Case Summary (G.R. No. 174966)
Factual Background
On June 15, 1987, Rome Teston purchased two parcels of land from DBP on an installment basis. However, he defaulted on his amortizations, accruing a total of P3,727,435.57 in unpaid obligations as of September 1990. As a result, DBP rescinded the contract by sending a letter dated September 24, 1990. In compliance with the Comprehensive Agrarian Reform Law of 1988 and the Executive Order accelerating the distribution of agricultural lands, DBP subsequently transferred the properties to the government.
Legal Proceedings Initiated by the Respondent
Teston had voluntarily offered the same parcels for inclusion in the Comprehensive Agrarian Reform Program (CARP) on December 1, 1988. Subsequently, on September 18, 1995, he filed a petition with the Department of Agrarian Reform Adjudication Board (DARAB), asserting that his outstanding obligations to DBP had been assumed by the government through the Land Bank of the Philippines upon the property becoming covered by CARP. He argued that this assumption extinguished DBP's right to rescind the sale.
DBP's Defense
In response, DBP contended that Teston had never acquired title to the lands and therefore lacked the authority to offer them under the Voluntary Offer to Sell (VOS) scheme. The Land Bank echoed DBP's defenses. The DARAB Regional Adjudicator dismissed Teston's petition on March 30, 1998, asserting that since Teston never became the owner of the land, he could not have validly offered it for sale. Furthermore, it stated that the five-year delay in his challenge raised a presumption of the validity of DBP's rescission due to non-payment.
DARAB's Decision Affirmation
On appeal, DARAB upheld the Adjudicator's decision. It reaffirmed that Teston did not own the property when DBP rescinded the conditional sale and consequently lost any rights over the land when it was turned over to the government. It also clarified that the scope of claims under Section 72 of Republic Act No. 6657 does not include payments of amortizations post-rescission, as the government cannot assume obligations that do not exist.
Court of Appeals Ruling
Teston later challenged DARAB's ruling in the Court of Appeals. The appellate court modified DARAB's decision by ordering DBP to return a P1,000,000 down payment made by Teston as part of the rescission agreement. Citing Article 1385 of the Civil Code, the Court emphasized that rescission necessitates returning the consideration paid.
DBP's Motion for Reconsideration
In response, DBP filed a partial motion for reconsideration, arguing against the return of the down payment. It asserted that the issue of the down payment was not properly raised in DARAB proceedings and thus should not have been a part of the appellate court's decision.
Supreme Court Finding
The Supreme Court found merit in DBP's petition for review, stating that the appell
...continue readingCase Syllabus (G.R. No. 174966)
Case Background
- The case involves a Deed of Conditional Sale dated June 15, 1987, where respondent Romeo Teston purchased two parcels of land in Mandaon, Masbate, from the Development Bank of the Philippines (DBP) on an installment basis.
- The parcels were covered by Transfer Certificate of Title Nos. T-6176 and T-6177.
- Respondent defaulted on his amortization payments, accumulating a total of P3,727,435.57 in unpaid amortizations by September 1990.
- DBP rescinded the contract via a letter dated September 24, 1990, following the default.
Legal Context
- Following the rescission, DBP transferred the land to the government under Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988) and Executive Order 407 dated June 14, 1990.
- On December 1, 1988, Teston voluntarily offered the properties for inclusion in the Comprehensive Agrarian Reform Program (CARP).
Petition to DARAB
- On September 18, 1995, Teston filed a Petition against DBP and the Land Bank of the Philippines (Land Bank) before the Department of Agrarian Reform Adjudication Board (DARAB).
- He asserted that his obligation to DBP was assumed by the government via Land Bank after the properties were covered by CARP.
- Teston contended that DBP's right to rescind the sale was extinguished by law.
DBP’s Defense
- DBP argued that