FACTS:
The petitioner, David Reyes, initiated a complaint against the respondents, Jose Lim, Chuy Cheng Keng, and Harrison Lumber, Inc., seeking the annulment of a contract and damages. Reyes alleged that he entered into a contract with Lim for the sale of a piece of land. The contract included a total consideration of P28,000,000, with P10,000,000 to be paid upon signing and the balance of P18,000,000 to be paid on or before March 8, 1995, upon the complete vacation of the property by the tenants. The contract also provided that if the tenants did not vacate the property by the specified date, Lim would withhold payment of the balance, and Reyes would be liable for a penalty of 4% per month based on the downpayment. Reyes claimed that he informed Harrison Lumber to vacate the property before January 1995 and informed Keng and Harrison Lumber that a penalty of P400,000 per month would be imposed if they failed to vacate by March 8, 1995. Reyes further alleged that Lim conspired with Harrison Lumber to delay the vacation of the property until the penalty equaled the unpaid purchase price. In their answer, Keng and Harrison Lumber denied colluding with Lim and contended that Reyes approved their request for an extension to vacate the property. Lim, in his answer, declared that he was ready and willing to pay the balance of the purchase price, but Reyes repeatedly postponed their meeting. Lim later discovered that Reyes had already sold the property to Line One Foods Corporation.
Reyes filed a motion to amend his complaint, which the trial court granted. Lim requested the cancellation of the contract to sell and the issuance of a writ of preliminary attachment against Reyes in his amended answer. Although the prayer for a writ of preliminary attachment was denied, the trial court granted Lim's motion to deposit the down payment with the court. Reyes filed a motion to set aside the order allowing the deposit, but the trial court denied it. Additionally, the trial court directed Reyes to deposit the down payment with the Clerk of Court. The Court of Appeals dismissed Reyes' petition for certiorari, ruling that the trial court had authority to issue the orders. Reyes subsequently filed a petition for review on certiorari before the Supreme Court.
ISSUES:
- Whether the trial court had the authority to issue the orders requiring petitioner David Reyes to deposit the down payment.
RULING:
- The Court of Appeals ruled that the trial court could validly issue the orders requiring petitioner David Reyes to deposit the down payment. The court held that the trial court was acting within its equity jurisdiction and could grant equitable reliefs to enforce substantive law. The orders merely directed Reyes to deposit the down payment to protect the interest of the buyer.