G.R. No. 124554 December 9, 1997
ETERNAL GARDENS MEMORIAL PARK CORPORATION, petitioner, vs. COURT OF APPEALS and NORTH PHILIPPINE UNION MISSION OF THE SEVENTH DAY ADVENTIST, respondents.

FACTS

Petitioner Eternal Gardens Memorial Park Corporation (EGMPC) and private respondent North Philippine Union Mission of the Seventh Day Adventist (NPUM) entered into a Land Development Agreement dated October 6, 1976, wherein EGMPC was to develop NPUM’s land into a memorial park. Under the agreement, NPUM was to receive forty percent (40%) of the gross collection less Perpetual Care Fees (Net Gross Collection), remitted monthly. The agreement also required EGMPC to keep proper books and accounting records open for NPUM’s inspection and to render monthly accounting reports. Disputes arose when third-party claimants (Maysilo Estate and the heirs of Vicente Singson Encarnacion) surfaced, leading EGMPC to file an interpleader action. This and a related quieting of title case culminated in G.R. No. 73794, where the Supreme Court, in a September 19, 1988 Decision, ordered EGMPC to deposit contested amounts in a depository bank until a decision on the merits became final. Ownership was eventually settled with finality in favor of NPUM. Pursuant to a Supreme Court Resolution dated December 1, 1993 in G.R. No. 73794, the case was remanded to the Court of Appeals for a mutual accounting to determine the parties’ accrued rights and liabilities. The appellate court referred the accounting to its Accountant, requiring EGMPC to produce specific financial documents. NPUM submitted a Summary of Sales and supporting documents, claiming a total amount due from EGMPC. EGMPC, however, failed to submit the required documents, contending it had no obligation to account as NPUM’s share had been fully paid through deductions for the land’s purchase price and that the amounts were deposited in court. The Court of Appeals’ Accountant relied on NPUM’s evidence due to EGMPC’s non-submission and recommended that EGMPC pay NPUM a specified sum. The Court of Appeals adopted this recommendation in its Resolution dated February 29, 1996. EGMPC filed a petition for certiorari with the Supreme Court (G.R. No. 124554) assailing this Resolution.

ISSUE

Whether the Court of Appeals acted with grave abuse of discretion in issuing its February 29, 1996 Resolution which adopted the findings and recommendation of its Accountant, based primarily on NPUM’s evidence due to EGMPC’s failure to submit the required accounting documents.

RULING

The Supreme Court DISMISSED the petition and AFFIRMED the assailed Resolution of the Court of Appeals. The Court held that the appellate court did not commit grave abuse of discretion. EGMPC’s failure to comply with the court’s order to produce its books and records, despite the clear stipulation in the Land Development Agreement and the court’s directive, warranted the consequences imposed. The Court of Appeals correctly relied on NPUM’s evidence, which was substantial and based partly on documents previously submitted by EGMPC itself, to determine the amount due. EGMPC’s defenses—that its obligation was extinguished by applying NPUM’s share to the land’s purchase price and that consignation of the amounts in court released it from obligation—were unmeritorious. The agreement stipulated that payments for the land would be deducted from NPUM’s share, but this required prior determination and accounting of that share, which EGMPC obstructed. Furthermore, the consignation (deposit) ordered in G.R. No. 73794 was provisional, intended to safeguard the funds during the litigation over ownership, and did not constitute payment or release EGMPC from its duty to account. The duty to pay arose only after the mutual accounting ordered by the Supreme Court. Therefore, the Court of Appeals’ actions were proper and within its jurisdiction.