G.R. No. 128609 - Anama vs. Court of Appeals

On March 24, 1973, petitioner Douglas F. Anama and Philippine Savings Bank (PSBank) entered into a Contract to Buy.
The contract involved the sale of a parcel of land with improvements, previously owned by petitioner’s parents and mortgaged to PSBank.
The purchase price was set at PESOS 135,000.00, with an initial down payment of PESOS 30,000.00 and the remainder to be financed through a real estate mortgage loan of PESOS 105,000.00.
Specific payment schedule provided:

Petitioner paid the first and second installments as required.
He failed to pay the third installment on or before April 30, 1973 as stipulated by the contract.
In a July 5, 1974, handwritten letter, petitioner’s father requested an extension and offered a deposit of PESOS 3,000.00 as a sign of good faith.
Subsequent irregular payments:

PESOS 17,500.00 on February 22, 1975.
A promise to pay PESOS 20,000.00 on or before August 3, 1976, via a letter sent on May 31, 1976.
An additional payment of PESOS 15,208.34 on November 25, 1976.

Payments from petitioner’s father’s savings account were evidenced by official receipts which indicated “penalties/interest charges” rather than payments toward the third installment.

On September 9, 1977, PSBank executed an Affidavit of Cancellation, effectively rescinding the Contract to Buy.
Petitioner was advised to vacate the premises.
The Bank forfeited the payments made by petitioner, treating them as rentals for the use of the property.
Despite petitioner’s protest through a letter dated October 6, 1977—asserting that the deposits were treated as installments—the Bank proceeded with its rescission rights.

PSBank sold the property on November 6, 1978, to spouses Tomas Co and Saturnina Baria.
A Transfer Certificate of Title was issued in the names of the respondent spouses.
On February 15, 1980, the Bank even prevented petitioner from withdrawing funds from his father’s account earmarked for payments under the contract.

On March 1, 1982, petitioner filed an action before the Regional Trial Court (RTC) of Pasig for a declaration of nullity of the deed of sale, cancellation of the title, and specific performance with damages.
The RTC issued procedural orders for submission of memoranda and later noted the delay caused by the incomplete transcript of stenographic notes.
The missing transcript pertained to the January 30, 1987, cross-examination testimony of Atty. Raul TotaAes, an essential part of the evidentiary record.
A conference was held on March 6, 1992, with an agreement to retake the testimony on June 2, 1992.
Petitioner later submitted his memorandum along with a position paper claiming due process violations, contending that he was not allowed sufficient opportunity to present his arguments.

On August 21, 1991, the RTC rendered a decision in favor of PSBank, justifying the rescission of the contract on the ground of petitioner’s failure to pay the third installment.
Petitioner filed a Notice of Appeal on September 12, 1991, though difficulties in transmitting complete records (due to the missing transcript) delayed the appellate process.
On June 17, 1996, the Court of Appeals dismissed petitioner’s appeal for failing to include an assignment of errors in his Appellant’s Brief.
The Court of Appeals further held that the absence of oral argument or memoranda did not constitute a denial of due process.

The official receipts for payments made on February 22, 1975, and November 25, 1976, were marked as covering penalties/interest.
Petitioner argued that these payments were meant to satisfy the third installment and that the bank had waived its right to rescind by granting extensions.
However, evidence suggested that under the contract, interest accrued upon failure to pay the third installment, and the payments were applied against that interest, not the principal installment.

Petitioner claimed that the trial court denied due process by deciding the case:

He further argued that Judge Alfredo C. Flores’ remarks during the retaken testimony indicated a lack of awareness of the earlier testimony, thereby affecting his right to be heard.
The court, however, maintained that the opportunity to be heard was not impaired since petitioner had been able to participate fully in the trial proceedings.

Whether petitioner’s failure to timely pay the third installment of the Contract to Buy justified PSBank’s rescission of the contract.

Did the extensions granted by PSBank, including the deposit and later payments, amount to a waiver of the bank’s right to rescind?
Whether the payments made (which were purportedly for penalties/interest) can be recharacterized as payments for the third installment.

Whether the decision of the trial court to render judgment without waiting for the submission of petitioner’s memorandum violated due process.

Whether the absence of a formal assignment of errors in the appellant’s brief warranted the dismissal of the appeal.
Whether the judge’s conduct during the retaken testimony (and the issues regarding the missing transcript) constituted a denial of the right to be heard.

The propriety of applying the funds received against interest charges before applying them to the principal, as stipulated by the contract and under Article 1253 of the New Civil Code.