Title
Abad vs. Goldloop Properties, Inc.
Case
G.R. No. 168108
Decision Date
Apr 13, 2007
Petitioners obligated to return buyer's first payment unconditionally after failed land sale, as per clear contract terms; SC affirmed lower courts' rulings.
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Case Digest (G.R. No. 168108)

Facts:

Ownership of the Property: Petitioners Enrique C. Abad, Joseph C. Abad, Ma. Sabina C. Abad, Adelaida C. Abad, Cecilia C. Abad, Victoria C. Abad, Victor C. Abad, Cenon C. Abad, Jr., and Juanita C. Abad were the owners of 13 parcels of titled agricultural land covering a total of 53,562 square meters in Tanza, Cavite.

Deed of Conditional Sale: On August 29, 1997, respondent Goldloop Properties Inc., through its President, Emmanuel R. Zapanta, entered into a Deed of Conditional Sale with petitioners for the purchase of the land at P650.00 per square meter, totaling P34,815,300.00. The terms of payment were as follows:

  • Earnest Money: P1,000,000.00 paid on June 30, 1997.
  • First Payment: P6,765,660.00 to be paid on August 17, 1997.
  • Full Payment: The remaining balance of P27,049,640.00 was to be paid on or before December 31, 1997, subject to verification of the land area through a site relocation survey.

Failure to Pay the Balance: Respondent failed to pay the balance by the agreed date. In a letter dated August 28, 1998, Zapanta informed petitioners that due to economic conditions, the transaction could not be consummated and requested the return of the first payment of P6,765,660.00, as stipulated in paragraph 8 of the Deed of Conditional Sale.

Legal Action: Respondent filed a Complaint for Collection with a Prayer for Writ of Attachment against petitioners, seeking the return of the first payment plus interest, attorney’s fees, and other damages.

RTC Decision: The Regional Trial Court (RTC) ruled in favor of respondent, ordering petitioners to return the first payment of P6,765,660.00 with 6% interest per annum, attorney’s fees, and costs of suit. The court held that the obligation to return the first payment was unconditional.

CA Decision: The Court of Appeals (CA) affirmed the RTC decision, stating that the terms of the contract were clear and unambiguous. The CA modified the ruling to declare that petitioners' liability was joint, not solidary.

Issue:

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Ruling:

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Ratio:

  1. Literal Interpretation of Contracts: The Court emphasized that if the terms of a contract are clear and unambiguous, the literal meaning of the stipulations shall control. The obligation to return the first payment is explicitly stated in the contract and must be enforced as written.

  2. Pure Obligation: The obligation to return the first payment is a pure obligation, meaning it is immediately demandable without any conditions or periods. The contract does not provide for any contingencies or delays in the return of the payment.

  3. No Need to Fix a Period: Since the contract does not indicate any period for the return of the first payment, and there is no evidence that the parties intended such a period, the Court cannot impose one. The obligation is demandable at once.

  4. Good Faith in Contracts: The Court reiterated that obligations arising from contracts have the force of law between the parties and must be complied with in good faith. The parties are bound by their agreement, and courts cannot rewrite contracts to impose terms that were not agreed upon.

Conclusion:

The Supreme Court upheld the decisions of the lower courts, ruling that petitioners are obligated to return the first payment of P6,765,660.00 to respondent without any conditions or delays. The obligation is unconditional, pure, and immediately demandable.


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