G.R. No. 107992




Manila FIRST DIVISION G.R. No. 107992 October 8, 1997 ODYSSEY PARK, INC., petitioner, vs. HONORABLE COURT OF APPEALS and UNION BANK OF THE PHILIPPINES, respondents. VITUG, J.: Assailed in the instant petition for review on certiorari is the decision, dated 07 September 1992, of the Court of Appeals affirming that of the Regional Trial Court, Branch 152, of Pasig, Metro Manila, which has adjudged the contract to sell entered into between petitioner and private respondent as having been validly rescinded. The Court adopts the factual findings, hereunder narrated, of the appellate court: 1. On November 4, 1981, Bancom Development Corporation and plaintiff-appellant Odyssey Park, Inc., entered into a Contract to Sell (Exhibit B-1), whereby the former agreed to sell to the latter the parcel of land with an area of 8,499 square meters situated in Baguio City and the structure constructed thereon identified as the Europa Clubhouse. 2. Subsequently on February 11, 1982, in a document entitled "Separate Deed of Conveyance" (Annex F of the Affidavit of Carmelito A. Montano, pages 152-154 of the Record), Bancom confirmed and acknowledged that it has ceded, transferred and conveyed in favor of defendant-appellee Union Bank all the rights, title and interest it has over the property. 3. The purchase price of P3,500,000.00 was, per Section 2 of the Contract to Sell, agreed to be paid as follows: a) SEVEN HUNDRED THOUSAND PESOS (P700,000.00) as down payment, to be paid by Odyssey as follows: (i) ONE HUNDRED THOUSAND (P100,000.00) PESOS upon signing of this Contract; (ii) TWO HUNDRED THOUSAND PESOS (P200,000.00), sixty (60) days from and after the date of this Contract. The said amount shall be covered by a check postdated sixty (60) days after the date of this Contract issued and delivered by Odyssey to Bancom upon the signing of this Contract; and (iii) FOUR HUNDRED THOUSAND PESOS (P400,000.00), ninety (90) days from and after the date of this Contract. The said amount shall be covered by a check postdated ninety (90) days after the date of this Contract issued and delivered by Odyssey to Bancom upon signing of this Contract. b) The balance of TWO MILLION EIGHT HUNDRED THOUSAND PESOS (P2,800,000.00) shall be paid by Odyssey to Bancom within a period of three (3) years by twelve (12) equal quarterly amortizations of P298,346.08 each, inclusive of the interest and service charge set forth in Section 3 hereof, the first amortization to become due and payable four (4) months and fifteen (15) days after the date of this Contract, and the succeeding amortizations at the end of each quarter thereafter until the balance of the purchase price of the Property is paid in full. 4. It was also agreed in Section 5 of the Contract to Sell that: Sec. 5: In the event Odyssey fails to pay any portion of the purchase price of the Property or the interest and service charge thereon as and when it falls due, or otherwise fails to comply with or violate any of the provisions of this Contract, Bancom may at its absolute discretion cancel and rescind this Contract and declare the same as null, void and no further force and effect by serving on Odyssey a written notice of cancellation and rescission thirty (30) days in advance. In the event this Contract is cancelled and rescinded as provided in this Section, all the amounts which the Odyssey may have paid to Bancom pursuant to and in accordance with this Contract shall be forfeited in favor of Bancom as rentals for the use and occupancy of the Property and as penalty for the breach and violation of this Contract. Furthermore, all the improvements which Odyssey may have introduced on the Property shall form part thereof and belong to Bancom without right of reimbursements to Odyssey; Provided, that Bancom may at its absolute discretion instead require Odyssey to remove such improvements from the Property at expense of Odyssey. 5. On November 26, 1981, twenty-two (22) days after the execution of the contract plaintiff-appellant paid the amount of P100,000.00. Other payments, also beyond the stipulated period, (see Odyssey Park, Inc., Statement of Application of Payment, Annex A of the Supportive Affidavit of Nicefero S. Agaton, p. 309 of the record) in the total sum of P110,000.00 were made as follows: September 22, 1982 P20,000.00 April 13, 1983 10,000.00 April 30, 1983 10,000.00 July 20, 1983 50,000.00 September 19, 1983 20,000.00. 6. On December 23, 1981, Mr. Vicente A. Araneta, President of Europa Condominium Villas, Inc., wrotes defendant-appellee Union Bank, a letter, Exhibit E, stating that the Europa Center was reported to prospective buyers as well as government authorities as part of common areas and amenities under the condominium concept of selling to the public and for that reason wants to make it of record that Europa Condominium Villas, Inc., questions the propriety of the contract to sell. 7. On January 4, 1982, plaintiff-appellant Odyssey Park, Inc., through its Chairman of the Board, Mr. Carmelito A. Montano, wrote Bancom Development Corp. a letter, Exhibit F, stating that it acknowledges receipt of a copy of the letter-protest from the Europa Condominium Villas, Inc., and that in the meantime that there is a question on the propriety of the sale, it is stopping/withholding payments of the amortization. 8. On the same date, January 4, 1982, Bancom, through its Senior Vice-President, wrote Europa Condominium Villas, Inc. a letter, Exhibit H, explaining that the Europa Center and the parcel of land on which it is built are not part of the Europa Condominium Villas, Inc. 9. On March 29, 1983, defendant-appellee Union Bank wrote plaintiff-appellant Odyssey Park, Inc., a letter (Annexes F, F-1 of the Supportive Affidavit of Nicefero S. Agaton, pp. 317-318 of the record) demanding payment of the overdue account of P2,193,720.91, inclusive of interest and service charges, otherwise the contract to sell would be cancelled and rescinded; 10. On April 12, 1983, plaintiff-appellant Odyssey wrote defendant-appellee Union Bank a letter (Annex F-2 of the Supportive Affidavit of Nicefero S. Agaton, pp. 319-320 of the record) proposing a manner of settlement which defendant-appellee Union Bank answered (Annex F-3, p. 321 of the record) asking for more details of the proposal. The series of communications led to the drafting of a Memorandum of Agreement (Exhibit N) which was not, however, signed by the parties. 11. On January 6, 1984, defendant-appellee Union Bank, through counsel, wrote plaintiff-appellant Odyssey Park, Inc., a letter (Exhibit O) formally rescinding and/or cancelling the contract to sell and demanding that plaintiff-appellant vacate and peaceably surrender possession of the premises. 12. On or about August 20, 1984, for failure of plaintiff-appellant to vacate, defendant-appellee filed a case for illegal detainer and damages (Exhibit P). 13. On July 5, 1988, plaintiff-appellant filed this case for "Declaration of the Nullity of the Rescission of the Contract to Sell With Damages".1 (Emphasis ours.) After the trial, the lower court rendered judgment in favor of private respondent, declaring the Contract to Sell of 04 November 1981 to have been properly rescinded; dismissing the complaint for being frivolous and unfounded; and ordering the plaintiff to pay the defendant P300,000.00 by way of attorney's fees and litigation expenses. The judgment, as so heretofore stated, was affirmed by respondent appellate court. Its motion for reconsideration having been denied on 22 November 1992, petitioner corporation seasonably filed the present petition questioning the decision of the appellate court. The Court rules for affirmance of the appealed decision. The issues raised by petitioner which generally are factual in nature and previously taken up by the appellate court cannot in this instance be freely examined all over again. It is not the function of the Supreme Court to analyze and to weigh anew the evidence already passed upon by the Court of Appeals. The authority of this Court is confined to correcting errors of law, if any, that might have been committed below.2 Absent the recognized exceptions, which are not here extant, factual findings of the Court of Appeals are conclusive. Hardly, in this case, can it be said that there was no basis at all for debunking the contention of petitioner to the effect that because Europa Condominium Villas, Inc., had questioned the right of Bancom to sell the property, petitioner thereby was enfranchised to suspend or withhold payment to Bancom. Respondent appellate court, seconding the findings of the trial court, quoted the latter; thus: First, the title of Union Bank over the property (TCT No. T-33725) is clear without any encumbrance or adverse claim. Second, Europa condominium Villas, Inc. has not earnestly questioned Bancom's right to sell. If Europa is in earnest, it should have filed the necessary action in Court to protect its right to a valuable property. Third, Europa would not have offered to buy the property from Bancom for P6 Million if it was claiming ownership over it. Fourth, the letters which plaintiff claim to be proof of Europa's persistence in questioning Bancom's right to sell the property do not really question Bancom's right to do so but are actually money claims of Europa Condominium Villas, Inc. against Odyssey for unpaid water bills and other services rendered by Europa.3 The only real legal issue, it appears to the Court, is whether or not the rescission of the contract to sell by private respondent accords with the requirements of Republic Act ("R.A.") No. 6552, also known as "An Act to Protect Buyers of Real Estate on Installment Payments" which, petitioner insists, requires a cancellation or rescission of the contract by means of a notarial act. A mere letter (dated 06 January 1984), or short of such a notarial act, according to petitioner, would be utterly deficient. Unfortunately for petitioner, the invocation of Republic Act No. 6552 is misplaced. This law, which normally applies to the sale or financing of real estate on installment payments, excludes "industrial lots, commercial buildings, and sales to tenants under R.A. No. 3844." The appellate court has thus aptly said: While the law applies to all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments, excluded are industrial lots, commercial buildings and sales to tenants under R.A. 3844 as amended. The property subject of the contract to sell is not a residential condominium apartment. Even on the basis of the letter of Mr. Vicente A. Araneta, Exhibit E, the building is merely "part of common areas and amenities under the Condominium concept of selling to the public". The property subject of the contract to sell is more of a commercial building.4 Neither would Article 1191 of the Civil Code govern. Article 1191, in full, provides: Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. The Court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with articles 1385 and 1388 and the Mortgage Law. In a contract to sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force.5 The breach contemplated in Article 1191 of the Code is the obligor's failure to comply with an obligation already extant, not a failure of a condition to render binding that obligation. In any event, the failure of petitioner to even complete the downpayment stipulated in the contract to sell puts petitioner corporation far from good stead in urging that there has been substantial compliance with the contract to sell within the meaning of Article 1191 of the Code. So, too, must Article 1592 of the Civil Code be held inapplicable. This law states: Art. 1592. In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term. It is clear that the above provisions contemplate neither a conditional sale nor a contract to sell but an absolute sale.6 What must instead be held to rule in the case at bar is the agreement of the parties themselves. Section 5 of their contract to sell reads: Sec. 5: In the event Odyssey fails to pay any portion of the purchase price of the Property or the interest and service charge thereon as and when it falls due, or otherwise fails to comply with or violate any of the provisions of this Contract, Bancom may at its absolute discretion cancel and rescind this Contract and declare the same as null, void and no further force and effect by serving on Odyssey a written notice of cancellation and rescission thirty (30) days in advance.ℒαwρhi৷ In the event this Contract is cancelled and rescinded as provided in this Section, all the amounts which the Odyssey may have paid to Bancom pursuant to and in accordance with this Contract shall be forfeited in favor of Bancom as rentals for the use and occupancy of the Property and as penalty for the breach and violation of this Contract. Furthermore, all the improvements which Odyssey may have introduced on the Property shall form part thereof and belong to Bancom without right of reimbursements to Odyssey; Provided, that Bancom may at its absolute discretion instead require Odyssey to remove such improvements from the Property at expense of Odyssey.7 It is a familiar doctrine in the law on contracts that the parties are bound by the stipulations, clauses, terms and conditions they have agreed to,8 the only limitation being that these stipulations, clauses, terms and conditions are not contrary to law, morals, public order or public policy.9 Not being repugnant to any legal proscription, the agreement entered into by the parties herein involved must be respected and held to be the law between them. WHEREFORE, the decision appealed from is AFFIRMED in toto. Costs against petitioner. SO ORDERED. Davide, Jr., Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur. Footnotes 1 Rollo, pp. 24-27. 2 PNB vs. Court of Appeals, 159 SCRA 433; Conde vs. Intermediate Appellate Court, 144 SCRA 144; Gaw vs. Intermediate Appellate Court, 220 SCRA 405. 3 Rollo, p. 29. 4 Rollo, p. 32. 5 See Manuel vs. Rodriguez, 109 Phil. 1, cited in Roque vs. Lapuz, 96 SCRA 741; Agustin vs. Court of Appeals, 186 SCRA 375. 6 See Alfonso vs. Court of Appeals, 186 SCRA 400; Joseph and Sons Enterprises, Inc. vs. Court of Appeals, 143 SCRA 663. 7 Rollo, p. 26. 8 Article 1308, Civil Code. 9 Article 1306. The Lawphil Project - Arellano Law Foundation