Case Digest (G.R. No. 167213)
Facts:
On October 27, 1994, petitioner Belen Cordero, acting for herself and as attorney-in-fact for co-petitioners Darrel Cordero, Egmedio Bautista, Rosemay Bautista, Marion Bautista, Danny Boy Cordero, and Ladylyn Cordero, entered into a contract to sell five parcels of land located in Nasugbu, Batangas with respondent F.S. Management and Development Corporation, represented by Roberto P. Tolentino, its chairman. The agreed total purchase price was Php 12,500,000 based on Php 25 per square meter, with a payment scheme involving an earnest money of Php 500,000 paid on the same date, followed by a down payment of Php 3,500,000 on or before April 30, 1995, and the remaining balance within 18 months payable in six quarterly installments of approximately Php 1,411,000 each. The contract stipulated that title would only transfer to the buyer upon full payment of the purchase price, and the buyer was entitled to occupy and improve the property after payment of the earnest and down payments
...
Case Digest (G.R. No. 167213)
Facts:
- Contract to Sell and Parties Involved
- On or about October 27, 1994, petitioner Belen Cordero, on her own behalf and as attorney-in-fact for co-petitioners Darrel Cordero, Egmedio Bautista, Rosemay Bautista, Marion Bautista, Danny Boy Cordero, and Ladylyn Cordero, entered into a contract to sell with respondent F.S. Management and Development Corporation (through its chairman Roberto P. Tolentino).
- The contract involved five parcels of land located in Nasugbu, Batangas, covered by TCT Nos. 62692, 62693, 62694, 62695, and 20987.
- Terms and Conditions of the Contract to Sell
- The purchaser (buyer) agreed to buy 50 hectares at P25 per square meter, totaling P12,500,000.
- Earnest money of P500,000 was to be paid on October 27, 1994, entitling the buyer to enter and improve the property.
- Downpayment of P3,500,000 was to be paid on or before April 30, 1995.
- The remaining balance was to be paid in six equal quarterly payments (P1,411,000.00 each) within 18 months from the downpayment date.
- Title would be transferred upon complete payment. Any encumbrances would be settled by either party and deducted from the purchase price.
- The owner (seller) agreed to transfer title earlier if the buyer provided post-dated checks guaranteed by a reputable bank.
- The buyer could occupy and improve the properties upon earnest money and downpayment, with the owner guaranteeing no tenants or squatters and cooperating with development efforts.
- Delay in payment would incur legal interest to the seller.
- Payment and Breach
- Respondent paid the earnest money of P500,000 on October 27, 1994.
- Respondent paid P1,000,000 on June 30, 1995, and another P1,000,000 on July 6, 1995. No further payments were made thereafter.
- Demand for Cancellation and Filing of Complaint
- Petitioners sent a demand letter dated November 28, 1996, revoking/canceling the contract due to breach and treating prior payments as damages. They also demanded P10 million as actual damages for loss of income.
- Respondent ignored the demand.
- On February 21, 1997, petitioner Belen filed a complaint for rescission of the contract with damages before the RTC of Parañaque, alleging respondent’s failure to pay the downpayment and balance as required.
- Respondent's Position and Trial Proceedings
- Respondent alleged petitioners breached first by preventing property access despite payments made.
- Alleged refusal to execute the final contract unless additional legal interest was paid, motivated by a higher offer from another buyer.
- Petitioners’ motion for pre-trial was attended only by petitioners, and respondent was declared in default.
- Evidence presented ex parte included petitioner Belen’s testimony on contract execution, respondent’s failure to pay, and damages sustained, plus testimony of Ma. Cristina Cleofe on a higher offer for the property.
- Respondent’s motion to set aside the default order was denied.
- RTC Decision and Appeal
- RTC rendered a decision on November 18, 1997, rescinding the contract and awarding petitioners damages and attorney’s fees:
- Actual damages: P5,000,000.00
- Moral and exemplary damages: P2,000,000.00
- Less payments made by respondent: P2,500,000.00
- Attorney's fees: P800,000.00
- Respondent appealed the decision to the Court of Appeals, raising errors regarding the award of damages and attorney’s fees.
- Court of Appeals Ruling
- The Court of Appeals set aside the contract to sell on the basis that petitioners' obligation never arose due to respondent’s failure to pay the full purchase price.
- The CA annulled the damages award for lack of proof and ordered petitioners to return all amounts received from respondent.
- Petitioners’ motion for reconsideration was denied.
- Petition to the Supreme Court
- Petitioners filed for review, arguing:
- The CA erred in ruling on the nature of the contract without this being raised.
- Whether a contract to sell may be rescinded under Article 1191 of the Civil Code.
- Whether CA erred in setting aside damages awarded.
Issues:
- Whether the Court of Appeals erred in ruling on the nature of the contract to sell despite this issue not being raised on appeal.
- Whether a contract to sell may be rescinded pursuant to Article 1191 of the Civil Code.
- Whether the Court of Appeals erred in setting aside the RTC award of damages and attorney’s fees.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)