FACTS:

Benjamin Castillo owned a parcel of land in Batangas, which was also claimed by the Philippine Tourism Authority. Castillo entered into a contract of conditional sale with Olivarez Realty Corporation, represented by Dr. Pablo R. Olivarez. Under the contract, Castillo agreed to sell his property to Olivarez Realty Corporation for a specified amount, with a down payment and monthly installments. Olivarez Realty Corporation agreed to file an action against the Philippine Tourism Authority to nullify their title to the property. The contract also provided for the payment of disturbance compensation to legitimate tenants and the clearing of the land by Castillo within six months. Olivarez Realty Corporation took immediate possession of the property but failed to fulfill their obligations under the contract. Castillo filed a complaint for rescission of contract and damages against Olivarez Realty Corporation and Dr. Olivarez, alleging substantial breach of contract and that the contract was a contract of adhesion.

In this case, the plaintiff, Mr. Castillo, entered into a deed of conditional sale with Olivarez Realty Corporation, represented by Dr. Olivarez. The agreement stated that Olivarez Realty Corporation would purchase a parcel of land from Castillo, clear the property of tenants, and file a lawsuit against the Philippine Tourism Authority to void their title to the property. The purchase price was not fully paid by the corporation, and no legal action was taken against the Philippine Tourism Authority. Castillo filed a complaint seeking the rescission of the contract and damages. Olivarez Realty Corporation and Dr. Olivarez admitted to only paying a portion of the purchase price and alleged that Castillo failed to assist them in filing the lawsuit and clearing the property of tenants. They argued that they had the right to withhold subsequent payments due to these alleged failures. Castillo denied their counterclaim for litigation expenses and attorney's fees. Castillo filed a motion for summary judgment and/or judgment on the pleadings, arguing that the defendants admitted the material allegations of his complaint. Olivarez Realty Corporation and Dr. Olivarez opposed the motion, claiming that a title adverse to Castillo's existed and that the case should proceed to trial. The trial court granted the motion and allowed the parties to file supplemental memoranda.

Dr. Olivarez and Olivarez Realty Corporation argued that there was an ambiguity as to which should occur first - the payment of disturbance compensation to the tenants or the clearing of the property of the tenants. They believed that this ambiguity should be resolved in a full blown trial. They also contended that the complaint of Castillo should be dismissed because he prayed for irreconcilable reliefs. Castillo, on the other hand, argued that there was no genuine issue requiring a trial and that the payment of disturbance compensation should occur before clearing the property. He also argued that certain issues raised by the defendants in their supplemental memorandum should not be entertained as they were not presented during pre-trial. The trial court found that the defendants' answer admitted the material allegations of Castillo's complaint and ruled in favor of Castillo. The trial court ordered the rescission of the deed of conditional sale, forfeiture of the down payment, and awarded damages to Castillo. The Court of Appeals affirmed the trial court's decision, stating that summary judgment was appropriate and the damages awarded were proper. Olivarez Realty Corporation and Dr. Olivarez filed a motion for reconsideration, which was denied by the Court of Appeals. They then filed a petition for review on certiorari with the Supreme Court, arguing that the Court of Appeals erred in awarding damages to Castillo.

In this case, the petitioners argued that there were genuine issues of material fact to be resolved and that a full trial was required. They cited a case, Torres v. Olivarez Realty Corporation, where the Court of Appeals set aside the trial court's summary judgment and remanded the case for further proceedings. In Torres, the owner of a parcel of land sold it under a conditional sale, but when the buyer failed to fully pay, the owner sued for rescission of the contract. The buyer argued that they discontinued payment because the owner failed to clear the land of tenants. The Court of Appeals ruled that the material allegations of the complaint were directly disputed by the buyer in their answer.

The petitioners argued that Castillo, the plaintiff in this case, sought both reformation of instrument and rescission of contract, which were irreconcilable reliefs, and that the trial court should have dismissed the case outright. They also claimed that the trial court had no jurisdiction to decide the case because Castillo had not paid the correct docket fees. Castillo, on the other hand, maintained that there were no genuine issues of fact and that the trial court was correct in rendering summary judgment. He argued that the docket fees were properly computed based on his prayer for rescission of contract.

Olivarez Realty Corporation and Dr. Olivarez replied, reiterating their arguments. The issues for resolution were whether the trial court erred in rendering summary judgment and whether proper docket fees were paid. The petition was found to lack merit.

ISSUES:

1. Whether the trial court erred in rendering summary judgment.

2. Whether proper docket fees were paid in this case.

3. Whether Castillo's alleged failure to fully assist the corporation in filing the case against Philippine Tourism Authority is a valid defense for Olivarez Realty Corporation to refuse full payment of the purchase price.

4. Whether Olivarez Realty Corporation's refusal to fully pay the purchase price due to the Philippine Tourism Authority's adverse claim on the property is a valid defense.

5. Whether there is ambiguity as to the order of payment of disturbance compensation and clearing of the land within six months from the signing of the deed of conditional sale.

6. Whether Olivarez Realty Corporation had the right to withhold payments of the purchase price.

7. Whether Castillo's alleged sale of the property to another is a valid defense.

8. Whether Castillo's prayer for the irreconcilable reliefs of rescission of contract and reformation of instrument is a ground for the dismissal of his complaint.

9. Whether the contract involved in this case is a contract to sell or a conditional sale.

10. Whether Article 1191 of the Civil Code applies to contracts to sell.

11. Whether Castillo is entitled to moral damages and exemplary damages.

12. Whether Dr. Pablo R. Olivarez is solidarily liable with Olivarez Realty Corporation for the damages.

13. Whether the trial court acquired jurisdiction over Castillo's action as he paid the correct docket fees.

14. Is an action to cancel a contract to sell an action incapable of pecuniary estimation?

15. Is the payment of filing fees in an action to cancel a contract to sell intertwined with the merits and end result of the case?

RULING:

1. The petition lacks merit.

2. The trial court correctly rendered summary judgment, as there were no genuine issues of material fact in this case.

3. Proper docket fees were paid in this case.

4. Castillo's alleged failure to fully assist Olivarez Realty Corporation in filing the case against Philippine Tourism Authority is not a valid defense. Olivarez Realty Corporation is responsible for initiating the court action as stated in the deed of conditional sale.

5. Olivarez Realty Corporation's refusal to fully pay the purchase price due to the adverse claim on the property is not a valid defense. Olivarez Realty Corporation knew of the adverse claim when entering into the contract and even obligated itself to sue Philippine Tourism Authority.

6. There is no ambiguity in the order of payment of disturbance compensation and clearing of the land. The obligations should be performed simultaneously.

7. Olivarez Realty Corporation had no right to withhold payments of the purchase price. It can only claim non-compliance of the obligation to clear the land of the tenants after October 2000.

8. Castillo's alleged sale of the property to another is not a valid defense as it lacks details and does not tender a genuine issue of fact.

9. Castillo's prayer for alternative reliefs is not a ground for dismissal. The prohibition lies in filing separate cases for each cause of action.

10. The contract involved in this case is a contract to sell. Since the transfer of title to the property is not automatic and is contingent upon full payment of the purchase price, it is a contract to sell.

11. Article 1191 of the Civil Code does not apply to contracts to sell. Failure to fully pay the purchase price in contracts to sell is not considered a breach of contract under Article 1191. Instead, the contract to sell is canceled, and the parties shall stand as if the obligation to sell never existed.

12. Castillo is entitled to moral damages and exemplary damages. Olivarez Realty Corporation exhibited evident bad faith in dealing with Castillo, causing him prejudice and financial difficulties. Therefore, Castillo is entitled to P500,000.00 as moral damages and P50,000.00 as exemplary damages.

13. Dr. Pablo R. Olivarez is not solidarily liable with Olivarez Realty Corporation for the damages. Under Article 1207 of the Civil Code, corporations are solely liable for their obligations, and directors and officers are not liable with the corporation. Unless the directors or officers acted in bad faith or with gross negligence in directing the corporate affairs, they cannot be held solidarily liable.

14. The trial court acquired jurisdiction over Castillo's action as he paid the correct docket fees. An action for rescission of a contract of sale of real property is an action incapable of pecuniary estimation. Therefore, the docket fees to be paid are based on actions incapable of pecuniary estimation, regardless of the potential recovery of real property. In this case, the correct docket fees were assessed and paid by Castillo.

15. Yes, an action to cancel a contract to sell, similar to an action for rescission of contract of sale, is an action incapable of pecuniary estimation.

16. No, the assessment and collection of the legal fees in an action to cancel a contract to sell should not be intertwined with the merits and end result of the case. Filing fees should be based on what is alleged and prayed for in the complaint and paid upon the filing of the complaint.

PRINCIPLES:

• Trial may be dispensed with and a summary judgment may be issued if there are no genuine issues of material fact based on the pleadings, affidavits, depositions, and other papers on file.

• An issue of material fact exists if the answer or responsive pleading specifically denies the material allegations of fact set forth in the complaint or pleading.

• A genuine issue of fact requires the presentation of evidence, while a sham issue of fact can be resolved through a summary judgment.

• Judgment on the pleadings is proper when the answer fails to tender any issue or otherwise admits the material allegations in the complaint.

• Obligations that do not depend on a future or uncertain event are demandable at once.

• Obligations with a resolutory period take effect at once but terminate upon arrival of the day certain.

• A plaintiff may allege two or more claims in a complaint alternatively or hypothetically, either in one cause of action or in separate causes of action, but filing separate cases for each cause of action is prohibited.

• In contracts of conditional sale, the buyer acquires title to the property upon full payment of the purchase price. This transfer of title is "by operation of law without any further act having to be performed by the seller."

• In contracts to sell, transfer of title to the prospective buyer is not automatic. The prospective seller must convey title to the property through a deed of conditional sale.

• Article 1191 of the Civil Code on the right to rescind reciprocal obligations does not apply to contracts to sell. It only applies to contracts of conditional sale.

• In contracts to sell, failure to fully pay the purchase price is an event that prevents the seller's obligation to convey title from acquiring binding force.

• When setting aside contracts to sell, the court generally orders reimbursement of the installments paid, especially if the property's possession has not been delivered to the prospective buyer prior to the transfer of title.

• In cases where the buyer fails to fulfill his obligation to pay the purchase price in contracts to sell, the seller is entitled to reasonable compensation for the buyer's use of the property.

• Summary judgment may be rendered in a case, except as to the amount of damages. The court must determine the amount of damages in a trial.

• Moral damages may be awarded for physical suffering, mental anguish, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.

• Exemplary damages may be awarded in addition to moral damages as a way of example or correction for the public good. In contracts, exemplary damages may be awarded if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

• An action to cancel a contract to sell is an action incapable of pecuniary estimation.

• Filing fees should be based on what is alleged and prayed for in the complaint and paid upon the filing of the complaint. The assessment and collection of legal fees should not be intertwined with the merits and end result of the case.