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FRANCISCO S. PE v. IAC

FACTS:

This case involves a petition for review seeking the reversal of a decision dismissing the complaint for specific performance and/or rescission of contract and reconveyance of property. The plaintiffs, Francisco and Anita Monasterio Pe, owned several parcels of land which were mortgaged with different banking institutions. They entered into negotiations with the spouses Ong Su Fu and Luisa Yu for the sale of the properties. Ong Su Fu issued a check as earnest money and partial payment. A contract to sell was executed in favor of defendant Domingo Sy, later transferred to Jose Juan Tong. Deeds of sale were executed for Lots Nos. 40, 41, 42, and 45. The Pe spouses failed to settle their account with the Philippine Commercial and Industrial Bank (PCIB), resulting in foreclosure and sale of the properties. The trial court dismissed the case, which was affirmed by the Intermediate Appellate Court. The Pe spouses filed a motion for reconsideration which was denied. They raised the issue of the consideration of the contract to sell and four assignment of errors.

ISSUES:

  1. Whether novation was properly pleaded as a defense in the answer.

  2. Whether the lower court erred in discussing issues that were not raised in the pleadings or material to the controversy.

RULING:

  1. Novation was not properly pleaded in the answer and therefore, is deemed waived.

  2. The lower court erred in discussing novation as an issue that was neither raised in the pleadings nor material to the controversy.

PRINCIPLES:

  • Defenses and objections not pleaded in a motion to dismiss or in the answer are deemed waived, except for failure to state a cause of action and lack of jurisdiction.

  • Courts have no jurisdiction or power to decide a question not in issue.

  • A judgment that goes outside the issues and adjudicates something upon which the parties were not heard is irregular and invalid.

  • The Supreme Court is not a trier of facts and defers to the findings of fact made by the lower court.

  • Findings of fact of the Court of Appeals are final and conclusive and cannot be reviewed on appeal, provided, they are borne out by the record or are based on substantial evidence. (Korean Airlines Ltd. v. Court of Appeals, G.R. No. 61418, 24 September 1987, 154 SCRA 211)

  • Findings of fact of the Court of Appeals may be reviewed on appeal if the findings are conclusions without citation of specific evidence on which they are based, or the appellate court's findings are contrary to those of the trial court. (Sese v. Intermediate Appellate Court, G.R. No. 66168, 31 July 1987, 152 SCRA 585)

  • Contracts are respected as the law between the contracting parties, as long as they are not contrary to law, morals, good customs, public policy, or public order. (Mercantile Insurance Co., Inc. v. Ysmael Jr. and Co., Inc. G.R. No. 43862, 13 January 1989, 169 SCRA 66)

  • If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control. If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former. (Article 1370, New Civil Code)