G.R. No. 254248 - Taok vs. Conde

Case Summary (G.R. No. 254248)

Factual Background

The parties executed an Agreement dated January 29, 2007, whereby Virgilio A. Taok purportedly sold Lot No. 906‑P (B‑1), 943 sq. meters, to Supremido Conde and Raul Conde for PHP 1,000,000.00, with a down payment of PHP 165,000.00 and the balance of PHP 835,000.00 to be paid in monthly bank installments of PHP 20,000.00. The Agreement was signed by the parties and witnessed by the barangay captain and others. Petitioner alleged that respondents failed to make any monthly payments and sought rescission, damages, and attorney’s fees. Respondents admitted the written Agreement but asserted oral modifications as to the commencement of installments and alleged tender of full payment before suit.

Trial Court Proceedings

The Regional Trial Court granted petitioner’s complaint by Decision dated July 8, 2015 and rescinded the Agreement for respondents’ failure to pay the monthly installments, finding a conditional sale whose material provisions were breached. The trial court denied respondents’ motion for reconsideration on September 17, 2015.

Court of Appeals Ruling

On appeal, the Court of Appeals reversed in a Decision dated March 7, 2018, holding that the Agreement was a contract of sale and not a contract to sell, that the parties orally modified the payment schedule so installments were to commence in May 2007, and that respondents had up to June 2010 to pay the balance. The appellate court granted respondents’ counterclaim ordering payment of PHP 835,000.00 and directed petitioner to accept payment and to execute a deed of absolute sale. Petitioner’s motion for reconsideration was denied by CA Resolution dated February 11, 2020.

Issues Presented

The Supreme Court identified the principal issues as whether the Agreement was a contract of sale or a contract to sell; whether respondents committed a material breach with respect to payment of the purchase price; and whether rescission of the Agreement was proper.

Parties’ Contentions

Petitioner maintained that the Agreement was a contract of sale, that respondents did not pay any installments and thus committed a substantial breach warranting rescission, and that respondents’ alleged oral modifications and late tenders were inadmissible or invalid. Respondents maintained that the Agreement was not a sale but a contract to sell or, alternatively, that the parties orally agreed to defer installments until May 2007 and later to permit lump‑sum payment, and that they tendered full payment prior to suit.

Supreme Court’s Conclusion on the Nature of the Agreement

The Court agreed with the Court of Appeals that the Agreement was a contract of sale, not a contract to sell. The Court applied Article 1458 and the doctrine that the literal terms of a clear written contract control per Article 1370. The Agreement contained the requisite elements of a sale: consent, determinate subject matter, and a price certain in money. There was no stipulation reserving title in the vendor until full payment, a feature that would have converted the transaction into a contract to sell.

Supreme Court’s Analysis on Breach and Rescission

The Court held that a contract of sale is rescindable under Article 1191 in case of substantial breach by an obligor. Respondents failed to pay any monthly installments and did not pay the PHP 835,000.00 balance for more than two years and seven months. That failure, representing 83.5 percent of the purchase price, constituted a substantial breach and justified rescission of the sale. The Court reaffirmed that nonpayment of the purchase price in a sale violates the essence of the contract and supports resolution.

Parol Evidence Rule and Alleged Oral Modifications

The Court found that the Court of Appeals erred in crediting respondents’ self‑serving oral claims that the parties agreed to postpone installments until May 2007 or to permit a later lump‑sum payment. The Court applied the Parol Evidence Rule embodied in Rule 130, Section 9, and its precedent in Ortanez v. Court of Appeals, holding that exceptions to the parol evidence rule must be expressly pleaded and squarely put in issue. The Agreement was clear and unambiguous; respondents did not plead intrinsic ambiguity, mistake, or failure of the written instrument to express the parties’ true intent. Consequently, parol evidence could not be admitted to vary the written terms.

Tender and Payment

The Court held respondents’ alleged tender and notice to consign to be self‑serving and legally insufficient. Citing Roman Catholic Bishop of Malolos, Inc. v. Intermediate Appellate Court, the Court emphasized that tender requires a positive and unconditional offer of legal tender and cannot be presumed by inference. A purporte

Case Syllabus (G.R. No. 254248)

Parties and Procedural Posture

Virgilio A. Taok, Petitioner filed a complaint in the Regional Trial Court, Branch 61, Bogo City, for rescission of contract, damages, and attorney’s fees.
Supremido Conde and Raul Conde, Respondents filed an answer admitting the written Agreement but alleged oral modifications and tendered payment.
The trial court rendered judgment rescinding the Agreement and denying monetary claims, and denied respondents’ motion for reconsideration.
The Court of Appeals reversed the trial court, dismissed the complaint, granted respondents’ counterclaim, and ordered payment of PHP 835,000 and execution of a deed of absolute sale.
The Court granted a Petition for Review on Certiorari under Rule 45, Rules of Court, and reviewed the Court of Appeals’ Decision dated March 7, 2018 and Resolution dated February 11, 2020.

Key Factual Allegations

Petitioner alleged ownership of a 943 square meter parcel identified as Cadastral Lot 906-P(B-1) under Tax Declaration 21274 in Agujo, Daanbantayan, Cebu.
The parties executed an Agreement dated January 29, 2007, reflecting a sale of the lot for PHP 1,000,000 with a down payment of PHP 165,000 and a balance of PHP 835,000 payable in monthly installments of PHP 20,000 through bank payments.
The Agreement recorded that the first monthly installment was due on February 29, 2007.
Respondents did not make any monthly amortizations for more than two years and seven months, prompting petitioner to seek barangay assistance and eventually to file suit on September 14, 2009.
Respondents later asserted verbal modification that installments would commence in May 2007, claimed offers of payments including a purported remittance of PHP 837,045 to a third person, and tendered full payment by letter dated August 25, 2009.

Pleadings and Contentions

Petitioner pleaded rescission of the Agreement for non-payment, exemplary damages, attorney’s fees, and litigation expenses.
Respondents admitted the written Agreement but denied refusal to pay and alleged an oral modification deferring the first installment to May 2007.
Respondents alleged that Raul arranged for a partial remittance and that petitioner instructed deferment and later demanded a lump-sum payment and an additional PHP 400,000.
Respondents prayed for moral damages, litigation expenses, acceptance fee, and per-appearance fees, and threatened to consign the tendered amount if petitioner refused acceptance.

Trial Court Decision

The Regional Trial Court, in a Decision dated July 8, 2015, found the Agreement to be a contract of sale and granted rescission due to respondents’ failure to pay installments.
The trial court held that respondents’ alleged oral agreement to defer payments to May 2007 lacked credibility and warranted rescission.
The trial court denied the monetary claims of both parties as lacking merit and denied respondents’ motion for reconsideration on September 17, 2015.

Court of Appeals Decision

The Court of Appeals, by Decision dated March 7, 2018, reversed and set aside the trial court Judgment and dismissed the complaint.
The Court of Appeals characterized the Agreement as a contract of sale but concluded that the Agreement lacked a fixed commencement date for installments and thus allowed an oral modification to delay the first payment to May 2007.
The Court of Appeals held that respondents had up to 41 months to pay and that their offer to tender full payment in August 2009 was within the payment period.
The Court