Intestate Estate of Presbitero v. CA Digest

Intestate Estate of Presbitero v. CA, G.R. 102432 FACTS: Ricardo Presbitero entered into two contracts with private respondent Leonardo Cañoso: 1ST CONTRACT: “CONFORMITY OF AGREEMENT”  Presbitero retained the services of the latter to negotiate with the Land Bank of the Philippines (LBP) and the Ministry of Agrarian Reform (MAR) in Cotabato City for the sale of Hacienda Maria which comprises some 270 hectares of land located at Balogo, Pigcawayan, North Cotabato and which is owned by the former.  To finish the processing and submission of documents within 120 days to Manila, by the Land Bank of the Philippines and Ministry of Agrarian Reform Cotabato City and shall be subjected to the delay of the approval of the DBP additional loan negotiated by petitioner. 2ND CONTRACT: “CONTRACT OF SERVICE”  Presbitero bound himself to compensate private respondent for his services in making the necessary preparation and production of necessary documents required  To effect the recovery of the proceeds of the land transfer payment from the Land bank in an amount equivalent to 25% of the gross total sales of petitioner’s properties Before Presbitero's claim with the LBP was approved, a third agreement was entered into with the private respondent in Bacolod City under which the latter's original fee of 25% was reduced to 17 1/2%. When his claim was finally approved, Presbitero sent two (2) letters to the LBP concerning the release of a part of the proceeds to the private respondent: (1) 1st Letter: addressed to the LBP President, requested that the amount equivalent to Seventeen and One Half (17 1/2%) per cent be released in the name of Leonardo Cañoso (2) 2nd Letter: requested that he (Presbitero) be notified in writing upon receipt and informed the Land Bank that he will personally release the cash and bonds to Mr. Cañoso due to advances made by him during the processing of the documents. However, when a part of the proceeds was released, the private respondent was not given his share as agreed upon. Hence, the latter filed a complaint against Presbitero before the RTC of Cotabato City which was docketed as Civil Case No. 68 and assigned to Branch 15 of the said court.  TRIAL COURT handed down a decision in favor of respondent Cañoso: ordered Presbitero to pay respondent the 25% collectible of the defendant from the Land Bank.  COURT OF APPEALS modified the decision by reducing the principal award to the private respondent from 25% to 17 1/2% of the amount to be collected by Presbitero from the LBP.

ISSUE: W/N respondent court erred in finding that Canoso (private respondent) had complied with the terms and conditions of the contract HELD: No. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Unless the stipulations in a contract are contrary to law, morals, good customs, public order or public policy, the same are binding as between the parties. In this case, the contracts entered into by the parties were valid contracts. The two (2) complementary instruments gave rise to reciprocal obligations which are defined as those that arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. No error was committed by the appellate and trial courts in concluding that the private respondent complied with the terms and conditions of the contracts. This is supported by the evidence, both testimonial and documentary, presented by the private respondent during trial before the lower court. Moreover, Presbitero's letter to the LBP authorizing the release of a portion of the proceeds to the private respondent reinforces the latter's position that he had actually complied with the terms and conditions of the contract. In the interpretation of contracts, it is the general rule that if the terms thereof are clear as to the intention of the contracting parties, the literal meaning of the stipulations shall control. Furthermore, subsequent or contemporaneous acts of the contracting parties shall be considered in judging their intention. In this case, it was clearly agreed upon by the contracting parties that the private respondent would undertake, among others, the processing, negotiation and followup of Presbitero's claim with the LBP within a stipulated period of 120 days.

Art. 1234. If the obligation has been substantially complied with in good faith, the obligor may recover as though there had been strict and complete compliance with the obligation, less damages suffered by the oblige.  All they had in mind was that the preparation, processing and filing of the necessary documents within the 120 days were needed to effect the recovery of proceeds from the LBP.  To follow-up with Presbitero’s claim with the LBP was not among the matters contemplated by the parties in the said agreement; and even assuming that private respondent breached the agreement by not fully accomplishing his obligation within the stipulated period, said breach was but of a slight and casual nature hardly enough to warrant rescission.

Art. 1235. When the obligee accepts the performance, knowing its incompleteness or irregularity, and without expressing protest or objection, the obligation is deemed fully complied with  Presbitero accepted the performance of the obligation as evidenced by the letter to the LBP authorizing the release of a portion of the proceeds to the private respondent  Finally, to allow Presbitero to rescind the contract would not only violate the wellsettled rule on mutuality of contracts — which provides that the validity or compliance of a contract cannot be left to the will of one of the contracting parties — but would also work an injustice to the rights of the private respondent who has already performed his obligation pursuant to their agreement.  Presbitero's correlative obligation must perforce be also fulfilled. There is no evidence to indicate that the private respondent was remise or negligent in the performance of his obligation. Neither was there any evidence presented to show that it was through Presbitero's own efforts that this claim with the LBP was approved.