VOL. 249, OCTOBER 16, 1995 331: Development Bank of The Philippines vs. Court of Appeals
VOL. 249, OCTOBER 16, 1995 331: Development Bank of The Philippines vs. Court of Appeals
VOL. 249, OCTOBER 16, 1995 331: Development Bank of The Philippines vs. Court of Appeals
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G.R. No. 110053. October 16, 1995.
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* SECOND DIVISION.
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sion, found that there had been no bad faith on the part of either
party, and this remains uncontroverted as a fact in the case at
bar. Correspondingly, respondent court correctly applied the rule
that if both parties have no fault or are not guilty, the restoration
of what was given by each of them to the other is consequently in
order. This is because the declaration of nullity of a contract
which is void ab initio operates to restore things to the state and
condition in which they were found before the execution thereof.
Same; Same; Purchaser is entitled to recover the money paid
by him where the contract is set aside by reason of the mutual
material mistake of the parties as to the identity or quantity of the
land sold.—Therefore, the purchaser is entitled to recover the
money paid by him where the contract is set aside by reason of
the mutual material mistake of the parties as to the identity or
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REGALADO, J.:
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2 Original Record, 6.
3 Ibid., 90.
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4 Civil Case No. RTC 83-152, Regional Trial Court, Branch 22, Naga
City; Judge Angel S. Malaya, presiding.
5 Ibid., 1-5.
6 Ibid., 9-17. These are alleged as defenses, incorporated by reference in
the counterclaims, and sought as reliefs by DBP in its answer (Original
Record, 9-16).
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7 Ibid., 156-164.
8 Rollo, CA-G.R. CV No. 28311, 35-C.
9 Rollo, 26-40.
10 Ibid., 41.
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for taxes and expenses for the relocation survey.
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11 Ibid., 17.
12 Tolentino, A.M., Commentaries and Jurisprudence on the Civil Code
of the Philippines, Vol. IV [1973], 594, citing Perez, Gonzales & Alguer: 1-
11 Enneccerus, Kipp & Wolff 364-366; 3 Von Tuhr 311; 3 Fabres 231.
13 Labrador, et al. vs. De los Santos, et al., 66 Phil. 579 (1938); Castro,
et al. vs. Orpiano, et al., 90 Phil. 491 (1951).
14 128 US 26, 9 S Ct, 5, 32 L ed 342.
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objected to by DBP.
Contrary to the claim of petitioner, the list of damages
was presented in the trial 20
court and was correspondingly
marked as “Exhibit P.” The said exhibit was, thereafter,
admitted by the trial court but only as part of the
testimonial evidence for private 21respondents, as stated in
its Order dated August 16, 1988.
However, despite that admission of the said list of
damages as evidence, we agree with petitioner that the
same cannot constitute sufficient legal basis for an award
of P4,000.00 and P7,980.00 as reimbursement for land
taxes and expenses for the relocation survey, respectively.
The list of damages was prepared extrajudicially by
respondent spouses by themselves without any supporting
receipts as bases thereof or to substantiate the same. That
list, per se, is necessarily self-serving and, on that account,
should have been declared inadmissible in evidence as the
factum probans.
In order that damages may be recovered, the best
evidence obtainable by the injured party must be
presented. Actual or compensatory damages cannot be
presumed, but must be duly proved, and so proved with a
reasonable degree of certainty. A court cannot rely on
speculation, conjecture or guesswork as to the fact and
amount of damages, but must depend upon competent
proof that they have been suffered and on evidence of the
actual amount thereof. If the proof is 22
flimsy and
unsubstantial, no damages will be awarded.
Turning now to the issue of whether or not private
respondents should be made to pay petitioner their loan
obligation amounting to P118,540.00, we answer in the
affirmative.
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23
equal amount of the same kind and quality.
The fact that the annulment of the sale will also result
in the invalidity of the mortgage does not have an effect on
the validity and efficacy of the principal obligation, for even
an obligation that is unsupported by any security of the
debtor may also be enforced by means of an ordinary
action. Where a mortgage is not valid, as where it24 is
executed by one who is not the owner of the property,
25
or
26
the consideration of the contract is simulated or false,
the principal obligation which it guarantees is not thereby
rendered null and void. That obligation matures and
becomes demandable in accordance with the stipulations
pertaining to it.
Under the foregoing circumstances, what is lost is only
the right to foreclose the mortgage as a special remedy for
satisfying or settling the indebtedness which is the
principal obligation. In case of nullity, the mortgage deed
remains as evidence or proof of a personal obligation of the
debtor, and the amount due to 27the creditor may be enforced
in an ordinary personal action.
It was likewise incorrect for the Court of Appeals to
deny the claim of petitioner for payment of the loan on the
ground that it failed to present the promissory note
therefor. While respondent court also made the concession
that its judgment was accordingly without prejudice to the
filing by petitioner of a separate action for the collection of
that amount, this does not detract from the adverse effects
of that erroneous ruling on the proper course of action in
this case.
28
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The fact is that a reading of the mortgage contract
executed by respondent spouses in favor of petitioner,
dated March 17, 1982, will readily show that it embodies
not only the mortgage but the complete terms and
conditions of the loan agreement as well. The provisions of
said contract, specifically paragraphs 16
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