Hermenegildo Trinidad vs Estrella Acapulco

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Hermenegildo Trinidad vs Estrella Acapulco
G.R. No. 147477
June 27, 2006

Facts:

On May 6, 1991, respondent Estrella Acapulco filed a Complaint before the RTC seeking the nullification of a sale she made in favor of petitioner Hermenegildo M. Trinidad. She alleged: Sometime in February 1991, a certain Primitivo Cañete requested her to sell a Mercedes Benz for P580,000.00. Cañete also said that if respondent herself will buy the car, Cañete was willing to sell it for P500,000.00.

Petitioner borrowed the car from respondent for two days but instead of returning the car as promised, petitioner told respondent to buy the car from Cañete for P500,000.00 and that petitioner would pay respondent after petitioner returns from Davao. Following petitioner’s instructions, respondent requested Cañete to execute a deed of sale covering the car in respondent’s favor for P500,000.00 for which respondent issued three checks in favor of Cañete.

Respondent thereafter executed a deed of sale in favor of petitioner even though petitioner did not pay her any consideration for the sale. When petitioner returned from Davao, he refused to pay respondent the amount of P500,000.00 saying that said amount would just be deducted from whatever outstanding obligation respondent had with petitioner. Due to petitioner’s failure to pay respondent, the checks that respondent issued in favor of Cañete bounced, thus criminal charges were filed against her. Respondent then prayed that the deed of sale between her and petitioner be declared null and void; that the car be returned to her; and that petitioner be ordered to pay damages.

In his Answer petitioner contended that: it is not true that he borrowed the car and that any demand was made to return it; he also did not give any instructions to respondent to buy the car from Cañete because as early as September 28, 1990, Cañete has already sold the car to respondent for P500,000.00; at the time respondent executed the deed of sale in his favor on March 4, 1991, respondent was already in possession of the deed of sale from Cañete; the amount of P500,000.00 was fully paid by way of dation in payment to partially extinguish respondent’s obligation with petitioner; the contract entered into was a true sale of a motor vehicle and the mode of payment was that of dation in payment agreed upon at the time of the sale.

The parties filed their respective pre-trial briefs. Petitioner raised as issue: whether or not there is valid dation in payment; while respondent put forth the questions: whether or not she is indebted to petitioner in the amount of P566,000.00, and whether the car was ceded by her to petitioner in order to partially pay off her obligation of P566,000.00 to petitioner as dation in payment.

The RTC issued an Order dated October 18, 1992 denying the Motion for Reconsideration and Supplemental Motion of petitioner stating that the claim of dacion en pago is inexistent in this case and the defense of legal compensation was not alleged or pleaded in petitioner’s Answer.

Petitioner appealed to the CA which affirmed the Decision of the trial court, finding that the issue of legal compensation was filed too late as it was brought up only in the supplemental motion for reconsideration; that the parties agreed that the issue to be tried was whether or not there was dacion en pago; that dacion en pago however is not present in this case as the parties did not give their consent thereto; that there can also be no legal compensation as one of the obligations of this case did not entail payment of a monetary debt but the delivery of a car; and that the admission of petitioner that the sale price of the car was not paid entitled respondent to file the action for rescission of sale.

Issue:

W/N the CA erred in giving undue reliance to petitioner’s conclusion in his answer that his obligation was deemed extinguished because of dation in payment instead of disregarding said conclusion and simply appreciating the facts alleged and proved and drawing for itself the juridical implication of said facts?

Held:

The claim of respondent that there could be no legal compensation in this case as one of the obligations consists of delivery of a car and not a sum of money must also fail. Respondent sold the car to petitioner on March 4, 1991 for P500,000.00 while she filed her complaint for nullification of the sale only on May 6, 1991. As legal compensation takes place ipso jure, and retroacts to the date when its requisites are fulfilled, legal compensation has already taken place at the time of the sale. At such time, petitioner owed respondent the sum of P500,000.00 which is the price of the vehicle.

Consequently, by operation of law, the P500,000.00 which petitioner owed respondent is off-set against the P566,000.00 owed by respondent to petitioner, leaving a balance of P66,000.00, which respondent should pay with 12% interest per annum from date of judicial or extrajudicial deed. Since there was no extrajudicial deed in this case, the interest shall be resolved from the date petitioner filed its Supplemental Motion for Reconsideration invoking for the first time legal compensation, that is, May 20, 1992.

Finally, the Court agrees with petitioner that the trial court erred in awarding damages in favor of respondent.

In this case, respondent merely testified that after petitioner refused the payment of the car as well as its return, she was very much worried, which if converted into monetary amount is equivalent to P200,000.00. We deem such testimony insufficient to warrant the award of moral damages.

The decision of the trial court also does not mention the reason for the award of attorney’s fees and the award was simply contained in the dispositive portion of the decision. Again, the trial court erred on this score as it must explicitly state in the body of its decision and not only in the dispositive portion thereof the legal reason for the award of attorney’s fees.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated February 16, 2001 is REVERSED and SET ASIDE. The P500,000.00 which Hermenegildo M. Trinidad owed Estrella Acapulco is offset against the P566,000.00 which Acapulco owed Trinidad. Acapulco is ordered to pay Trinidad the amount of P66,000.00 plus interest at 12% per annum from May 20, 1992 until full payment. SO ORDERED.