G.R. No. 178255 ; November 24, 2009
RICARDO C. SILVERIO, Petitioner, vs. EUFEMIA ALMEDA and PONCIANO ALMEDA, substituted by his legal heirs, Respondents.

FACTS

In 1973, respondents Ponciano and Eufemia Almeda sold three lots in California, USA, to petitioner Ricardo Silverio for $200,000, payable in installments. A critical stipulation (paragraph 4) entitled the Almedas to an additional 20% of the net profit, not exceeding $100,000, should Silverio resell the properties at a profit. In 1984, Silverio executed a grant deed transferring the lots to Silcor USA, Inc., a company he controlled. Later that same year, Silcor sold the properties to Lancaster Properties, a partnership that included Silverio. The Almedas demanded payment of the additional sum. In a 1985 letter, Silverio admitted his conditional sale and obligation to pay the Almeds upon receipt of the proceeds. A subsequent lawsuit by the Almedas in California was dismissed, but the U.S. court noted Silverio’s admission of the $100,000 obligation under paragraph 4.
In 1990, the Almedas filed a suit for sum of money in the Makati RTC to recover the additional compensation. Silverio defended by claiming full payment of the principal, asserting prescription and res judicata via the foreign judgment, and arguing no substantial profit was made from the resale, which was allegedly rescinded by a bankruptcy court. The RTC dismissed the complaint, finding no proof of a profitable sale. The Court of Appeals reversed, ordering Silverio to pay $100,000 plus interest and attorney’s fees, finding the series of conveyances to be attempts to defraud the Almedas of their rightful share.

ISSUE

Whether Silverio’s conveyance of the subject lots to Silcor and the subsequent sale to Lancaster made him liable to the Almedas for their share in the profits under paragraph 4 of their agreement.

RULING

Yes, Silverio is liable. The Supreme Court affirmed the CA decision. The legal logic rests on the principle of good faith in contractual obligations under Article 19 of the Civil Code. The Court found that the transactions with Silcor and Lancaster constituted a resale triggering the profit-sharing clause. Silverio’s 1985 letter was a clear judicial admission of his obligation, which he could not unilaterally withdraw. The defense of prescription failed because the ten-year period for actions upon a written contract commenced from the date the right of action accrued—when Silverio resold the property in 1984. The action filed in 1990 was well within the prescriptive period.
The U.S. court’s dismissal did not constitute res judicata as it was based on a procedural ground (non-suit) and did not adjudicate the merits of the obligation, which Silverio had expressly admitted. His claim of no profit was belied by the sequence of transfers to his controlled entities and his own admission. The Court held that Silverio’s acts of transferring the properties to circumvent the profit-sharing agreement violated the duty to act in good faith. Consequently, he was ordered to pay the Almedas $100,000 as stipulated, with legal interest from judicial demand.