Case Digest (G.R. No. 122539)
Facts:
Sps. Lorenzo V. Lagandaon and Cecilia T. Lagandaon, together with the Overseas Agricultural Development Corporation, filed several identical complaints before the RTC in Valenzuela to rescind Pacweld Steel Corporation’s contracts to sell executed in favor of private respondents, alleging that the contracts became stale or inoperative after the Development Bank of the Philippines (DBP) acquired the subdivision through foreclosure. Petitioners also alleged an alleged verbal modified contract to sell under which private respondents would update their accounts, while petitioners would have the right of forfeiture and would not be bound by Pacweld’s obligation to develop the subdivision. The RTC dismissed the complaints, finding that the alleged modified contract to sell did not exist. The Court of Appeals affirmed dismissal but deleted the trial court’s award of attorneys fees. Petitioners then sought review under Rule 45.Issues:
- Whether the Court of Appeals erred in finding that
Case Digest (G.R. No. 122539)
Facts:
- Parties and nature of the controversy
- Petitioners were Sps. Lorenzo V. Lagandaon and Cecilia T. Lagandaon and Overseas Agricultural Development Corporation.
- Respondents were Sps. Meliton Banoyo and Asuncion P. Banoyo, Sps. Demetrio B. Batayola and Anita A. Batayola, Bonifacio Vasquez, Sps. Romeo M. Gomez and Ester M. Gomez, Aurora Gomez, Sps. Carlos V. David and Manuela C. David, Sps. Leonido D. Bongco and Fe V. Bongco, Sps. Rafael S. Solidum and Lucenda M. Solidum, Sps. Raymundo Sitjar and Lucia Sitjar, and Sps. Benjamin V. Viva and Gilda Viva.
- The controversy involved several contracts to sell covering lots in the Pacweld Subdivision (Pacweld Village, Marulas), and the consequences of Pacweld’s foreclosure and sale to petitioners.
- Pacweld’s contracts to sell and installment payments
- Pacweld Steel Corporation (Pacweld), a now defunct domestic corporation, executed several Contracts to Sell in favor of present respondents on different dates.
- The contracts covered lots payable in installments, with payments beginning and then later deferred/refused by respondents in or about 1972.
- Refusal to pay and subsequent litigation for specific performance
- On or about 1972, respondents deferred/refused further amortization payments because Lorenzo V. Lagandaon, then President of Pacweld, allegedly refused to undertake development of the areas bought.
- Respondents and other lot buyers filed an action for Specific Performance before the Court of First Instance of Manila, Branch XXVII, docketed as Civil Case No. 87763, titled Rolando Fadul et al., Plaintiffs vs. Pacweld Steel Corporation et al.
- On October 12, 1976, the CFI promulgated a decision ordering Pacweld to strictly comply with obligations under the contract to sell (particularly paragraph 6-A), within sixty (60) days from receipt, including authorization for plaintiffs to hire a contractor to cement roads, gutters, concrete curbs, and drainage at defendants’ expense if Pacweld failed.
- The CFI also ordered Pacweld to pay moral damages (P35,000.00) and exemplary damages (P10,000.00), and to pay plaintiffs attorneys fees (P4,000.00), with costs.
- The decision recognized factual findings that roads supposed to be cemented had been constructed as shown by exhibits, and there were big holes in the roads.
- Foreclosure and transfer of Pacweld property to DBP and then to petitioners
- Pacweld’s subdivision lots were subject to real estate mortgages constituted in favor of the Development Bank of the Philippines (DBP) to secure a loan of P1.5 million.
- DBP foreclosed on the mortgaged properties (including lots sold to respondents) on June 2, 1975 due to Pacweld’s failure to pay at maturity.
- Because there were no bidders, DBP participated and, after non-redemption, consolidated title in its name.
- On May 12, 1980, DBP executed a Deed of Absolute Sale in favor of petitioners covering sixty-nine (69) parcels known as Pacweld Village located at Marulas.
- Petitioners became registered owners under TCT No. B-42988 pursuant to the deed.
- Condition in the Deed of Absolute Sale from DBP to petitioners
- The deed contained a quoted typewritten condition stating that any and all claims, liens, assessments, liabilities and/or damages arising from any case or litigation involving the properties would be assumed and borne by the vendees to the exclusion of the vendor.
- Petitioners’ later position relied on their interpretation of this condition and on arguments about implied limits of their liability.
- Petitioners’ civil actions seeking rescission/cancellation of contracts to sell
- Petitioners filed several identical complaints before the CFI to rescind/cancel the first item, i.e., the contracts to sell executed by Pacweld in favor of respondents.
- Petitioners alleged that the contracts had become stale and/or inoperative because petitioners acquired ownership of the entire subdivision lots through DBP’s acquisition and subsequent sale.
- Petitioners also alleged that the relationship was governed by an alleged modified agreement to sell, under which respondents would update accounts consistent with the original contract, while petitioners had the right of forfeiture and were not bound nor liable to comply with the developer obligations under the original contracts.
- Petitioners asserted that respondents failed to pay their outstanding accounts and justified rescission on that ground.
- Petitioners prayed for respondents to be declared to have unjustifiably failed to comply, for the contracts to sell and rights and obligations arising therefrom to be rescinded/cancelled, for respondents and persons acting under them to vacate and surrender possession, and for damages and attorneys fees.
- Respondents’ defenses in the trial court
- Respondents denied the existence of a modified contract to sell...(Subscriber-Only)
Issues:
- Existence and enforceability of a modified contract to sell
- Whether the Court of Appeals erred in finding that there was no modified Contract (verbal) to sell between petitioners and respondents.
- Change of theory on appeal
- Whether the Court of Appeals erred in finding that petitioners made a change of theory on appeal.
- Right to rescind based on the alleged modified contract
- Whether the Court of Appeals erred in finding that petitioners had no right to ask for rescission of the various contracts to sell based on the alleged modified contract (verbal), and in dismissing the complaints.
- Core factual issues as framed by the Court
- Whether ...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)