GR 165285; (June, 2012) (Digest)
G.R. No. 165285 ; June 18, 2012
LOMISES ALUDOS, deceased, substituted by FLORA ALUDOS, Petitioner, vs. JOHNNY M. SUERTE,* Respondent.
FACTS
Petitioner Lomises Aludos, a stall holder at the Hangar Market in Baguio City, entered into an agreement on September 8, 1984, with respondent Johnny M. Suerte for the transfer of his improvements and rights over two market stalls for ₱260,000.00. Johnny made a down payment of ₱68,000.00. Lomises later rescinded the agreement and returned the ₱68,000.00 to Johnny’s parents in October 1985. Johnny protested and filed a complaint for specific performance to enforce the agreement and compel Lomises to accept the balance and execute a deed of sale.
The Regional Trial Court (RTC) nullified the entire agreement. It ruled that Lomises was merely a lessee of the City Government, and the assignment of his leasehold rights without the lessor’s consent violated Article 1649 of the Civil Code. The RTC ordered Lomises to return the down payment with interest. On appeal, the Court of Appeals (CA) differentiated the contract’s components. It affirmed the nullity of the leasehold rights assignment but declared the sale of the stall improvements—being Lomises’s private property—as valid and separable. The CA remanded the case to the RTC to determine the value of these improvements.
ISSUE
Whether the Court of Appeals erred in upholding the validity of the contract for the sale of the market stall improvements and in ordering the remand of the case for the determination of their value.
RULING
The Supreme Court denied the petition and affirmed the CA decision. The legal logic rests on the principle of separability or severability of contracts. The agreement between the parties contained two distinct objects: the assignment of leasehold rights (which is a personal right requiring lessor consent) and the sale of the physical improvements attached to the stalls (which are considered the lessee’s personal property). The nullity of one part does not automatically void the entire contract if the parts are separable and the lawful portion can stand independently.
The Court found the sale of improvements to be a valid, separate obligation. Lomises’s claim that a lease contract rendered the improvements city property was rejected, as said contract was not formally offered in evidence. Consequently, the lawful portion—the sale of improvements—must be enforced. The remand to the RTC was proper to ascertain the value of these improvements as of the agreement’s date to determine the final monetary adjustments between the parties, given the ₱68,000.00 already paid. The ruling ensures that a lawful contractual intent is upheld despite the illegality of an associated stipulation.