G.R. No. 158941 - Timeshare Realty Corp. vs. Lao

On October 6, 1996, Timeshare Realty Corporation (petitioner) entered into a timeshare purchase agreement with respondents Cesar M. Lao and Cynthia V. Cortez for one timeshare share in Laguna de Boracay.
The agreed purchase price was US$7,500.00, payable over an eight‐month period, with the respondents having fully paid under Contract No. 135000998.

In February 1998, the Securities and Exchange Commission (SEC) issued a resolution declaring that petitioner was unauthorized to sell securities—such as timeshares—prior to February 11, 1998.
The SEC also ruled that the Registration Statement of the petitioner only became effective on February 11, 1998, and stipulated that the 30-day period within which a purchaser could unilaterally rescind the purchase agreement (and receive a refund of any money advanced) applied to all purchase agreements executed before the Registration Statement’s effectivity.
On March 9, 1998, petitioner’s request for reconsideration of the SEC ruling was denied.

Following the SEC ruling, respondents sent a letter on March 30, 1998 to petitioning party demanding their right to cancel the contract, given that the sale occurred without the proper license or SEC authority.
The respondents reiterated their demand in a subsequent letter on June 29, 1998, after not receiving any response from petitioner.
Unable to obtain a refund, the respondents directly filed a complaint with the SEC En Banc alleging violation of Section 4 of Batas Pambansa Bilang (B.P. Blg.) 178.
Although petitioner filed an Answer to the complaint, it was expunged from the records by the SEC En Banc due to tardiness.

On March 25, 2002, the SEC En Banc rendered a decision ordering petitioner and certain board members to pay respondents US$7,500.00.
Petitioner’s Motion for Reconsideration of this decision was denied in an order dated June 24, 2002.
Petitioner received notice of the June 24, 2002 order on July 4, 2002, and was given 15 days (until July 19, 2002) to appeal.

On July 10, 2002, petitioner sought an extension from the Court of Appeals (CA) amounting to 30 days, counted from the original deadline, for filing its petition for review.
The CA, in an order dated July 24, 2002, granted a non-extendible extension of only 15 days from July 10, 2002 (or until July 25, 2002).
Despite the CA’s order, petitioner filed its Petition for Review on August 19, 2002, which was 25 days beyond the allowed extended period.
In its petition, petitioner also raised substantive issues regarding the retroactive effect of the licensed registration and the right to rescind purchase agreements unilaterally.

Whether the eventual approval/issuance of the license, evidenced by the corporate registration and SEC authorizations, had a retroactive effect that would ratify the October 6, 1996 purchase agreement.
Whether a contracting party has the unilateral right to withdraw or rescind the purchase agreement without valid and compelling reason, thereby invalidating respondents’ rescission actions based on the SEC’s ruling.

Whether the petitioner’s appeal (Petition for Review) was filed within the allowed period as mandated by Section 4 of Rule 43 of the 1997 Revised Rules of Civil Procedure, particularly given the discrepancy between the requested 30-day extension versus the granted 15-day period.

Whether the subsequent approval or issuance of the petitioner’s license (through SEC registration) has retroactive effect, thereby ratifying earlier timeshare transactions executed prior to the effectivity of the registration statement.
Whether a party to a contract may withdraw or rescind unilaterally without a compelling reason, particularly in cases involving transactions conducted prior to the requisite SEC registration and subsequent administrative rulings.

Whether petitioner’s failure to challenge the SEC ruling through proper administrative remedies prior to seeking judicial recourse bars its substantive arguments regarding the validity of the sale and rescission rights.