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EVADEL REALTY v. SPS. ANTERO

FACTS:

The spouses Antero and Virginia Soriano (respondent spouses) entered into a "Contract to Sell " with Evadel Realty and Development Corporation (petitioner) over a parcel of land known as Lot 5536-C of the Subdivision Plan of Lot 5536. The contract specified the sale of a portion of the land measuring 28,958 sq.m. The petitioner introduced improvements and fenced off the property, but it was later discovered that the area fenced off exceeded the area subject to the contract by 2,450 square meters. The encroached area was denominated as Lot 5536-D-1 and was later issued a new transfer certificate of title in the name of the respondent spouses. The respondent spouses sent demand letters to the petitioner to vacate the encroached area, but the petitioner refused. As a result, the respondent spouses filed a complaint for accion reinvidicatoria against the petitioner. The trial court granted the motion for summary judgment filed by the respondent spouses and ordered the petitioner to remove the improvements and return possession of the encroached area to the respondent spouses. The Court of Appeals affirmed the summary judgment. The petitioner appealed to the Supreme Court, arguing that there are genuine issues of fact that should be resolved through trial.

ISSUES:

  1. Whether there are genuine issues of fact in the present case regarding the exact area of the land allegedly encroached and the possession of the subject property.

  2. Whether the lower courts erred in summarily disposing of the issue of whether the petitioner was a builder in good faith.

  3. Whether there was novation of contract between the parties.

RULING:

  1. The Court held that there are no genuine issues of fact in the present case. Under Rule 35 of the 1997 Rules of Civil Procedure, summary judgment may be allowed when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Summary judgment is appropriate when there are no genuine issues of fact which call for the presentation of evidence in a full-blown trial. When the facts as pleaded appear uncontested or undisputed, then there is no genuine issue of fact. The party who moves for summary judgment has the burden of demonstrating clearly the absence of any genuine issue of fact. In this case, the admissions made by the petitioner in its Answer are tantamount to an admission that the respondent spouses owned the subject property, therefore there is no genuine issue of fact as to ownership.

  2. The court held that the lower courts did not err in summarily disposing of the issue of whether the petitioner was a builder in good faith. Petitioner's admission in its Amended Answer that the property in dispute is owned by respondent spouses negates its claim of being a builder in good faith. The admission of knowledge of respondent spouses' title over the subject lot establishes bad faith on the part of the petitioner.

  3. The court ruled that there was no novation of contract between the parties. The alleged "second" agreement was not put in writing, and it was not shown that the two agreements were materially and substantially incompatible with each other. Moreover, the Statute of Frauds bars the petitioner from proving its claim of novation since novation must be clearly proven by the party invoking it.

PRINCIPLES:

  • Summary judgment may be allowed when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law.

  • Summary judgment is appropriate when there are no genuine issues of fact which call for the presentation of evidence in a full-blown trial.

  • A "genuine issue" is an issue of fact which require the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim.

  • When the facts as pleaded appear uncontested or undisputed, then there is no genuine issue or question as to the facts, and summary judgment is called for.

  • The party who moves for summary judgment has the burden of demonstrating clearly the absence of any genuine issue of fact, or that the issue posed in the complaint is patently unsubstantial so as not to constitute a genuine issue for trial.

  • Admission in a pleading constitutes evidence against the party making such admission.

  • Good faith consists in the belief of the builder that the land he is building on is his and his ignorance of any defect or flaw in his title.

  • A builder who knowingly constructs improvements on another person's property without the owner's consent is considered a builder in bad faith.

  • Novation, as a mode of extinguishing an obligation, requires the concurrence of the following: (1) there is a valid previous obligation; (2) the parties concerned agree to a new contract; (3) the old contract is extinguished; and (4) there is a valid new contract.

  • Novation may be express or implied. Express novation requires a clear declaration, while implied novation requires that the old and new obligations be incompatible with each other.