Paranaque Kings Enterprises, Inc. V. CA; G.R.

111538

Facts: Petitioner, Paranaque Kings Enterprises, is the lessee of eight parcels of land owned by private
respondent, Santos. The lease was by virtue of a deed of assignment originating from a lease contract
between Santos and one Chua, who assigned the same to one Bing, who, in turn, assigned it to the
petitioner. The deed of assignment provides for a right of first refusal granting such right to Paranaque,
thus, under Paragraph 9 thereof, Paranaque is to be recognized as if it was the original lessor of the land
and, in case the lessee sells the property, the lessor shall have the first option or priority to buy the
properties subject of the lease.

The issue arose when Santos sold the land twice to private respondent, Raymundo, for five million pesos
and nine million pesos, respectively. The first transaction was opposed by Paranaque on the ground that
it was violative of the lease contract for failing to first offer the sale of the land to the petitioner, hence,
to comply with her contractual obligation, Santos had the land reconveyed to her from Raymundo.
Thereafter, Santos made an offer to Paranaque for fifteen million pesos but Paranaque rejected the offer
and countered to buy it for five million pesos. The counter, however, was initially ignored by Santos
resulting to the second sale with Raymundo.

After the sale, Santos responded to the counter by simply replying that the period for Paranaque to
exercise its right has lapsed. Series of communication exchanged between the parties to settle the
controversy, but to no avail. Hence, Paranaque filed for the annulment of the sale and to have the
property sold to it with prayer for damages, claiming its right under the assigned contract of lease and
under Section 6 of P.D. 1517. For their part, Santos and Raymundo filed a motion to dismiss for lack of
cause of cause of action as Santos did make a fifteen million peso-offer to Paranaque. The trial court and
the CA took credence of Santos and Raymundo’s assertions, thus, the case before the SC.

Issue: 1. Does Paranaque have a cause of action under the assigned contract of lease?

2. Does Paranaque have a cause of action under Section 6 of P.D. 1517?

Ruling: 1. Yes. According to the Court, in determining whether allegations of a complaint are sufficient to
support a cause of action, it must be borne in mind that the complaint does not have to establish or
allege facts proving the existence of a cause of action at the outset; this will have to be done at the trial
on the merits of the case. To sustain a motion to dismiss for lack of cause of action, the complaint must
show that the claim for relief does not exist, rather than that a claim has been defectively stated, or is
ambiguous, indefinite or uncertain.

In the case, Paranaque does have a cause of action against Santos. It did sufficiently allege under its
complaint that Santos breached its obligation to first offer the sale of the subject land to Paranaque
under the first and second sale to Raymundo. As such, whether Santos violated Paranaque’s right of first
refusal and whether Paranaque is entitled to damages is a question which must be resolved after a trial
on the merits where each party can present their evidence to prove their respective allegations and
defenses.

Further, the Court also held that the lower courts erred in when it granted the motion to dismiss
because according to the court, in order for Santos to have fully complied with the contractual right
granting Paranaque the first option to purchase, the sale of the properties for the amount of 9 million
pesos, the price for which they were finally sold to Raymundo, should have been first offered to
Paranaque.

2. No. According to the Court, the terms and conditions of the sale in the exercise of the lessee’s right of
first refusal to purchase under Section 6 of P.D. 1517 shall be determined by the Urban Zone
Expropriation and Land Management Committee. Hence, to invoke such right, certain prerequisites
must be complied with by those who wishes to avail the right or benefit.

In the case, since Paranaque failed to allege its compliance with the prerequisites as required by the law,
the latter has no cause of action anent this right.
Santos V. CA; G.R. 120820

Facts: Petitioners, Spouses Santos, were the owner of a house and lot located in Paranaque, Metro
Manila which was mortgaged to Rural Bank of Salinas, Inc. During the term of the loan, the spouses had
financial troubles, hence, they offered to sell the property to Spouses Caseda. The Casedas agreed to
buy the property, hence, both parties executed a simple document embodying the transaction. Under
the document, the Casedas is to pay the monthly installments of the mortgage due to the bank, the real
estate taxes, the bills and to pay the difference to the Santoses.

After sometime, the Casedas had financial trouble themselves thereby failing to pay the monthly
amortization of the load owed to the bank. As a result, the Santoses repossessed the property and
thereafter, collected the monthly rentals it generates. When the Casedas were able to sell their fishpond
in Batangas, they offered to repurchase the property from the Santoses but the parties were not able to
agree on a price since its value has skyrocketed.

Thus, the Casedas filed a case to compel the Santoses to execute the final deed of conveyance over the
property. The trial court dismissed the complaint opining, among others, that since the contract entered
into was a contract to sell, the repossession by the Santoses was justified, hence, the Casedas has no
right to the execution of the final deed of conveyance.

When the Casedas appealed the case with the CA, the latter reverse the trial court’s decision ruling that
the rescission of the document was not justified and allowed the Casedas to pay the balance within 90
days. As such, the Santoses brought the case before the SC raising the issue that the CA had no
jurisdiction to decide the case since the case appealed involved only questions of law in contravention of
SC Circular 2-90 (4) (c) since both the parties and the appellate court adopted the findings of the court a
quo.

Issue: Did the appeal from the RTC to the CA involve pure questions of law?

Ruling: No. A question of law exists when the doubt or difference arises as to what the law is on a
certain state of facts. On the other hand, a question of fact exists when the doubt or difference arises
arises as to the truth or falsehood of the alleged facts.

In the case, the appeal is one which involves a question of fact because the assignment of error
submitted by the Casedas dealt with the trial court’s finding that the Santoses got back the property
because the former failed to pay the monthly installments as agreed upon by reason of financial trouble.
An assignment of error which involves an evaluation of proof, and not only a consideration of the
applicable laws. Consequently, the CA had jurisdiction to review the trial court’s fact findings and that no
violation of the cited circular was made.
Royal Cargo V. DFS; G.R. 158621

Facts: In one instance, respondent, DFS Sports Unlimited, Inc., a corporation engaged in the business of
selling duty-free products, availed of the services of petitioner, Royal Cargo Corporation, a corporation
engaged in the business of freight transportation, to attend and undertake DFS’ brokerage and trucking
requirements. Thereafter, Royal Cargo continued to provide its services to DFS for four months, and as a
consequence it incurred expenses in the form of fees and charges related to the services rendered.
When Royal Cargo demanded from DFS what was due to it, the latter refused to pay.

Hence, Royal Cargo filed a case for the collection of the sum due plus legal interest as well as attorney’s
fees and the cost of the suit. In its answer, DFS averred that it had never engaged the services of Royal
Cargo for the four month-period as claimed by the former. During the trial, however, it was found that
DFS indeed engaged the services of Royal Cargo but according to DFS, it had already paid the same as
evidenced by the invoices stamped “PAID” and “AUDITED” by Royal Cardo. After trial, the trial court
dismissed the complaint and on appeal, was affirmed by the CA. Hence, the Royal Cargo filed this
petition before the SC.

In its petition, Royal Cargo averred that the CA erred in ruling that: 1. the burden of evidence in proving
payment was on former; and 2. that latter’s presentation of the invoices is not sufficient to prove
payment of its indebtedness to Royal Cargo. In its defense, DFS countered that the petition should be
dismissed because the issues raised by Royal Cargo involves questions of fact which is beyond the scope
of a petition for review on certiorari under Rule 45 of the Rules of Court.

Issue: Does the issues raised by Royal Cargo involve a question of fact?

Ruling: As to the burden of proof, the issue raises a question of law, while the determination of whether
invoices is sufficient to prove payment raises a question of fact.

An issue is factual when the doubt or difference arise as to the truth or falsehood of alleged facts, or
when the query invites calibration of the whole evidence considering mainly the credibility of witnesses,
existence and relevancy of specific surrounding circumstances, their relation to each other and to the
whole, and the probabilities of the situation. On the other hand, an issue is one of law when the doubt
or difference arises as to what the law is on a certain state of facts.

In the case the first issue raises a question of law because clearly, it does not require the calibration of
evidence. However, the second issue poses a question of fact because it requires the examination of the
probative value of the evidence of the parties. Being a question of fact, the Court must look into
whether the invoice sent by Royal Cargo reflected payment on the part of DFS.