Case Summary (G.R. No. 172635)
Background and Agreement Terms
G.G. Sportswear Mfg. Corp. entered into a Reservation Agreement with World Class Properties to purchase a penthouse unit and parking slots at the Global Business Tower located in Ortigas Center, Pasig City, for a total price of PHP 89,624,272.82. The Agreement required various payments, including a downpayment and additional monthly installments. Significant provisions included the stipulation that failure to pay any installment would allow World Class to impose a 3% monthly interest rate on unpaid amounts or rescind the Agreement without court action, potentially forfeiting the reservation fee.
Payment History and Issues Arising
GG Sportswear made timely payments from May to December 1996, totaling PHP 19,717,339.50, which represented 21% of the total purchase price. In January 1997, GG Sportswear requested the return of checks for replacement, leading to discussions about a new Reservation Agreement. Despite the intention to defer payments due to financial difficulties, World Class insisted on payment and later delivered a provisional Contract to Sell that included a completion date for the project.
Dispute and Claims for Refund
Discontented with the stated completion date and feeling that the Agreement lacked essential terms, GG Sportswear filed a complaint with the Housing and Land Use Regulatory Board (HLURB) seeking a refund of payments made due to World Class’s purported contractual breach. World Class denied any wrongdoing, suggesting instead that GG Sportswear's dissatisfaction stemmed from its own financial struggles.
HLURB Findings and Board Rulings
An HLURB Arbiter found that World Class violated P.D. No. 957 by entering the Agreement without the required Certificate of Registration and License to Sell (CR/LS), leading to the rescission of the Agreement and an order for World Class to refund the installment payments with interest. Upon appeal, the HLURB Board modified the Arbiter's ruling, asserting that since a License to Sell was acquired before the complaint, the rescission claim on that basis was no longer valid but still allowed for a refund based on failure to deliver as promised.
Court of Appeals Decision
The Court of Appeals reversed the ruling of the Office of the President that favored GG Sportswear, contending that the Board's findings had attain finality, and emphasized that the presence of a CR/LS at the time the complaint was filed barred rescission. Additionally, no material breach occurred since the completion date was either undisputed or evolved as per subsequent agreements.
Supreme Court Ruling
The Supreme Court upheld the Court of Appeals' decision, concluding that rescission was unwarranted because GG Sportswear failed to demonstrate substantial breach of contract justifying such relief. The issues r
...continue readingCase Syllabus (G.R. No. 172635)
Background of the Case
- G.G. Sportswear Mfg. Corp. (GG Sportswear) filed a petition for review on certiorari challenging the decisions of the Court of Appeals (CA) dated December 19, 2007, and January 2, 2008.
- The main issues are the denial of rescission of the Reservation Agreement between GG Sportswear and World Class Properties, Inc. (World Class), and the request for a refund of payments made under the Agreement.
- World Class is the developer of the Global Business Tower (now Antel Global Corporate Center) located in Pasig City, which was projected for completion by December 15, 1998.
The Reservation Agreement
- GG Sportswear agreed to purchase a penthouse unit and parking slots for a total price of P89,624,272.82, accompanied by a P500,000 reservation fee.
- The Reservation Agreement outlined a payment schedule, including a 20% down payment, 60% payment in installments, and a 20% final payment upon turnover.
- The agreement stipulated that a contract to sell would be executed upon payment of 30% of the total purchase price.
- It included clauses allowing World Class to charge interest on unpaid amounts or to rescind the Agreement without court action, forfeiting the reservation fee and other payments.
Payment History and Disputes
- GG Sportswear made timely payments from May to December 1996, totaling 21% of the contract price.
- In January 1997, GG Sportswear requested the return of postdated checks and suggested a new Reservation Agreement to accommodate this.
- World Class refused to defer the deposit of replacement checks and demanded payment for overdue installments.
- In March 1997, GG Sportswear deliv