Case Digest (G.R. No. 202947)
Facts:
Respondent Ortigas & Company Limited Partnership sold a Pasig City parcel of land to Amethyst Pearl Corporation under a Deed of Sale dated June 29, 1994, with annotated covenants, including submission of building plans within six months and completion of construction within four years from December 31, 1991. After Amethyst assigned the property to petitioner ASB Realty Corporation by Deed of Assignment in Liquidation on December 28, 1996, the titles were issued in petitioner’s name with the same covenants annotated.On July 7, 2000, Ortigas filed an action for specific performance, later seeking rescission and reconveyance (and related reliefs), alleging petitioner’s violation of the covenants. The RTC dismissed the complaint on December 14, 2009. The CA first affirmed, then reversed and rescinded the sale by amended decision dated January 9, 2012, which was later denied reconsideration on July 26, 2012.
Issues:
- Whether Ortigas could rescind the Deed of Sale and demand reconve
Case Digest (G.R. No. 202947)
Facts:
- Parties and their relationship
- ASB Realty Corporation (ASB) acted as the petitioner and as the assignee of the subject property from Amethyst Pearl Corporation (Amethyst).
- Ortigas & Company Limited Partnership (Ortigas) acted as the respondent and as the original seller of the subject property to Amethyst.
- Amethyst acted as the original vendee under a Deed of Sale executed with Ortigas.
- The 1994 Deed of Sale and its contractual covenants
- On June 29, 1994, Ortigas entered into a Deed of Sale with Amethyst involving a parcel of land with an area of one thousand twelve (1,012) square meters situated in Barrio Oranbo, Pasig City.
- The property was originally registered under Transfer Certificate of Title (TCT) No. 65118 of the Register of Deeds of Rizal, and the consideration was P2,024,000.00.
- The Deed of Sale included Covenants, Conditions and Restrictions, including provisions governing building works and architecture, submission of plans, and construction completion:
- Building works and architecture: the building to be constructed should be of reinforced concrete, cement hollow blocks and other high-quality materials, and should not exceed fourteen (14) storeys plus one penthouse.
- Submission of plans: final plans and specifications were to be submitted to Ortigas for approval not later than six (6) months from date hereof; if Ortigas objected, it was to specify amendments, and the vendee was to submit amended plans within sixty (60) days from receipt of the notice.
- Construction and completion: the vendee was to finish construction within four (4) years from December 31, 1991.
- Other restrictions referenced in the complaint: the property was for office and residential purposes; the contract restricted commercial signs/advertisements and limited commercial use; setbacks were established by the contract and were to be respected.
- Transfer of title from Ortigas to Amethyst and annotation of restrictions
- After execution of the Deed of Sale, the Register of Deeds of Rizal cancelled TCT No. 65118 and issued TCT No. PT-94175 in the name of Amethyst.
- The Deed of Sale’s conditions were annotated on TCT No. PT-94175 as encumbrances.
- The 1996 assignment in liquidation to ASB and issuance of ASB’s title with the same annotations
- On December 28, 1996, Amethyst assigned the subject property to its sole stockholder, petitioner ASB, through a Deed of Assignment in Liquidation.
- The consideration stated was ten thousand (10,000) shares of ASB’s outstanding capital stock.
- The property was transferred to ASB free from any liens or encumbrances except those duly annotated on the relevant title.
- The Register of Deeds of Rizal cancelled TCT No. PT-94175 and issued TCT No. PT-105797 in ASB’s name with the same encumbrances annotated as were on TCT No. PT-94175.
- Ortigas’s enforcement attempt and the 2000 complaint
- On July 7, 2000, Ortigas filed a complaint for specific performance against ASB, docketed as Civil Case No. 67978 before the Regional Trial Court (RTC) of Pasig City.
- Ortigas later amended the complaint and alleged, among others, that ASB violated the Deed of Sale covenants by:
- Introducing constructions allegedly commercial in nature (e.g., restaurants and retail stores), contrary to the intended use of the lot for office and residential purposes.
- Extending commercial structures allegedly up to the boundary lines, violating contractual setbacks.
- Failing to submit final plans and specifications within the contractual period and failing to complete construction within the contractual four-year period from December 31, 1991.
- Putting up commercial signs and advertisements contrary to the agreed restriction on ads/commercial signs in a first-class office building area.
- Ortigas invoked an enforcement clause under the Deed of Sale, including a “Unilateral Cancellation” concept, and sought reconveyance of the property or, alternatively, demolition of the structures and improvements, plus penalties, attorney’s fees, and costs.
- RTC proceedings and dismissal in 2009
- During the pendency of the case, ASB amended its corporate Articles of Incorporation to change its name to St. Francis Square Realty Corporation.
- After trial, the RTC rendered its decision on December 14, 2009 and dismissed the complaint.
- The RTC’s reasoning included:
- Ortigas allegedly failed to enforce the construction provision against Amethyst within a reasonable time, thus allegedly showing laches or negligence/omission to assert a right within a reasonable time, warranting a presumption of abandonment or decline to assert it (citing Tijam v. Sibonghanoy, L-21450, April 15, 1968).
- The RTC opined that the restriction annotations referred consistently to the “VENDEE,” and it interpreted “VENDEE” as referring to Amethyst Pearl Corporation rather than ASB, because of contextual consistency with the construction-completion date stated in the contract.
- The RTC reasoned that reconveyance to Ortigas would necessarily imply rescission of the sale/transfer in earlier steps, but Amethyst was not made a party, so reconveyance based on rescission was argued to be inapplicable to subsequent vendees.
- The RTC concluded that non-compliance by Ortigas with the requisites of its own restrictions indicated lack of intention to enforce, and treated Ortigas’s attempt as an afterthought.
- The RTC dismissed the complaint for lack of basis.
- CA initial affirmance in 2011 and subsequent reversal in amended decision in 2012
- On appeal, the Court of Appeals initially affirmed the RTC through a decision promulgated on September 6, 2011.
- The CA’s September 6, 2011 reasoning included:
- Ortigas could no longer enforce the restrictions against ASB due to inaction and tolerance.
- Ortigas allegedly failed to pursue its stated purpose of a controlled real estate develo...(Subscriber-Only)
Issues:
- Procedural issue on timeliness of ASB’s motion for reconsideration
- Whether the CA erred in concluding that ASB’s motion for reconsideration was filed three days late, and in denying it for being filed out of time.
- Substantive issue on rescission and enforceability against ASB
- Whether Ortigas could validly rescind the June 29, 1994 Deed of Sale and demand reconveyance/demolition against ASB due to Amethyst’s and ASB’s alleged non-compliance with the Deed of Sale covenants.
- Whether ASB, as assignee of the property, became liable for the Deed of Sale covenants whose breach Ortigas invoked for rescission.
- Whether Ortigas had a cause of action against ASB for rescission under Article 1191 of the Civil Code, considering privity and responsibility for performance under the Deed of Sale.
- Whether the covenants annotated on ASB’s TCT created liability for non-performance by ASB beyond notice of encumbrance.
- Whether rescission could still be directed again...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)