G.R. No. L-36824 - People vs. Guillermo

In March 1997, spouses Roy S. Tan and Susana C. Tan purchased two (2) Class “Da” shares of stock in Fontana Resort and Country Club, Inc. (FRCCI) from RN Development Corporation (RNDC) for ₱387,300.00.
They were induced by sales agents to believe that Fontana Leisure Park (FLP) in Clark Field, Pampanga would be fully developed and operational by Q1 1998, and that each Class “Da” shareholder was entitled to one membership with free use of park facilities and a two-bedroom villa for five (5) weekdays and two (2) weekend days annually.

FLP remained unfinished by promised date; club rules and booking policies were obscure.
Respondents successfully availed a free stay on September 5, 1998 (Saturday). Their October 17, 1998 (Saturday) reservation was refused on grounds they had exhausted their free Saturday privilege. Respondents alleged they were never informed of this rule.
A confirmed reservation for April 1, 1999 (Holy Thursday) was later canceled due to full booking; respondents claimed initial confirmation by an FLP employee and subsequent cancellation by another.

Promotional materials, FRCCI Articles of Incorporation, and By-Laws explicitly stated the one-week benefit consisted of five (5) ordinary days, one (1) Saturday, and one (1) Sunday.
No confirmed reservation was ever issued for April 1, 1999; at most, respondents were on a wait-list and were duly informed on March 3, 1999 that FLP was fully booked.
Only minor finishing works remained at FLP when respondents first stayed; facilities were operational.

Hearing Officer Bacalla (SEC-SICD) deemed petitioners to have waived presentation of evidence after two defaults.
He found petitioners guilty of gross misrepresentation in inducing respondents to buy shares, ordered refund of ₱387,000.00 plus 21% interest from August 28, 1998.
SEC En Banc (July 6, 2001) affirmed the hearing officer’s decision; denied reconsideration (Sept. 19, 2001).

CA (Mar. 30, 2002) held there was no fraud: inducements merely repeated brochure contents which respondents had read.
Nonetheless, CA rescinded the sale for failure to complete FLP and grant promised benefits; modified refund to ₱387,000.00 plus 12% interest from August 28, 1998, and ordered respondents to return share certificates upon payment.
CA denied petitioners’ motion for reconsideration (Aug. 12, 2002).

Petitioners challenged that (a) SEC’s order did not expressly rescind the contract, (b) FRCCI was not the seller, and (c) 12% interest lacked legal basis as no loan existed.
Respondents maintained that petitioners’ issues were factual and that rescission and 12% interest were proper.

Did the SEC decision effect a rescission or annulment of the contract of sale?
Was it proper to order FRCCI—rather than RNDC, the actual seller—to refund the purchase price?
Was the imposition of 12% interest per annum from the date of demand lawful on an obligation not constituting a loan or forbearance?