Reyes v. Lim Case Reference No., Date CHARACTERS: • Petitioner David Reyes – seller with respect to Jose Lim; lessor with respect to Harrison Lumber • Respondent Jose Lim – buyer • Respondents Harisson Lumber, Inc. and huy hen! "en! – lessees FACTS: • 1994, Reyes and Lim entered into a contract to sell ("Contra ct to Sell") a parcel ofland whi ch was leased and occupied b y Harisson Lumber, Inc and Keng . • #he contract stipulated , amon! others, that Reyes should be able to have the lessees vacate the sub$ect proper ty • Harisson Lumber and "en! DID NOT vacatedespite notice by Reyes • Plot #wist% Reyes &led a civil action for ANNULENTo' the ontract an! for DAA"ESa!ainst Lim, Harisson Lumber and "en! o he alleged that LIM COI!"# with Harrison Lumber O$ $O !% C%$" the &roperty '$IL the &()),))) monthly penalty would ha*e accumulated and "+'%L"# the unpaid purchase price of P18,000,000 • Keng and Harrison Lumer!s %nswero #"I"# that they conni*ed with Lim to defraud Reyes o alleged that Reyes %&&RO!"# their re-uest for an "$"/IOof time to *acate the &roperty due to their difficul ty in finding a new locationfor t#eir usiness • Lim!s $ns%er& o he was R"%#0 %# 1ILLI 2 $O &%0 the balance of the purchase pri ce on or efore 8 'arc# 199o he re-uested a meeting with Reyes but Rey es 3ept &O/$&OI2 theirmeeting o Reye s O44"R"# $O R"$'Rthe &5) mi ll ion do wn paymen t to Li m beca use Reyes was ha* ing problems in remo *in g the lessee from the &roperty o Lim R"6"C$"# Reyes7 offer and proceeded to *erify the status of Reyes7 titleto t#e Proert*Lim l earned that Reyes had %LR"%#0 /OL# the &roperty to Line One 4oods Corporation 89Line One9: • +e*es filed an $'-.. Comlaint • Lim!s $'-.. $ns%er&
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ProvRem_Reyes v. Lim [Judicial Deposit as a Prov Rem in Case of EQUITY]
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7/24/2019 ProvRem_Reyes v. Lim [Judicial Deposit as a Prov Rem in Case of EQUITY]
o Lim prayed for the cancellation of t#e Contract to Sell and for the
I//'%C" O4 % 1RI$ O4 &R"LIMI%R0 %$$%CHM"$
against Reyes• trial court #"I"# the prayer for a writ of reliminar* attac#ment
• 199/, Lim re-uested in open court that Reyes be OR#"R"# $O#"&O/I$ the &5) million down payment with the cashier of the Regional
$rial Court of Paraaue 2#e trial court 2R%$"# this motion ;• 3entuall*, trial court directed Reyes to deposit t#e P10 million do%n a*ment %it#
t#e Cler of Court on or efore 50 6ctoer 199/
• +e*es filed a Petition for Certiorari %it# C$7 C$ .S'SS. t#e Petition&
o $RI%L CO'R$ CO'L# !%LI#L0 I//'" the assailed orders in the
e<ercise of its "+'I$0 6'RI/#IC$IO since the &RO!I/IO%L
R"M"#I"/ under the Rules of Court #O O$ %&&L0 to this caseo assailed orders merely directed Reyes to deposit the &5) million to
t#e custod* of t#e trial court $O &RO$"C$ $H" I$"R"/$ O4 LIM who
paid the amount to Reyes as down payment• Hence, +e*es filed t#e instant Petition for +e3ie%&
o Reyes points out that #"&O/I$ I/ O$ %MO2 the pro*isional remedies
enumerated in the 5==> Rules of Ci*il &rocedure7 enumeration in t#e Rules is
"CL'/I!"
o +e*es argues t#at a court C%O$ %&&L0 "+'I$0 and re-uire deposit I4
$H" L%1 %LR"%#0 &R"/CRI?"/ the specific pro*isional remedies %#ic#
do not include deosit
ISSUE:
()* the )rder directin! Reyes to deposit P+- to the custody o' the court is
valid
RULIN":
/01, it is valid.
$his is not a case of e-uity o*erruling a positi*e pro*ision of law or udicial rule for $H"R" I/ O" $H%$ 2O!"R/ this particular case $his is a C%/" O4 /IL"C"
OR I/'44ICI"C0 O4 $H" L%1 and the Rules of Court
f left alone, suc# silence will result in un@ust enrichment to Reyes at t#e e:ense of
Lim 2#e silenceAhiatus may also imperil restitution, which is a precondition to the
rescission of the Contract to /ell t#at +e*es #imself sees
7/24/2019 ProvRem_Reyes v. Lim [Judicial Deposit as a Prov Rem in Case of EQUITY]
C#eng Keng ("Keng") and Harrison Lumer, nc ("Harrison Lumer")
2#e comlaint5
alleged t#at on / -o3emer 1994, Reyes as seller and Lim as buyerentered into a contract to sell ("Contract to Sell") a parcel of land ("Proert*") located
along <B Harrison Street, Pasa* Cit* Harrison Lumber occupied the &roperty as lessee
%it# a mont#l* rental of P5,000 2#e Contract to Sell ro3ided for t#e follo%ing terms and
conditions&
1 2#e total consideration for t#e urc#ase of t#e aforedescried arcel of land toget#er %it#
t#e erimeter %alls found t#erein is 2-2D ?H2 'LL6- (P;8,000,00000) PS6S
a*ale as follo%s&
(a) 2- 'LL6- (P10,000,00000) PS6S uon signing of t#is Contract to Sell7
() 2#e alance of ?H2- 'LL6- (P18,000,00000) PS6S s#all e aid on or efore
'arc# 8, 199 at 9&50 $' at a an to e designated * t#e Bu*er ut uon t#e comlete
3acation of all t#e tenants or occuants of t#e roert* and e:ecution of t#e .eed of
$solute Sale Ho%e3er, if t#e tenants or occuants #a3e 3acated t#e remises earlier t#an
'arc# 8, 199, t#e =-.6+ s#all gi3e t#e =-. at least one %ee ad3ance notice for
t#e a*ment of t#e alance and e:ecution of t#e .eed of $solute Sale
7/24/2019 ProvRem_Reyes v. Lim [Judicial Deposit as a Prov Rem in Case of EQUITY]
; 2#at in t#e e3ent, t#e tenants or occuants of t#e remises suect of t#is sale s#all not
3acate t#e remises on 'arc# 8, 199 as stated ao3e, t#e =-. s#all %it##old t#e
a*ment of t#e alance of P18,000,00000 and t#e =-.6+ agrees to a* a enalt* of
<our ercent (4E) er mont# to t#e #erein =-. ased on t#e amount of t#e
do%na*ment of 2- 'LL6- (P10,000,00000) PS6S until t#e comlete 3acation of t#e
remises * t#e tenants t#erein
4
2#e comlaint claimed t#at +e*es #ad informed Harrison Lumer to 3acate t#e Proert* efore t#e
end of Aanuar* 199 +e*es also informed Keng and Harrison Lumer t#at if t#e* failed to 3acate
* 8 'arc# 199, #e %ould #old t#em liale for t#e enalt* of P400,000 a mont# as ro3ided in t#e
Contract to Sell 2#e complaint further alleged that LIM COI!"# with Harrison
Lumber O$ $O !%C%$" the &roperty until the &()),))) monthly penalty
would ha*e accumulated and e-ualed the unpaid purchase price of P18,000,000
6n 5 'a* 199, Keng and Harrison Lumer filed their %nswerE #"0I2 they conni*ed with
Lim to defraud Reyes Keng and Harrison Lumer alleged that Reyes %&&RO!"#their re-uest for an "$"/IO of time to *acate the &roperty due to their
difficulty in finding a new location for t#eir usiness Harrison Lumer claimed t#at as of
'arc# 199, it #ad alread* started transferring some of its merc#andise to its ne% usiness location
in 'alaon/
6n 51 'a* 199, Lim filed his %nswerF stating that he was R"%#0 %# 1ILLI2 $O
&%0 the balance of the purchase price on or efore 8 'arc# 199 Lim re-uested a
meeting with Reyes t#roug# t#e latter!s daug#ter on t#e signing of t#e .eed of $solute Sale
and t#e a*ment of t#e alance but Reyes 3ept &O/$&OI2 their meeting 6n 9 'arc#
199, Reyes O44"R"# $O R"$'R the &5) million down payment to Lim becauseReyes was ha*ing problems in remo*ing the lessee from the &roperty Lim
R"6"C$"# Reyes7 offer and proceeded to *erify the status of Reyes7 title to t#e
Proert* Lim learned that Reyes had %LR"%#0 /OL# the &roperty to Line One
4oods Corporation 89Line One9: on 1 'arc# 199 for P1@,/8;,840 $fter t#e registration of
t#e .eed of $solute Sale, t#e +egister of .eeds issued to Line 6ne 2C2 -o 154/@/ co3ering t#e
Proert* Lim denied conni3ing %it# Keng and Harrison Lumer to defraud +e*es
6n ; -o3emer 199, +e*es filed a 'otion for Lea3e to <ile $mended Comlaint due to
suer3ening facts 2#ese included t#e filing * Lim of a comlaint for estafa against +e*es as %ell
as an action for secific erformance and nullification of sale and title lus damages efore anot#ertrial court9 2#e trial court granted t#e motion in an 6rder dated ;5 -o3emer 199
In his %mended %nswer dated 18 Aanuar* 199@,10 Lim prayed for the cancellation of t#e
Contract to Sell and for the I//'%C" O4 % 1RI$ O4 &R"LIMI%R0
%$$%CHM"$ against Reyes 2#e trial court #"I"# the prayer for a
writ of reliminar* attac#ment in an 6rder dated / 6ctoer 199@
7/24/2019 ProvRem_Reyes v. Lim [Judicial Deposit as a Prov Rem in Case of EQUITY]
6n @ 'arc# 199/, Lim re-uested in open court that Reyes be OR#"R"# $O
#"&O/I$ the &5) million down payment with the cashier of the Regional $rial
Court of Paraaue 2#e trial court 2R%$"# this motion
6n ; 'arc# 199/, +e*es filed a 'otion to Set $side t#e 6rder dated @ 'arc# 199/ on t#e groundt#e 6rder racticall* granted t#e reliefs Lim ra*ed for in #is $mended $ns%er11 2#e trial court
denied +e*es! motion in an 6rder 1; dated 5 Aul* 199/ Citing $rticle 158 of t#e Ci3il Code, t#e trial
court ruled t#at an action for rescission could roser onl* if t#e art* demanding rescission can
return %#ate3er #e ma* e oliged to restore s#ould t#e court grant t#e rescission
2#e trial court denied +e*es! 'otion for +econsideration in its 6rder 15 dated 5 6ctoer 199/ n t#e
same order, t#e trial court directed +e*es to deosit t#e P10 million do%n a*ment %it# t#e Cler of
Court on or efore 50 6ctoer 199/
6n 8 .ecemer 199/, +e*es14 filed a Petition for Certiorari1 %it# t#e Court of $eals +e*es
ra*ed t#at t#e 6rders of t#e trial court dated @ 'arc# 199/, 5 Aul* 199/ and 5 6ctoer 199/ e setaside for #a3ing een issued %it# gra3e ause of discretion amounting to lac of urisdiction 6n 1;
'a* 1998, t#e Court of $eals dismissed t#e etition for lac of merit
Hence, t#is etition for re3ie%
$he Ruling of the Court of %ppeals
2#e Court of %ppeals ruled the $RI%L CO'R$ CO'L# !%LI#L0 I//'" the assailed
orders in the e<ercise of its "+'I$0 6'RI/#IC$IO 2#e court ma* grant euitale
reliefs to reat#e life and force to sustanti3e la% suc# as $rticle 1581@ of t#e Ci3il Code since the
pro*isional remedies under the Rules of Court do not apply to this case
2#e Court of $eals #eld t#e assailed orders merely directed Reyes to deposit the &5)
million to t#e custod* of t#e trial court to protect the interest of Lim who paid the
amount to Reyes as down payment 2#is did not mean t#e mone* %ould e returned
automaticall* to Lim
$he Issues
+e*es raises t#e follo%ing issues&
1 #et#er t#e Court of $eals erred in #olding t#e trial court could issue t#e uestioned
n t#e case at ar, a careful anal*sis of t#e records %ill s#o% t#at etitioner admitted among
ot#ers in its comlaint in nterleader t#at it is still oligated to a* certain amounts to ri3ate
resondent7 t#at it claims no interest in suc# amounts due and is %illing to a* %#oe3er is
declared entitled to said amounts : : :
Fnder t#e circumstances, t#ere aears to e no lausile reason for etitioner!s oections
to t#e deosit of t#e amounts in litigation after #a3ing ased for t#e assistance of t#e lo%er
court * filing a comlaint for interleader %#ere t#e deosit of aforesaid amounts is not onl*
reuired * t#e nature of t#e action ut is a contractual oligation of t#e etitioner under t#e
Land .e3eloment Program (+ollo, ;;)
2#ere is also no lausile or ustifiale reason for +e*es to oect to t#e deosit of t#e P10 million
do%n a*ment in court $he Contract to /ell can no longer be enforced because
Reyes himself subse-uently sold the &roperty to Line One Bot# +e*es and Lim are
no% seeing rescission of t#e Contract to Sell Fnder $rticle 158 of t#e Ci3il Code, rescission
creates t#e oligation to return t#e t#ings t#at are t#e oect of t#e contract +escission is ossileonl* %#en t#e erson demanding rescission can return %#ate3er #e ma* e oliged to restore %
court of e-uity will not rescind a contract 'L"// $H"R" I/ R"/$I$'$IO, that
is, the parties are restored to the status -uo ante54
2#us, since Reyes is demanding to rescind the Contract to /ell, he cannot refuse
to deposit the &5) million down payment in court5 Suc# deosit %ill ensure restitution of
7/24/2019 ProvRem_Reyes v. Lim [Judicial Deposit as a Prov Rem in Case of EQUITY]