA 479, 781-483).

Consequently, the fee for docketing it is ₱200, an

amount already paid by plaintiff, now respondent
Matilda Lim. (She should pay also the two pesos legal
1âwphi 1

research fund fee, if she has not paid it, as required in

Section 4 of Republic Act No. 3870, the charter of the
U.P. Law Center).

Thus, although eventually the result may be the

recovery of land, it is the nature of the action as one for
rescission of contract which is controlling. The Court of
Appeals correctly applied these cases to the present
one. As it said:

We would like to add the observations that since the

action of petitioners [private respondents] against
private respondents [petitioners] is solely for annulment
or rescission which is not susceptible of pecuniary
estimation, the action should not be confused and
equated with the "value of the property" subject of the
transaction; that by the very nature of the case, the
allegations, and specific prayer in the complaint, sans
any prayer for recovery of money and/or value of the
transaction, or for actual or compensatory damages,
the assessment and collection of the legal fees should
not be intertwined with the merits of the case and/or
what may be its end result; and that to sustain private
respondents' [petitioners'] position on what the
respondent court may decide after all, then the
assessment should be deferred and finally assessed
only after the court had finally decided the case, which
cannot be done because the rules require that filing
fees should be based on what is alleged and prayed for
in the face of the complaint and paid upon the filing of
the complaint.142

Although we discussed that there isno rescission of

contract to speak of in contracts of conditional sale, we
hold that an action to cancel a contract to sell, similar to
an action for rescission of contract of sale, is an action
incapable of pecuniary estimation. Like any action
incapable of pecuniary estimation, an action to cancel a
contract to sell "demands an inquiry into other
factors"143 aside from the amount of money to be
awarded to the claimant. Specifically in this case, the
trial court principally determined whether Olivarez
Realty Corporation failed to pay installments of the
property’s purchase price as the parties agreed upon in
the deed of conditional sale. The principal natureof
Castillo’s action, therefore, is incapable of pecuniary
estimation.

All told, there is no issue that the parties in this case

entered into a contract to sell a parcel of land and that
Olivarez Realty Corporation failed to fully pay the
installments agreed upon.Consequently, Castillo is
entitled to cancel the contract to sell.

WHEREFORE, the petition for review on certiorari is

DENIED. The Court of Appeals’ decision dated July 20,
2010 and in CA-G.R. CV No. 91244 is AFFIRMEDwith
MODIFICATION.

The deed of conditional sale dated April 5, 2000 is

declared CANCELLED. Petitioner Olivarez Realty
Corporation shall RETURN to respondent Benjamin
Castillo the possession of the property covered by
Transfer Certificate of Title No. T-19972 together with
all the improvements that petitioner corporation
introduced on the property. The amount of
₱2,500,000.00 is FORFEITED in favor of respondent
Benjamin Castillo as reasonable compensation for the
use of petitioner Olivarez Realty Corporation of the
property.

Petitioner Olivarez Realty Corporation shall PAY

respondent Benjamin Castillo ₱500,000.00 as moral
damages, ₱50,000.00 as exemplary damages, and
₱50,000.00 as attorney's fees with interest at 6% per
annum from the time this decision becomes final and
executory until petitioner
corporation fully pays the amount of damages.144

SO ORDERED.