EVIDENCE | B2015 CASE DIGESTS

Goni v. CA
September 23,1986 Fernan, J. sai

but did not have sufficient funds to "ay the "rice so, with the consent of TABACLERA, he offered the haciendas to #antiago Villegas, later substituted by ;oa$uin Villegas. -as"ar Vicente stood as the guarantor in a docu ent <Escritura de Tas"aso de Cuenta= since TABLACLERA did not agree to the transaction without a guaranty. The a ount reali!ed fro the transaction between Villegas and Villanueva was not enough so Villanueva contracted or "ro ised to sell fields no. 3, ', (3 of >acienda .ulce 8o bre for :(3,?/@ to Vicente. The a ount of :(%,'A/.%' was the a ount debited fro Vicente since it was the a ount needed to co "lete the "urchase "rice. Villanueva was able to raise funders by selling a "ro"erty in Ayungon 8egros 9ccidental so he went to Vicente to rescind the contractB"ro ise to sell but since the a ount was already debited, this was not "ossible. They agreed that lots ' and (3 would be leased to Vincent for + years starting (C+/3(C+( at annual rental of (+D of the gross inco e, rent to be deducted fro oney advanced by Vicente. 2n (C'C, TABACLERA e4ecuted for al deed of sale of the 3 haciendas in favor of Villanueva, including fields 3,',and (3 which were registered in the latterEs na e. These fields were ortgaged to the Rehailitation and 7inance Cor"oration later transferred to :8B for total indebtedness of :33','//. 1eanwhile, fields 3 and (3 were delivered to Vicente. Villanueva additionally e4ecuted a <.ocu ento de la Venta .efinitive= in favor of Villegas covering Lot 3(' of >acienda #arria. 2n (C+(, Villanueva died. 2ncluded in the inventory for intestate "roceedings were fields nos. 3 and ' &listed as lot %+@ of inventory) and (3 &listed as lot no. @%3). Vicente instituted an action for recovery of "ro"erty and da ages against -oni in his ca"acity as ad inistrator of the estate. Vicente sought to recover field no. 3 by virtue of the contractB"ro ise to sell. -onie filed an answer with counterclai for accounting of the "roduce of fields ' and (3 and surrender thereof at the end of the + th cro" year in (C++ "lus oral da ages, atty. fees. Vicente filed an a ended co "laint to include a "rayer for da ages re"resenting "roduce of field no. 3 until delivery thereof to hi . >e later a ended to include as "arties3defendants heirs of Villanueva. The "arties entered into a sti"ulation of facts agreeing on the costs of "roduction and "roduce of the 3 fields. There were two witnesses for VicenteF Vicente hi self who testified on the facts occurring before the

SUMMARY: Villanueva wanted to buy the 3 haciendas owned by TABACLERA but since he had no sufficient funds, he offered the haciendas to Villegas with Vicente as guarantor. The a ount reali!ed fro this transaction was still not enough so he entered into a "ro ise to sell 3 lots of one of the haciendas with Vicente. #ubse$uently, % of the 3 lots &lot nos ' and (3) were sub*ect of a lease to Vicente for + years. ,hen Villanueva died, the inventory included the 3 lots in $uestion. Vicente instituted an action for recovery of "ro"erty and da ages against heirs and -oni, the ad inistrator. TC and CA ruled in favor of Vicente. #C reversed this ruling stating that Vicente should surrender the lots to the heirs and "ay corres"onding annual rent for the fields. DOCTRINE: .is$ualification by reason of interest is anchored on #ection %/&a) of Rule (3/, co only 0nown as the #urvivorshi" .is$ualification Rule or .ead 1an #tatute. The ob*ect and "ur"ose of the rule is to guard against the te "tation to give false testi ony in regard to the transaction in $uestion on the "art of the surviving "arty and further to "ut the two "arties to a suit u"on ter s of e$uality in regard to the o""ortunity of giving testi ony. 2t is designed to close the li"s of the "arty "laintiff when death has closed the li"s of the "arty defendant, in order to re ove fro the surviving "arty the te "tation to falsehood and the "ossibility of fictitious clai s against the deceased. But in this case, such "rovision is ina""licable since such "rotection was effectively waived when counsel for "etitioners cross3 e4a ined Vicente. 5A waiver occurs when "laintiff6s de"osition is ta0en by the re"resentative of the estate or when counsel for the re"resentative cross3e4a ined the "laintiff as to atters occurring during deceased6s lifeti e FACTS: Co "ania -eneral de Tabacos de 7ili"inas &TABACLERA) owned 3 haciendas 0nown as #an #ebastian, #arria and .ulce 8o bre de 1aria in Bais, 8egros 9ccidental. :ra4edes Villanueva wanted to but the haciendas

EVIDENCE | B2015 CASE DIGESTS

death of Villanueva and E"ifanio E$uio a cler0 of TABACLERA Agency 2 Bais #ugar Central. .efendants on the other hand "resented -9ni who testified on the alleged verbal lease agree ent. TC *udg ent in favor of Vicente, that the heirs should deliver filed no. 3 to the for er and to e4ecute a for al deed of sale covering the 3 fields. 2t ordered the heirs to "ay Vicente actual or co "ensatory da ages :?(,%/' which was (+D of the total gross inco e of field 3 for cro" years (C+/3+( to (C+?3+C. Both "arties a""ealed CA affir ed TC decision with odification on the a ount of da ages which should be total net inco e fro filed 3 fro (C+/3+( until the field is delivered to Vicente. ISSUES AND RU ING: !."RE E#ANT$ %ON Ga&'a( #icente )ay te&tify on )atte(& of fact occ*((in+ ,efo(e t-e deat- of #illan*eva w-ic- con&tit*te& a clai) o( de)and *'on -i& e&tate in violation of R*le !./ Sec. 0/ 'a(a+(a'- A1 YES2 Gnder ordinary circu stances, Vicente would be dis$ualified by reason of interest fro testifying as to any atter of fact occurring before the death of Villanueva, such dis$ualification being anchored on #ection %/&a) of Rule (3/, co only 0nown as the #urvivorshi" .is$ualification Rule or .ead 1an #tatute. The ob*ect and "ur"ose of the rule is to guard against the te "tation to give false testi ony in regard to the transaction in $uestion on the "art of the surviving "arty and further to "ut the two "arties to a suit u"on ter s of e$uality in regard to the o""ortunity of giving testi ony. 2t is designed to close the li"s of the "arty "laintiff when death has closed the li"s of the "arty defendant, in order to re ove fro the surviving "arty the te "tation to falsehood and the "ossibility of fictitious clai s against the deceased. This case re ains within the a bit of the "rotection because the defendants3heirs are "ro"erly the 5re"resentatives5 of the deceased, not only because they succeeded to the decedent6s right by descent or o"eration of law, but ore i "ortantly because they are so "laced in litigation that they are called on to defend which they have obtained fro the deceased and a0e the defense which the deceased ight have ade if living, or to

establish a clai living.

which deceased

ight have been interested to establish, if

#uch "rotection, however, was effectively waived when counsel for "etitioners cross3e4a ined Vicente. 5A waiver occurs when "laintiff6s de"osition is ta0en by the re"resentative of the estate or when counsel for the re"resentative cross3e4a ined the "laintiff as to atters occurring during deceased6s lifeti e. Also, the heirs "resented a counterclai against Vicente. ,hen Vicente thus too0 the witness stand, it was in a dual ca"acity as "laintiff in the action for recovery of "ro"erty and as defendant in the counterclai for accounting and surrender of fields nos. ' and (3. Evidently, as defendant in the counterclai , he was not dis$ualified fro testifying as to atters of fact occurring before the death of Villanueva, said action not having been brought against, but by the estate or re"resentatives of the estateBdeceased "erson. Li0ewise, under a great a*ority of statutes, the adverse "arty is co "etent to testify to transactions or co unications with the deceased or inco "etent "erson which were ade with an agent of such "erson in cases in which the agent is still alive and co "etent to testify. But the testi ony of the adverse "arty ust be confined to those transactions or co unications which were had with the agent. The contractB"ro ise to sell under consideration was signed by "etitioner -oHi as attorney3in3 fact of Villanueva. >e was "rivy to the circu stances surrounding the e4ecution of such contract and therefore could either confir or deny any allegations ade by Vicente with res"ect to said contract. The ine$uality or in*ustice sought to be avoided by #ection %/&a) of Rule (3/, where one of the "arties no longer has the o""ortunity to either confir or rebut the testi ony of the other because death has "er anently sealed the for er6s li"s, does not actually e4ist in the case at bar, for the reason that -oHi could and did not negate the binding effect of the contractB"ro ise to sell. Thus, while ad itting the e4istence of the said contractB"ro ise to sell, -oHi testified that the sa e was subse$uently novated into a verbal contract of lease over fields nos. ' and (3 of the >acienda .ulce 8o bre de 1aria 0. %ON t-e w(itten '(o)i&e to &ell wa& novated into a ve(,al a+(ee)ent of lea&e d*(in+ t-e lifeti)e of #illan*eva3 YES2 8ovation ta0es "lace when the ob*ect or "rinci"al condition of an obligation is changed or altered. 58ovation is never "resu ed. 2t ust be established that the old and the new contracts are inco "atible in all "oints, or that the

EVIDENCE | B2015 CASE DIGESTS

will to novate a""ear by e4"ress agree ent of the "arties or in acts of e$uivalent i "ort. The novation of the written contractB"ro ise to sell into a verbal agree ent of lease was clearly and convincingly "roven not only by the testi ony of "etitioner -oHi, but li0ewise by the acts and conduct of the "arties subse$uent to the e4ecution of the contractB"ro ise to sell. Thus, after the illing season of cro" year (C'C3+/, only fields nos. ' and (3 were delivered to Vicente. 7ields nos. 3, ' and (3 were subse$uently registered in Villanueva6s na e and ortgaged with the R7C. Villanueva li0ewise e4ecuted a deed of sale covering >acienda #arria in favor of ;oa$uin Villegas. All these were 0nown to Vicente, yet he did not ta0e any ste"s toward "rotecting his clai over fields nos. 3, ' and (3 either by de anding during the lifeti e of Villanueva that the latter e4ecute a si ilar docu ent in his favor, or causing notice of his adverse clai to be annotated on the certificate of title of said lots. 2f it were true that he ade de ands on Villanueva for the surrender of field no. 3 as well as the e4ecution of the corres"onding deed of sale, he should have, u"on refusal of the latter to do so, i ediately or within a reasonable ti e thereafter, instituted an action for recovery, or caused his adverse clai to be annotated on the certificate of title. Considering that field no. 3, containing an area of 3 hectares, @+ ares and A/ centares, is the biggest a ong the 3 lots, an ordinary "rudent an would have ta0en these ste"s if he honestly believed he had any right thereto. Vicente did neither. 2n fact such inaction "ersisted even during the "endency of the intestate "roceedings wherein he could have readily intervened to see0 e4clusion of fields nos. 3, ' and (3 fro the inventory of "ro"erties. The e4"lanation of Vicente that there were s all sugar cane growing on field 3 ay be "lausible e4"lanation why he could not ta0e i ediate "ossession, but it certainly could not e4"lain why it too0 hi ' years before instituting an action in court. TC and CA believed ore in the "ro ise to sell than the lease agree ent si "ly because the for er had been reduced to writing, while the latter was erely verbal. 2t ust be observed, though, that the contractB"ro ise to sell was signed by "etitioner -oHi as attorney3in3fact of Villanueva, an indication that final arrange ents were ade by -oHi in the absence of Villanueva. 2t was therefore natural for Vicente to have de anded that the agree ent be in writing to erase any doubt of its binding effect u"on

Villanueva. 9n the other hand, the verbal lease agree ent was negotiated by and between Villanueva and Vicente. Being close friends and relatives it can be safely assu ed that they did not find it necessary to reduce the sa e into writing. Also, it was stated by the CA that -oni, as a sugar "lanter had full 0nowledge as to annual inco e of lots ' and (3 and since there was the a ount of :(%'A/.%+ to be li$uidated, -onie never dee ed it wise to de and a yearly accounting. 2t was only after the e4"iration of the + year lease that -oni de anded accounting of the "roduction of the % lots leased to Vicente. 2t is the custo a ong the sugar "lanters in the locality that the Lessee usually de ands an advance a ount to cover the rental for the "eriod of the lease, and the de and of an accounting will be only ade after the e4"iration of the lease "eriod. 2t was adduced during the trial that the a ount of :(%,'A/.@+ was considered as an advance rental of the % lots which was leased to Vicente lots nos. ' and (3I so there was no necessity on the "art of to a0e a yearly de and for an accounting for the total "roduction of % "arcels leased. -oni and >eirs having clearly and sufficiently shown that the contractB"ro ise to sell was subse$uently novated into a verbal lease agree ent, it follows that they are entitled to a favorable decision on their counterclai . DIS4OSITI#E: *udicial ad inistrator of the estate of "rivate res"ondent -as"ar Vicente andBor his successors3in3interest are hereby ordered toF a) surrender "ossession of fields nos. ' and (3 of the >acienda .ulce 8o bre de 1aria to "etitionersI b) render an accounting of the "roduce of said fields for the "eriod beginning cro"3year (C+/3+( until co "lete "ossession thereof shall have been delivered to "etitionersI and c) to "ay the corres"onding annual rent for the said fields in an a ount e$uivalent to (+D of the gross "roduce of said fields, for the "eriods beginning cro"3year (C+/3+( until said fields shall have been surrendered to "etitioners, deducting fro the a ount due "etitioners the su of :(%,'A/.%' advanced by "rivate res"ondent -as"ar Vicente.