June 2007 - Philippine Supreme Court Resolutions
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[G.R. No. 175580 : June 13, 2007] YUSAY CREDIT AND LENDING CORPORATION V. MODESTO VASQUEZ, AS SUBSTITUTED BY VISITACION OCERA VASQUEZ, MARICRIS O. VASQUEZ, MARICHU VASQUEZ LIBO-ON, MARIVIC VASQUEZ BALACUIT AND MARICON VASQUEZ NABOR :
[G.R. No. 175580 : June 13, 2007]
YUSAY CREDIT AND LENDING CORPORATION V. MODESTO VASQUEZ, AS SUBSTITUTED BY VISITACION OCERA VASQUEZ, MARICRIS O. VASQUEZ, MARICHU VASQUEZ LIBO-ON, MARIVIC VASQUEZ BALACUIT AND MARICON VASQUEZ NABOR
Sirs/Mesdames:
Quoted hereunder, for your information, is a resolution of this Court dated 13 JUNE 2007
G.R. No. 175580 (Yusay Credit and Lending Corporation v. Modesto Vasquez, as substituted by Visitacion Ocera Vasquez, Maricris O. Vasquez, Marichu Vasquez Libo-on, Marivic Vasquez Balacuit and Maricon Vasquez Nabor)- The instant petition for review challenges the decision of the Court of Appeals (CA) dated 3 February 2006[1] and its subsequent Resolution dated 7 November 2006,[2] directing Yusay Credit and Lending Corporation (petitioner) to accept the payment of respondents representing the balance of the purchase price of the property in dispute and, thereafter, to execute the corresponding deed of sale in respondents' favor.
The controversy stemmed from a complaint for specific performance with damages filed by Modesto Vasquez (Vasquez) against petitioner before the Regional Trial Court (RTC), Branch 41, Bacolod City. It appears that in 1975, Vasquez mortgaged the parcel of land in question, originally owned by his father-in-law, as security for a loan he obtained from petitioner. Vasquez claimed that the lot was eventually extra-judicially foreclosed by petitioner without notice to him, his father-in-law as the registered owner of the land, or the latter's heirs. Title was later consolidated in the name of petitioner.
Vasquez offered to repurchase the property from petitioner. Thus, on 20 February 1989, Vasquez and petitioner entered into a Contract to Sell, whereby petitioner agreed to sell the subject property to Vasquez for the amount of P75,400.00, with Vasquez paying an initial amount of P40,000.00 and the balance of P35,400.00 in four (4) quarterly installments within a period of one (1) year.
Vasquez settled the P40,000.00 initial payment upon execution of the Contract to Sell. However, claiming to have encountered financial difficulties due to his deteriorating health and confinement in the hospital, he was unable to pay the balance of P35,400.00. In 1995, he offered to pay the balance but was informed that his obligation had already become P90,000.00. After having been given the run-around, he was told that the matter was referred to petitioner's board of directors (BOD), who offered to sell the property initially at P350,000.00, then later at P800,000.00. In 1996, petitioner wrote respondents that the BOD approved the sale of the property at P1,000,000.00.
Aggrieved by petitioner's actions, Vasquez filed the complaint for specific performance with damages. He sought relief to allow him to pay the balance of the purchase price and for petitioner as defendant to accept payment. He assailed petitioner's act of declaring the Contract to Sell cancelled, despite the absence of a demand for its cancellation or rescission. In 1996, Vasquez died and was substituted by his surviving spouse and heirs. On 24 March 2000, while the case was pending before the RTC, respondent Maricris Vasquez made a written offer to petitioner to purchase the parcel of land for P800,000.00. Petitioner rejected the offer.
The RTC dismissed the complaint for lack of merit but ordered petitioner to return the initial payment of P40,000.00 to Vasquez, without interest.[3]
On appeal, the CA reversed the decision of the court a quo. The CA ratiocinated that the Contract to Sell contained no provision for automatic rescission or cancellation of the contract in the event of failure of a party to comply with its obligations embodied therein. Thus, it applied the rule that one cannot unilaterally rescind the Contract to Sell absent any provision, express or implied, providing for automatic rescission in case of default.[4] Moreover, the appellate court held that Republic Act (R.A.) No. 6552, entitled "An Act to Provide Protection to Buyers of Real Estate on Installment Payments," was applicable to the case at bar. The CA ordered petitioner to accept payment of the purchase price of P35,400.00 and directed the execution of the corresponding Deed of Sale in favor of respondents.
In this petition, the issues hinge ultimately on the determination of whether the CA erred in enforcing the Contract to Sell and in ordering petitioner to accept the payment of respondents and to execute a Deed of Sale in their favor. We find no cogent reason to reverse the assailed rulings of the CA.
The failure of respondents to redeem the foreclosed property within the reglementary period validly resulted in the transfer of ownership. The owner has the right to dispose of the property at whatever price and subject to whatever terms he may decide or agree to. Petitioner exercised this right of dominion in entering into a Contract to Sell over the subject property with respondents. Embodying the new agreement between the parties and providing for the sale of real property in installments, the Contract to Sell falls within the purview of R.A. No. 6552.[5] Section 3 of R.A. No. 6552 provides:
WHEREFORE, the petition is DENIED. Quisumbing, J., on official leave.
G.R. No. 175580 (Yusay Credit and Lending Corporation v. Modesto Vasquez, as substituted by Visitacion Ocera Vasquez, Maricris O. Vasquez, Marichu Vasquez Libo-on, Marivic Vasquez Balacuit and Maricon Vasquez Nabor)- The instant petition for review challenges the decision of the Court of Appeals (CA) dated 3 February 2006[1] and its subsequent Resolution dated 7 November 2006,[2] directing Yusay Credit and Lending Corporation (petitioner) to accept the payment of respondents representing the balance of the purchase price of the property in dispute and, thereafter, to execute the corresponding deed of sale in respondents' favor.
The controversy stemmed from a complaint for specific performance with damages filed by Modesto Vasquez (Vasquez) against petitioner before the Regional Trial Court (RTC), Branch 41, Bacolod City. It appears that in 1975, Vasquez mortgaged the parcel of land in question, originally owned by his father-in-law, as security for a loan he obtained from petitioner. Vasquez claimed that the lot was eventually extra-judicially foreclosed by petitioner without notice to him, his father-in-law as the registered owner of the land, or the latter's heirs. Title was later consolidated in the name of petitioner.
Vasquez offered to repurchase the property from petitioner. Thus, on 20 February 1989, Vasquez and petitioner entered into a Contract to Sell, whereby petitioner agreed to sell the subject property to Vasquez for the amount of P75,400.00, with Vasquez paying an initial amount of P40,000.00 and the balance of P35,400.00 in four (4) quarterly installments within a period of one (1) year.
Vasquez settled the P40,000.00 initial payment upon execution of the Contract to Sell. However, claiming to have encountered financial difficulties due to his deteriorating health and confinement in the hospital, he was unable to pay the balance of P35,400.00. In 1995, he offered to pay the balance but was informed that his obligation had already become P90,000.00. After having been given the run-around, he was told that the matter was referred to petitioner's board of directors (BOD), who offered to sell the property initially at P350,000.00, then later at P800,000.00. In 1996, petitioner wrote respondents that the BOD approved the sale of the property at P1,000,000.00.
Aggrieved by petitioner's actions, Vasquez filed the complaint for specific performance with damages. He sought relief to allow him to pay the balance of the purchase price and for petitioner as defendant to accept payment. He assailed petitioner's act of declaring the Contract to Sell cancelled, despite the absence of a demand for its cancellation or rescission. In 1996, Vasquez died and was substituted by his surviving spouse and heirs. On 24 March 2000, while the case was pending before the RTC, respondent Maricris Vasquez made a written offer to petitioner to purchase the parcel of land for P800,000.00. Petitioner rejected the offer.
The RTC dismissed the complaint for lack of merit but ordered petitioner to return the initial payment of P40,000.00 to Vasquez, without interest.[3]
On appeal, the CA reversed the decision of the court a quo. The CA ratiocinated that the Contract to Sell contained no provision for automatic rescission or cancellation of the contract in the event of failure of a party to comply with its obligations embodied therein. Thus, it applied the rule that one cannot unilaterally rescind the Contract to Sell absent any provision, express or implied, providing for automatic rescission in case of default.[4] Moreover, the appellate court held that Republic Act (R.A.) No. 6552, entitled "An Act to Provide Protection to Buyers of Real Estate on Installment Payments," was applicable to the case at bar. The CA ordered petitioner to accept payment of the purchase price of P35,400.00 and directed the execution of the corresponding Deed of Sale in favor of respondents.
In this petition, the issues hinge ultimately on the determination of whether the CA erred in enforcing the Contract to Sell and in ordering petitioner to accept the payment of respondents and to execute a Deed of Sale in their favor. We find no cogent reason to reverse the assailed rulings of the CA.
The failure of respondents to redeem the foreclosed property within the reglementary period validly resulted in the transfer of ownership. The owner has the right to dispose of the property at whatever price and subject to whatever terms he may decide or agree to. Petitioner exercised this right of dominion in entering into a Contract to Sell over the subject property with respondents. Embodying the new agreement between the parties and providing for the sale of real property in installments, the Contract to Sell falls within the purview of R.A. No. 6552.[5] Section 3 of R.A. No. 6552 provides:
Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:In this case, petitioner failed to furnish respondents with a notice of cancellation or a demand for rescission of the contract by a notarial act. Such failure, following the above-quoted provision, effectively negates petitioner's pretense that it validly rescinded the Contract to Sell. Moreover, as aptly pointed out by the appellate court, petitioner's continued negotiations with respondents with respect to the outstanding indebtedness of the latter clearly show that petitioner still considered the Contract to Sell valid and subsisting despite the default in payment of Vasquez. In fact, it was only in a letter dated 24 November 1995 that petitioner advised Vasquez of the supposed cancellation of the Contract to Sell, indicating that such was a mere afterthought. It is likewise pertinent to note that the questioned Contract to Sell did not provide for its automatic rescission in case of default. Petitioner's failure to exercise its right of rescission under R.A. No. 6552 after Vasquez had defaulted constitutes a waiver of such right.[7]
x x x(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made and, after five years of installments, an additional five percent every year but not to exceed ninety percent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.[6] (Emphasis supplied)
WHEREFORE, the petition is DENIED. Quisumbing, J., on official leave.
Very truly yours,
(Sgd.) LUDICHI YASAY-NUNAG
Clerk of Court
(Sgd.) LUDICHI YASAY-NUNAG
Clerk of Court
Endnotes:
[1] Rollo, pp. 23-35.
[2] Id. at 37.
[3] Id. at 39-60.
[4] NEW CIVIL CODE, ART. 1169.
[5] See Ramos v. Heruela, G.R. No. 145330, 14 October 2005, 473 SCRA 79; Rillo v. Court of Appeals, G.R. No. 125347, 19 June 1997.
[6] Emphasis ours.
[7] Rapanut v. Court of Appeals, 316 Phil. 391 (1995).
