G.R. No. 112733 October 24, 1997
PEOPLE’S INDUSTRIAL AND COMMERCIAL CORPORATION, petitioner, vs. COURT OF APPEALS and MAR-ICK INVESTMENT CORPORATION, respondents.

FACTS

Private respondent Mar-ick Investment Corporation is the exclusive owner of Mar-ick Subdivision. On May 29, 1961, it entered into six agreements to sell six subdivision lots to petitioner People’s Industrial and Commercial Corporation. The agreements stipulated that failure to pay any monthly installment within 120 days from its due date would cause the contract to expire by itself and become null and void without necessity of notice or judicial declaration, and all sums paid would be considered rentals. After ten years, petitioner had paid only the down payment and eight installments, failing to fully pay despite a grace period. As of May 1, 1980, the total amount due was P214,418.00. Private respondent, through counsel, demanded in 1980 and 1981 that petitioner remove a wall encroaching upon the lots (including an additional Lot No. 2) and pay rentals, noting the contracts had been cancelled for non-payment. After negotiations, the parties drafted a new contract to sell dated October 11, 1983, covering seven lots, stating the previous contracts were cancelled. This new contract was never signed. Petitioner issued five checks totaling P37,642.72 in 1984, which private respondent received but did not encash. On July 12, 1984, private respondent filed a complaint for accion publiciana de posesion, seeking possession, removal of the wall, payment of rentals, attorney’s fees, and damages. The Regional Trial Court ruled in favor of private respondent, declaring the original agreements validly cancelled, finding no perfected new contract, and ordering petitioner to return the lots and pay rentals and attorney’s fees. The Court of Appeals affirmed the decision in toto.

ISSUE

1. Whether the lower court had jurisdiction over the subject matter in view of Republic Act No. 6552 and Presidential Decree No. 1344.
2. Whether there was a perfected and enforceable contract of sale on October 11, 1983 which modified the earlier contracts to sell.
3. Whether there was a valid grant of right of way involving Lot No. 2 in favor of petitioner.
4. Whether there was a justification for the grant of rentals and the award of attorney’s fees in favor of private respondent.

RULING

1. On jurisdiction, the Supreme Court ruled that petitioner is estopped from raising the issue due to its active participation in the proceedings from the trial court to the appellate court without previously challenging jurisdiction. Even if raised seasonably, the cited laws (P.D. No. 957, P.D. No. 1344, and R.A. No. 6552 ) do not apply because the contracts were automatically cancelled in 1971, prior to the effectivity of these laws, and the action filed was for accion publiciana, not for specific performance or rescission under those statutes.
2. On the new contract, the Court ruled there was no perfected contract. The unsigned draft contract dated October 11, 1983 did not bind the parties as there was no meeting of the minds. The receipt of checks by private respondent did not perfect the contract because it did not encash them, indicating no acceptance. The negotiations for a new contract indicated both parties considered the original contracts already cancelled.
3. On the right of way for Lot No. 2, the Court ruled there was no valid grant. The alleged agreement for a “free right-of-way” was oral and not embodied in a public document as required for donations of real property under Article 749 of the Civil Code, thus it was invalid.
4. On rentals and attorney’s fees, the Court upheld the award. Petitioner’s possession of the lots after the automatic cancellation of the contracts was without right, making it liable for reasonable rentals. The award of attorney’s fees was justified because private respondent was compelled to litigate to protect its interests due to petitioner’s unjustified refusal to settle the claims.
The petition for review on certiorari was denied and the Decision of the Court of Appeals was AFFIRMED.