Case Digest (G.R. No. 230817) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
The case involves Vive Eagle Land, Inc. (petitioner) against National Home Mortgage Finance Corporation (NHMFC), Joseph Peter S. Sison, and Cavacon Corporation (respondents). The events unfolded when Vive filed a complaint on April 18, 2006, seeking nullification of the rescission of a Deed of Sale, suspension of payment, and other reliefs. Vive Eagle Land, Inc., represented by its President Virgilio O. Cervantes, executed a Deed of Sale on November 17, 1999, to purchase NHMFC's rights over certain foreclosed properties with a total purchase price of ₱40,000,000. Payments were structured with a down payment and subsequent installments. Vive made an initial payment of ₱4,000,000 but defaulted on later installments allegedly due to legal issues regarding the property, particularly certificates of land awards and classification under the Comprehensive Agrarian Reform Program (CARP). In June 2004, NHMFC initially agreed to a moratorium on payments but sought board approval for
Case Digest (G.R. No. 230817) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Background of the Case
- On April 18, 2006, petitioner Vive Eagle Land, Inc.—a corporation engaged in the realty business—filed a complaint seeking:
- Declaration of nullity of the rescission of a Deed of Sale;
- Declaration of suspension of payment of the purchase price and interest; and
- Other reliefs against the respondents.
- The respondents were National Home Mortgage Finance Corporation (NHMFC), a government corporation created under Presidential Decree No. 1267, its President Joseph Peter S. Sison, and Cavacon Corporation, a construction company.
- The Contract and Transaction Details
- On November 17, 1999, Vive Eagle Land, Inc. and NHMFC entered into a Deed of Sale of Rights, Interests, and Participation over foreclosed assets of a property located at Barangay Sta. Catalina, Angeles City, covering 73.5565 hectares (TCT Nos. 86340 and 86341).
- The purchase price was set at ₱40,000,000.00, payable as follows:
- A 20% downpayment of ₱8,000,000.00 in two equal installments; the first installment due on or before December 4, 1999, and the second installment timed with the execution of a Deed of Conditional Sale (but no later than January 4, 2000).
- The remaining ₱32,000,000.00 to be paid in 10 equal semi-annual installments of ₱3,200,000.00 each, with an interest rate of 14% per annum.
- Vive paid the first installment of ₱4,000,000.00 as the downpayment but failed to pay subsequent installments.
- Alleged Difficulties and Requests by Vive
- Vive contended that it was prevented from continuing its payments because of issues affecting the property, namely:
- The issuance of several certificates of land awards over the property; and
- The classification of the property as agricultural, thereby subjecting it to the Comprehensive Agrarian Reform Program (CARP).
- While these issues were being litigated or resolved, Vive requested NHMFC to:
- Grant a moratorium or suspension in the payment period;
- Waive the interest; and
- Provide a 10% reduction in the purchase price to offset litigation costs.
- On June 17, 2004, NHMFC, via its then President Atty. Angelico T. Salud, initially agreed to a moratorium but directed Vive to submit its further requests to the NHMFC Board of Directors.
- Despite this initial agreement, NHMFC later, through Sison, sent letters (dated February 10, 2006, and February 27, 2006) rescinding or cancelling the Deed of Sale due to Vive’s non-payment of subsequent installments.
- Procedural History and Subsequent Developments
- The Regional Trial Court (RTC), Makati City, Branch 138, on September 18, 2014, dismissed Vive’s complaint upholding the rescission as valid.
- A subsequent reassignment of the case took place:
- RTC Branch 133, on January 13, 2015, granted Vive’s motion for reconsideration, declaring NHMFC’s rescission null and void; it declared Vive as the owner of the property and ordered payment of the subsequent installment without interest.
- RTC Branch 139, on June 15, 2015, reinstated the decision of Branch 138, thereby validating the rescission.
- The Court of Appeals (CA):
- In a Decision dated August 23, 2016, affirmed the RTC’s finding that Vive’s failure to pay constituted an event of default, entitling NHMFC to annul or cancel the contract.
- In its Resolution dated March 30, 2017, the CA rejected Vive’s arguments regarding the moratorium and held that the rescission was valid.
- Vive then filed a Petition for Review on Certiorari before the Supreme Court on May 22, 2017, alleging multiple errors and raising issues including:
- The nature of the contract (absolute transfer versus contract to sell);
- The existence of a valid moratorium;
- Absence of a substantial breach;
- Alleged bad faith in the subsequent Memorandum of Agreement (MOA) between NHMFC and Cavacon; and
- Violation of the Maceda Law requirements concerning rescission.
- Additional pleadings included:
- Multiple motions for reconsideration and an exchange of Comments, Replies, and Rejoinders among the parties; and
- A motion by NHMFC and Cavacon to expunge certain pleadings alleged to be misleading.
- Eventually, the Supreme Court resolved to give a final determination on the conflicting issues and ruled in favor of the respondents.
Issues:
- Classification of the Contract
- Whether the Deed of Sale is to be considered a contract to sell—where the title remains with NHMFC until full payment—or an absolute contract of sale with immediate transfer of ownership.
- The implications of the contractual terms, particularly Section 7, on the transfer of title.
- Existence and Effect of a Moratorium
- Whether NHMFC validly granted a moratorium on the collection period for the balance of the purchase price.
- Whether the alleged moratorium, as evidenced by the June 17, 2004 letter, was sufficient to excuse or suspend Vive’s obligation to pay.
- Whether the absence of board approval for the moratorium invalidates its effect.
- Validity of Rescission
- Whether Vive’s non-payment of subsequent installments constitutes an event of default that properly triggers NHMFC’s right to rescind the contract.
- Whether the unilateral rescission and subsequent sale to Cavacon were executed in accordance with the contractual provisions.
- Whether the actions taken by NHMFC conformed to the agreed contractual default clauses.
- Allegations of Bad Faith and Substantial Breach
- Whether NHMFC and Cavacon acted in bad faith by entering into a MOA despite the pending issues over the property.
- Whether there was a substantial breach by Vive that justified the rescission and cancellation of the contract.
- Application of the Maceda Law
- Whether the Maceda Law, which protects low-income buyers in installment sales, is applicable to the transaction at bar.
- Whether NHMFC’s cancellation of the contract failed to comply with the mandatory requirements of a notarized notice of cancellation and the refund of the cash surrender value under the Act.
- Whether, even if the rescission were valid, mutual restitution should have been ordered.
- Authority of Corporate Officers
- Whether the acts of NHMFC’s officers (specifically Atty. Salud and Atty. Cacal) in granting or acknowledging the moratorium can bind the corporation.
- The extent to which the doctrines of apparent authority, ratification, and equitable estoppel can be applied.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)