CASE 2017-0035: PILIPINAS MAKRO, INC. VS. COCO CHARCOAL PHILIPPINES, INC. AND LIM KIM SAN (G.R. NO. 196419, 4 OCT 2017, MARTIREZ, J.) (SUBJECT/S: EXPRESSED WARRANTY AND IMPLIED WARRANTY OF EVICTION; ATTORNEY’S FEES; EXEMPLARY DAMAGES; EXTENSION OF TIME TO FILE MOTION FOR RECON- DOES IT STOP RUNNING OF APPEAL PERIOD?)  (BRIEF TITLE: PILIPINAS MACRO VS. COCO CHARCOAL PHILIPPINES)

 

DISPOSITIVE:

 

“WHEREFORE, the petition is GRANTED. The 30 December 2010 Decision and 7 April 2011 Resolution of the Court of Appeals in CA-G.R. CV No. 83836 are REVERSED and SET ASIDE. Petitioner Pilipinas Makro, Inc. is entitled to recover Pl,113,500.00 from respondent Coco Charcoal Phils., Inc. and Pl,105,000.00 from respondent Lim Kim San.

 

SO ORDERED.”

 

SUBJECTS/DOCTRINES/DIGEST:

 

MAKRO FILED  TWO MOTIONS FOR EXTENSION TO FILE MOTION FOR RECONSIDERATION. IS THIS ALLOWED UNDER THE RULES?

 

GENERALLY, NOT ALLOWED. THE EXCEPTION IS IF THERE IS COGENT REASON. IN THIS CASE THE COGENT REASON IS THAT THEIR COUNSEL, ATTY. EDWIN LACIERDA WITHDRAW BECAUSE OF HIS APPOINTMENT AS PRESS SECRETARY.

 

Makro filed two motions for extension to file a motion for reconsideration. On the first motion, it sought an extension after its former lawyer, Atty. Edwin Lacierda, withdrew as a counsel in view of his appointment as press secretary for former President Benigno Aquino III. Makro again asked for an extension after its present counsel was confined for dengue and typhoid fever. Eventually, it filed its motion for reconsideration on 7 March 2011.

 

In its 7 April 2011 Resolution, the CA denied Makro’ s motions for extension to file a motion for reconsideration, explaining that the 15-day period for the filing of such is non-extendible and that a motion for extension is prohibited.

 

It must be remembered that procedural rules are set not to frustrate the ends of substantial justice, but are tools to expedite the resolution of cases on their merits. The Court reminds us in Gonzales v. Serrano13 that the prohibition on motion for extension to file a motion for reconsideration is not absolute. . . . .  

 

………………………………………………..

 

Thus, the general rule is that no motion for extension of time to file a motion for reconsideration is allowed. This rule is consistent with the rule in the 2002 Internal Rules of the Court of Appeals that unless an appeal or a motion for reconsideration or new trial is filed within the 15-day reglementary period, the CA’s decision becomes final. Thus, a motion for extension of time to file a motion for reconsideration does not stop the running of the 15-day period for the computation of a decision’s finality. At the end of the period, a CA judgment becomes final, immutable and beyond our power to review.

 

This rule, however, admits of exceptions based on a liberal reading of the rule, so long as the petitioner is able to prove the existence of cogent reasons to excuse its non-observance. xxx

 

While the CA was correct in denying his Urgent Motion for Extension to File Motion for Reconsideration for being a prohibited motion, the Court, in the interest of justice, looked into the merits of the case, and opted to suspend the prohibition against such motion for extension after it found that a modification of the CA Decision is warranted by the law and the jurisprudence on administrative cases involving sexual harassment. The emerging trend of jurisprudence, after all, is more inclined to the liberal and flexible application of procedural rules. Rules of procedure exist to ensure the orderly, just and speedy dispensation of cases; to this end, inflexibility or liberality must be weighed. Thus, the relaxation or suspension of procedural rules, or exemption of a case from their operation is warranted only by compelling reasons or when the purpose of justice requires it. (emphases and underscoring supplied)

 

The Court finds that cogent reason exists to justify the relaxation of the rules regarding the filing of motions for extension to file a motion for reconsideration. The explanation put forth by Makro in filing its motions for extension clearly were not intended to delay the proceedings but were caused by reasons beyond its control, which cannot be avoided even with the exercise of appropriate care or prudence. Its former counsel had to withdraw in the light of his appointment as a cabinet secretary and its new lawyer was unfortunately afflicted with a serious illness. Thus, it would have been more prudent for the CA to relax the procedural rules so that the substantive issues would be thoroughly ventilated.

 

More importantly, the liberal application of the rules becomes more imperative considering that Makro’s position is meritorious.

 

THE DEEDS OF SALE PROVIDE THAT BOTH PARTIES APPOINT A SURVEYOR WHO SHALL SURVEY THE PROPERTY AND IF THE AREA IS NOT THE AREA IN THE DEEDS OF SALE THE PRICE HAS TO BE ADJUSTED. THERE WAS A DISCREPANCY IN AREA BUT DISCOVERED LATER. IS BUYER ENTITLED TO ADJUSTMENT IN PRICE?

 

CA SAID NO BECAUSE BUYER SHOULD HAVE KNOWN THE DISCREPANCY BEFORE SIGNING THE DEEDS.

 

SUPREME COURT SAID BUYER IS ENTITLED TO ADJUSTMENT. READ BELOW THE REASON WHY.

 

The courts a quo agree that the DPWH project encroached upon the properties Makro had purchased from respondents. Nevertheless, the CA opined that Makro was not entitled to a refund because it had actual knowledge of the ongoing road widening project. The appellate court likened Section 4(i) of the deeds of sale as a warranty against eviction, which necessitates that the buyer be in good faith for it to be enforced.

 

WHAT IS WARRANTY IN DEED OF SALE?

 

A warranty is a collateral undertaking in a sale of either real or personal property, express or implied; that if the property sold does not possess certain incidents or qualities, the purchaser may either consider the sale void or claim damages for breach of warranty.18 Thus, a warranty may either be express or implied.

 

WHAT IS AN EXPRESS WARRANTY?

 

An express warranty pertains to any affirmation of fact or any promise by the seller relating to the thing, the natural tendency of which is to induce the buyer to purchase the same.19 It includes all warranties derived from the language of the contract, so long as the language is express-it may take the form of an affirmation, a promise or a representation.20

 

WHAT IS AN IMPLIED WARRANTY?

 

An implied warranty is one which the law derives by application or inference from the nature of transaction or the relative situation or circumstances of the parties, irrespective of any intention of the seller to create it. 21

 

WHAT IS THE DIFFERENCE BETWEEN THE TWO?

 

In other words, an express warranty is different from an implied warranty in that the former is found within the very language of the contract while the latter is by operation of law.

 

THE CA ERRED. THE REASON IS:

 

Thus, the CA erred in treating Section 4(i) of the deeds of sale as akin to an implied warranty against eviction. First, the deeds of sale categorically state that the sellers assure that the properties sold were free from any encumbrances which may prevent Makro from fully and absolutely possessing the properties in question. Second, in order for the implied warranty against eviction to be enforceable, the following requisites must concur: (a) there must be a final judgment; (b) the purchaser has been deprived of the whole or part of the thing sold; ( c) said deprivation was by virtue of a prior right to the sale made by the vendor; and ( d) the vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee. 22 Evidently, there was no final judgment and no opportunity for the vendors to have been summoned precisely because no judicial action was instituted.
 

MAKRO’S LEGAL COUNSEL CONDUCTED AN OCULAR INSPECTION. MAKRO THEREFORE MUST HAVE KNOWLEDGE OF THE DISCREPANCY IN AREA.

 

BUT THE DIMENSIONS OF THE PROPERTIES IN RELATION TO THE DPWH PROJECT COULD HAVE NOT BEEN ACCURATELY ASCERTAINED THROUGH THE NAKED EYE. A MERE OCULAR INSPECTION COULD NOT HAVE POSSIBLY DETERMINED THE EXACT EXTENT OF THE ENCROACHMENT.

 

It is undisputed that Makro’ s legal counsel conducted an ocular inspection on the properties in question before the execution of the deeds of sale and that there were noticeable works and constructions going on near them. Nonetheless, these are insufficient to charge Makro with actual knowledge that the DPWH project had encroached upon respondents’ properties. The dimensions of the properties in relation to the DPWH project could have not been accurately ascertained through the naked eye. A mere ocular inspection could not have possibly determined the exact extent of the encroachment. It is for this reason that only upon a relocation survey performed by a geodetic engineer, was it discovered that 131 square meters and 130 square meters of the lots purchased from Coco Charcoal and Lim, respectively, had been adversely affected by the DPWH project.

 

To reiterate, the fact of encroachment is settled as even the CA found that the DPWH project had disturbed a portion of the properties Makro had purchased. The only reason the appellate court denied Makro recompense was because of its purported actual knowledge of the intrusion which is not reason enough to deny Makro a refund of the proportionate amount pursuant to Section 2 of the deeds of sale.

 

RTC AWARDED MAKRO ATTORNEY’S FEES. IS THIS CORRECT?

 

NOT CORRECT.

 

THE FACT THAT A PARTY WAS COMPELLED TO LITIGATE HIS CAUSE DOES NOT NECESSARILY WARRANT THE AWARD OF ATTORNEY’S FEES.

 

OTHER THAN THE BARE FACT THAT MAKRO WAS COMPELLED TO HIRE THE SERVICES OF COUNSEL TO PROSECUTE ITS CASE, THE RTC DID NOT PROVIDE COMPELLING REASONS TO JUSTIFY THE AWARD OF ATTORNEY’S FEES.

 

In finding for Makro, the RTC also awarded attorney’s fees and exemplary damages in its favor. The trial court ruled that Makro was entitled to attorney’s fees because it was forced to bring the matter before the court assisted by counsel. It found the grant of exemplary damages in order because respondents were in bad faith for concealing from Makro the fact that the DPWH had already dispossessed a portion of the lots purchased.

 

 In ABS-CBN Broadcasting Corporation v. Court of Appeals, 24 the Court cautioned that the fact that a party was compelled to litigate his cause does not necessarily warrant the award of attorney’s fees, to wit:

 

As regards attorney’s fees, the law is clear that in the absence of stipulation, attorney’s fees may be recovered as actual or compensatory damages under any of the circumstances provided for in Article 2208 of the Civil Code.

 

The general rule is that attorney’s fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit. The power of the court to award attorney’s fees under Article 2208 demands factual, legal, and equitable justification. Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorney’s fees may not be awarded where no sufficient showing of bad faith could be reflected in a party’s persistence in a case other than an erroneous conviction of the righteousness of his cause. (emphasis supplied)

 

Other than the bare fact that Makro was compelled to hire the services of counsel to prosecute its case, the RTC did not provide compelling reasons to justify the award of attorney’s fees.

 

Thus, it is but right to delete the award especially since there is no showing that respondents had acted in bad faith in refusing Makro’s demand for refund. It is in consonance with the policy that there is no premium on the right to litigate.25

 

WAS MACRO ENTITLED TO EXEMPLARY DAMAGES?

 

NO. THERE IS INSUFFICIENT EVIDENCE TO DEFINITIVELY ASCERTAIN THAT RESPONDENTS’ OMISSION TO MENTION THE ONGOING DPWH PROJECTS WAS IMPELLED BY A CONSCIOUS DESIRE O DEFRAUD MAKRO.

 

TO READ THE DECISION, JUST CLICK/DOWNLOAD THE FILE BELOW.

 

SCD-2017-0035-Pilipinas Makro, Inc. Vs. Coco Charcoal Philippines, Inc. and Lim Kim San

 

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