[G.R. No. 107992. October 8, 1997.
] Contract, Bancom may at its absolute discretion
ODYSSEY PARK, INC., Petitioner, v. HONORABLE
COURT OF APPEALS and UNION BANK OF THE
PHILIPPINES, Respondents.
VITUG, J.:
Facts:
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respondent as having been validly rescinded.
On November 4, 1981, Bancom Development Corporation
and plaintiff-appellant Odyssey Park, Inc., entered into a
Contract to Sell, 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.
Subsequently on February 11, 1982, in a document
entitled ‘Separate Deed of Conveyance’ (Annex F of the
Affidavit of Carmelito A. Montano), 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.
The purchase price of P3,500,000.00 was, per Section 2 of
the Contract to Sell, agreed to be paid as
follows:jgc:chanrobles.com.ph
P700,000.00as down payment, to be paid by Odyssey as
follows:chanrob1es virtual 1aw library
P100,000.00 upon signing of this Contract;
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
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.
The balance of 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.’
It was also agreed in Section 5 of the Contract to Sell
that:jgc:chanrobles.com.phSection 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
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.chanroblesvirtual|awlibrary
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.’
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) in the total sum of
P110,000.00 were made as follows:chanrob1es virtual
1aw library
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
On December 23, 1981, Mr. Vicente A. Araneta, President
of Europa Condominium Villas, Inc., wrote
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.
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.
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.
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;
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.
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.
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).
On July 5, 1988, plaintiff-appellant filed this case for
‘Declaration of the Nullity of the Rescission of the
Contract to Sell With Damages’."
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 was affirmed by
respondent appellate court.
The Court rules for affirmance of the appealed
decision.
Issue:
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.
Held:
Contract properly rescinded, RA 6552 does not apply.
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.”
"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:jgc:chanrobles.com.ph
"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."
4chanroblesvirtuallawlibrary:red
Neither would Article 1191 of the Civil Code govern.
Article 1191, in full, provides:jgc:chanrobles.com.ph
"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."cralaw
virtua1aw library
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:jgc:chanrobles.com.ph
"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."cralaw virtua1aw library
It is clear that the above provisions contemplate neither a
conditional sale nor a contract to sell but an absolute sale.
What must instead be held to rule in the case at bar is
the agreement of the parties themselves.
"Section 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."
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. 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.
[G.R. No. 125531. February 12, 1997.]
JOVAN LAND, Petitioner, v. COURT OF APPEALS and
EUGENIO QUESADA, INC., Respondents.
1. CIVIL LAW; CONTRACT; CONSTRUED. — In the case
of Ang Yu Asuncion v. Court of Appeals, 238 SCRA 602
(1994), this Court held that: ". . . [A] contract (Art. 1157,
Civil Code), . . . is a meeting of minds between two
persons whereby one binds himself, with respect to the
other, to give something or to render some service . . . A
contract undergoes various stages that include its
negotiation or preparation, its perfection and, finally, its
consummation. Negotiation covers the period from the
time the prospective contracting parties indicate interest in
the contract to the time the contract is concluded . . . The
perfection of the contract takes place upon the
concurrence of the essential elements thereof."cralaw
virtua1aw library
2. ID.; ID.; SALE; REQUISITES FOR VALIDITY. — It is a
fundamental principle that before contract of sale can be
valid, the following elements must be present, viz: (a)
consent or meeting of the minds; (b) determinate
subject matter; (3) price certain in money or its
equivalent. Until the contract of sale is perfected, it cannot,
as an independent source of obligations serve as a binding
juridical relation between the
parties.chanroblesvirtual|awlibrary
 3. ID.; ID.; ID.; REAL PROPERTY, AS THE OBJECT;
REQUIREMENTS UNDER THE STATUTE OF FRAUDS;
NOT COMPLIED WITH IN CASE AT BAR. — Although
there was a series of communications through letter-offers
and rejections as evident from the facts of this case, still it
is undeniable that no written agreement was reached
between petitioner and private respondent with regard to
the sale of the realty. Hence, the alleged transaction is
unenforceable as the requirements under the Statute
of Frauds have not been complied with. Under the said
provision, an agreement for the sale of real property or
of an interest therein, to be enforceable, must be in
writing and subscribed by the party charged or by an
agent thereof.
HERMOSISIMA, JR., J.:
This is a petition for review on certiorari to reverse and set
aside the decision of the Court of Appeals in C.A.-G.R. CV
No. 47515.
Petitioner Jovan Land, Inc. is a corporation engaged in the
real estate business. Its President and Chairman of the
Board of Directors is one Joseph Sy.
Private respondent Eugenio Quesada is the owner of the
Q Building located on an 801 sq. m. lot at the corner of
Mayhaligue Street and Rizal Avenue, Sta. Cruz, Manila.
The property is covered by TCT No. 77796 of the Registry
of Deeds of Manila.
Petitioner learned from co-petitioner Consolacion P.
Mendoza that private respondent was selling the aforesaid
Mayhaligue property. Thus, petitioner through Joseph Sy
made a written offer, dated July 27, 1987 for P10.25 million.
This first offer was not accepted by Conrado Quesada, the
General Manager of private Respondent. Joseph Sy sent
a second written offer dated July 31, 1989 for the same
price but inclusive of an undertaking to pay the
documentary stamp tax, transfer tax, registration fees and
notarial charges. Check No. 247048, dated July 31, 1989,
for one million pesos drawn against the Philippine
Commercial and Industrial Bank (PCIB) was enclosed
therewith as earnest money. This second offer, with
earnest money, was again rejected by Conrado Quesada.
Undaunted, Joseph Sy, on August 10, 1989, sent a third
written offer for twelve million pesos with a similar check
for one million pesos as earnest money. Annotated on this
third letter-offer was the phrase "Received original, 9-4-89"
beside which appears the signature of Conrado Quesada.
On the basis of this annotation which petitioner insists is
the proof that there already exists a valid, perfected
agreement to sell the Mayhaligue property, petitioner
filed with the trial court, a complaint for specific
performance and collection of sum of money with
damages.
However, the trial court held
that:jgc:chanrobles.com.ph". . . the business
encounters between Joseph Sy and Conrado Quesada
had not passed the negotiation stage relating to the
intended sale by the defendant corporation of the
property in question. . . . As the court finds, there is
nothing in the record to point that a contract was ever
perfected. In fact, there is nothing in writing which is
indispensably necessary in order that the perfected
contract could be enforced under the Statute of Frauds."
CA affirmed TC ruling.
Issues:om.ph
The Court a quo failed to appreciate that there was
already a perfected contract of sale between Jovan
Land, Inc. and the [private respondent];
The Court a quo erred in its conclusion that there was
no implied acceptance of the offer by appellants to
appellee [private respondent];
The Court a quo was in error where it concluded that
the contract of sale was unenforceable;
Ruling:
Ang Yu Asuncion v. Court of Appeals,
". . . [A] contract (Art. 1157, Civil Code), . . . is a meeting of
minds between two persons whereby one binds himself,
with respect to the other, to give something or to render
some service . . . . A contract undergoes various stages
that include its negotiation or preparation, its perfection
and, finally, its consummation. Negotiation covers the
period from the time the prospective contracting
parties indicate interest in the contract to the time the
contract is concluded . . . . The perfection of the
contract takes place upon the concurrence of the
essential elements thereof."cralaw virtua1aw library
Moreover, it is a fundamental principle that before contract
of sale can be valid, the following elements must be
present, viz: (a) consent or meeting of the minds; (b)
determinate subject matter; (3) price certain in money
or its equivalent. Until the contract of sale is perfected, it
cannot, as an independent source of obligation, serve as a
binding juridical relation between the parties.
In the case at bench, Petitioner, anchors its main
argument on the annotation on its third letter-offer of the
phrase "Received original, 9-4-89," beside which appears
the signature of Conrado Quesada. It also contends that
the said annotation is evidence to show that there was
already a perfected agreement to sell as respondent can
be said to have accepted petitioner’s payment in the form
of a check which was enclosed in the third
letter.chanrobles virtual lawlibrary
The court cannot believe that this notation marked as
Exhibit D-2 would signify the acceptance of the offer.
Neither does it signify, as Sy had testified that the
check was duly received on said date. If this were true
Sy, who appears to be an intelligent businessman could
have easily asked Conrado Quesada to indicate on Exhibit
D the alleged fact of acceptance of said check. And better
still, Sy could have asked Quesada the acceptance in
writing separate of the written offer if indeed there was an
agreement as to the price of the proposed sale of the
property in question."

Clearly then, a punctilious examination of the receipt

reveals that the same can neither be regarded as a
contract of sale nor a promise to sell. Such an annotation
by Conrado Quesada amounts to neither a written nor
an implied acceptance of the offer of Joseph Sy. It is
merely a memorandum of the receipt by the former of
the latter’s offer. The requisites of a valid contract of
sale are lacking in said receipt and therefore the "sale"
is neither valid nor enforceable.

Although there was a series of communications through

letter-offers and rejections as evident from the facts of this
case, still it is undeniable that no written agreement was
reached between petitioner and private respondent with
regard to the sale of the realty. Hence, the alleged
transaction is unenforceable as the requirements
under the Statute of Frauds have not been complied
with. Under the said provision, an agreement for the
sale of real property or of an interest therein, to be
enforceable, must be in writing and subscribed by the
party charged or by an agent thereof.

Petitioner also asseverates that the failure of Conrado

Quesada to return the check for one million pesos,
translates to implied acceptance of its third letter-offer.
It, however, does not rebut the finding of the trial court
that private respondent was returning the check but
petitioner refused to accept the same and that when
Conrado Quesada subsequently sent it back to
petitioner through registered mail, the latter failed to
claim its mail from the post office.

As shown elucidated above, we agree with the findings

and conclusions of the trial court and the respondent court.
Neither has petitioner posited any new issues in the instant
petition that warrant the further exercise by this court of its
review powers.

WHEREFORE, premises considered, this petition is

DENIED.

Costs against petitioner.