SECOND DIVISION
[G.R. No. 208366. August 23, 2017.]
NEW MINTRADE VILLAGERS ASSOCIATION, INC., REPRESENTED BY ITS AUDITOR, MARIA JUN A. GONZALES, petitioner,vs. HEIRS OF TOMAS L. GOTIANSE, ET AL., respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Second Division, issued a Resolution dated23 August 2017which reads as follows:
"G.R. No. 208366 (New Mintrade Villagers Association, Inc., represented by its Auditor, Maria Jun A. Gonzales vs. Heirs of Tomas L. Gotianse, et al.). — Petitioner New Mintrade Villagers Association, Inc. (NMVAI) filed the present petition for review on certiorari1 against the Heirs of Tomas Gotianse, Peter Gotianse (Peter), Paul Gotianse (Paul), Myrna S. Inocencio (Inocencio), Atty. Antonio Llamas (Atty. Llamas), in his capacity as the City Administrator of Davao City, and Engr. Mendrano Metran (Engr. Metran), in his capacity as the City Engineer and Building Official of Davao City, as it assails the Decision 2 dated February 28, 2013 and Resolution 3 dated June 26, 2013 issued by the Court of Appeals (CA) in CA-G.R. CV No. 02307.
The Antecedents
Tomas Gotianse (Tomas) owned the parcels of land covered by Transfer Certificate of Title Nos. T-59203, T-59204, T-59205, T-59206, T-59207 and T-59208, all situated in Barangay Centro, Agdao, Davao City and with a total area of 21,046 square meters, 4 more or less. Beginning 1986, NMVAI 5 occupied the subject properties without the consent of Tomas. On April 15, 1986, NMVAI sent a letter to the Commission on the Settlement of Land Problems indicating its willingness to pay for the properties and seeking the Commission's aid for the purpose of locating Tomas. 6 caITAC
Eventually, NMVAI and Tomas were able to negotiate and come up with the Contract/Agreement (Contract) dated February 19, 1992 for a sale by Tomas of the subject lots under the following terms and conditions: (1) the sale and purchase shall be for a consideration of P220.00 per sq. m; (2) Tomas shall bear the payment of the capital gains tax; and (3) NMVAI shall bear the real estate taxes, documentary stamps, transfer tax and registration fees, both for the transfer of the lots and the mortgage that might be constituted to secure the loan to be obtained by NMVAI to finance the land acquisition. The Contract expressly provided that it should only be effective until April 15, 1992, after which time, the contract would cease to have any effect whatsoever, unless both parties should decide to extend it. NMVAI was represented in the Contract by its then president, Inocencio. 7
Following successive renewal agreements that carried substantially the original terms and conditions, the Contract's effectivity was extended until April 30, 1993. 8 When the agreement still remained unenforced, Tomas sent a letter dated January 28, 1994 to NMVAI, giving the latter 15 days to signify its willingness to still comply with the contract; otherwise, he would be withdrawing his offer to sell the subject lots. 9 Tomas' letter remained unanswered, prompting his son and attorney-in-fact Peter to send a letter on May 24, 1994, informing NMVAI that the Gotianse family was no longer interested in pursuing the Contract. 10
Several other correspondences were exchanged by the parties. In a letter dated May 30, 1994, NMVAI signified its efforts to still comply with the Contract and asked for an extension of the agreement. By November 7, 1994, however, the Gotianse family still had to remind NMVAI of its undertaking to purchase the subject lots. On November 14, 1994, NMVAI explained its continued failure to purchase the lots by referring to the stringent requirements of the National Home Mortgage Finance Corporation (NHMFC), the agency that would fund the purchase under its Community Mortgage Program (CMP). 11
The Gotianse family, however, remained firm in its decision to no longer sell the subject properties, as signified in its notices dated August 17, 1995, August 28, 1995 and April 3, 1996. Meanwhile, on March 3, 1996, Inocencio was removed as NMVAI president, and was replaced by Floresita Santos. Prior to the ouster, a referendum conducted by NMVAI indicated that out of 157 voting members, 93 were willing to accept a relocation proposed by the Gotianse family, while 64 were against it. 12
On September 4, 1996, NMVAI filed a Complaint 13 for specific performance, with prayer for a writ of preliminary injunction and restraining order against Tomas, Peter, Paul, Inocencio, Atty. Llamas and Engr. Metran (defendants). It alleged that prior to the subject lots' occupation, the lots were "swampy, sunken and flooded, and barely suitable for residential purposes[.]" 14 Through time and by the efforts of their community, substantial improvements were introduced into the lots, including a community chapel, electrical lampposts with transformers and adequate lighting facilities, roads, basketball court, water drainage system, and earth filling improvements. 15 After Tomas and NMVAI executed the Contract, the latter applied for financing under NHMFC's CMP. Tomas allegedly agreed on an indefinite extension of the Contract given the long and tedious process by which NHMFC handled the application. 16 ICHDca
Sometime in October 1995, NRMFC required from NMVAI an amended Land Purchase Agreement. Tomas, however, refused to execute the agreement, prompting the filing of the complaint for specific performance, with prayer for the issuance of injunctive writs. Inocencio was named defendant as she allegedly conspired with Tomas in enticing some NMVAI members to abandon their interest in the acquisition. 17 Atty. Llamas and Engr. Metran were implicated due to a letter-petition allegedly filed by Tomas for ejectment and demolition. By way of an alternative prayer, NMVAI asked for reimbursement of the cost of improvements it had introduced by virtue of the Contract, plus expenses incurred for NHMFC's application for financing. 18
The defendants disputed the complaint. The improvements that were allegedly introduced into the lots were either owned by or paid for by some other person or the government. Some cited structures were even inexistent. Any delay in the processing of the CMP application was due to the refusal to contribute or cooperate by several NMVAI members. 19 More importantly, the defendants argued that NMVAI lacked cause of action because the Contract had expired, and had no capacity to file the complaint as it was unsupported by a majority of its members. 20 By way of counterclaim, the defendants sought the payment of damages and litigation expenses. 21
Ruling of the RTC
After trial, the Regional Trial Court (RTC) rendered its Decision 22 dismissing both NMVAI's complaint and the defendants' counterclaim. The dispositive portion of the RTC Decision dated March 25, 2010 reads:
WHEREFORE, judgment is hereby rendered DISMISSING the complaint as well as the counterclaim.
SO ORDERED.23
For the trial court, NMVAI could no longer compel Tomas to execute a new Land Purchase Agreement after the original Contract had ceased to have any effect. 24 Dissatisfied, the defendants appealed to the CA. Tomas was substituted by his heirs in the proceedings before the appellate court. 25
Ruling of the CA
The CA affirmed the RTC in a Decision 26 dated February 28, 2013. It classified the Contract as a mere contract to sell by which Tomas was obligated to sell the lots only upon payment by NMVAI of the stipulated purchase price. The latter's failure to fully pay the price prevented it from demanding from Tomas the satisfaction of the obligation to sell, especially since the effectivity of the Contract had lapsed. NMVAI's prayer for reimbursement was also denied on the ground of its failure to establish that it actually bore the payment of the improvements. On the other hand, the expenses purportedly incurred for the filing of the NHMFC application remained unsupported by convincing proof. The CA decision's dispositive portion reads: TCAScE
FOR REASONS STATED, the assailed Decision is AFFIRMED in toto.
SO ORDERED.27
NMVAI moved to reconsider, 28 but its motion was denied in a Resolution 29 dated June 26, 2013. Hence, this petition for review on certiorari.
The Present Petition
NMVAI ascribes error upon the CA in holding that the heirs of Tomas could not be compelled to execute a new Land Purchase Agreement. It argues that the Contract is a contract of sale, which Tomas could not have validly rescinded or revoked without judicial intervention. 30
Ruling of the Court
The Court denies the petition.
As the records indicate, the Contract indicated the term thereof and the manner by which it could be validly extended, as follows:
6. That this Agreement/Contract shall expire o[n] April 15, 1992 after which this Agreement shall [have] no effect whatsoever[,] unless extended by both parties. 31
Subsequent renewals of the Contract allowed extensions that strictly ended on April 30, 1993. The extension on May 7, 1992 was only until July 15, 1992, while the extension on July 14, 1992 lapsed on December 15, 1992. The final agreement to extend was on February 20, 1993, as the parties set the Contract's expiration on April 30, 1993 with the same proviso that after such time, the Contract would have no further effect unless both parties extend it. 32 While by mere accommodation, there were succeeding adjustments that Tomas offered to allow even after April 30, 1993, there was no further extension that was actually agreed upon by the parties. NMVAI's assertion that the extension was for an indefinite period, therefore, proves to be untruthful.
Despite the length of time that was allowed by Tomas, NMVAI failed to satisfy its obligation under the Contract. It was not until May 24, 1994 that Peter, being the representative of Tomas, sent a letter to NMVAI on the Contract's termination, 33 with substantial portions herein reproduced verbatim:
It appears that your association is no longer interested to purchase the parcel of land owned by my said father and in view of the same, we would like to cancel or terminate whatever proposed agreement we have. 34
Several other notices reiterating the Contract's termination, and the Gotianses' firm resolve to no longer pursue a sale, were sent to NMVAI. 35 cTDaEH
NMVAI puts to issue the sufficiency of the notices sent to it, as it invokes the provisions on rescission in Article 1191, 36 in relation to Article 1592, 37 of the New Civil Code. The Court, however, highlights the inapplicability of these provisions considering the nature of the Contract. The CA correctly classified the Contract as a contract to sell, instead of a contract of sale. By the terms of the original agreement, Tomas clearly retained his title to and ownership of the subject properties, only with the undertaking that he "shall sell, cede, convey and transfer" unto NMVAI the subject properties upon the payment of the agreed consideration. 38 There was no immediate transfer or conveyance of the lots subject of the agreement. "[I]n a contract to sell, the prospective seller agrees to transfer ownership of the property to the buyer upon the happening of an event, which normally is the full payment of the purchase price." 39 These were the same conditions indicated in the parties' Contract and the Amended Contract/Agreement that extended it until April 30, 1993. Clearly, upon the lapse of the agreed period, Tomas was relieved of the obligation to sell, cede and transfer the lots considering that NMVAI failed to pay the purchase price.
The nature of the contract was not affected by the mere fact that the NMVAI members were already occupying the subject premises. It was significant that their possession was originally effected through means that were unsanctioned by the landowner, absent any consent on the part of Tomas that could have otherwise signified a true intent to deliver the land and title thereto by virtue of a sale.
The Court underscores the inapplicability of the provisions on rescission, and the requirements for the validity thereof, in contracts to sell. When Tomas sent to NMVAI the notices of cancellation, he did not seek the Contract's rescission but an enforcement of an express stipulation that limited the agreement's effectivity. The Court made an extensive discussion on the matter in Diego v. Diego, et al., 40 to wit:
The contract to sell is terminated or cancelled.
Having established that the transaction was a contract to sell, what happens now to the parties' agreement?
The remedy of rescission is not available in contracts to sell. As explained in Spouses Santos v. Court of Appeals:
In view of our finding in the present case that the agreement between the parties is a contract to sell, it follows that the appellate court erred when it decreed that a judicial rescission of said agreement was necessary. This is because there was no rescission to speak of in the first place. As we earlier pointed out, in a contract to sell, title remains with the vendor and does not pass on to the vendee until the purchase price is paid in full. Thus, in a contract to sell, the payment of the purchase price is a positive suspensive condition. Failure to pay the price agreed upon is not a mere breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. x x x In a contract to sell, x x x the vendor remains the owner for as long as the vendee has not complied fully with the condition of paying the purchase price. If the vendor should eject the vendee for failure to meet the condition precedent, he is enforcing the contract and not rescinding it. x x x As petitioners correctly point out, the [CA] erred when it ruled that petitioners should have judicially rescinded the contract pursuant to Articles 1592 and 1191 of the Civil Code. Article 1592 speaks of non-payment of the purchase price as a resolutory condition. It does not apply to a contract to sell. As to Article 1191, it is subordinated to the provisions of Article 1592 when applied to sales of immovable property. Neither provision is applicable in the present case. cSaATC
Similarly, we held in Chua v. Court of Appeals that "Article 1592 of the Civil Code permits the buyer to 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 notarial act. However, Article 1592 does not apply to a contract to sell where the seller reserves the ownership until full payment of the price," as in this case. 41 (Citations omitted, emphases ours, and italics in the original)
Evidently, the parties' agreement to sell and purchase the subject parcels of land had terminated even prior to the time NMVAI filed its complaint in September 1996. The CA then did not commit any reversible error in affirming the RTC's decision to dismiss the complaint.
The Court also finds it worthy to mention that while it understands the predicament of some NMVAI members, specifically those who would rather pursue the land purchase through the NHMFC's CMP, it likewise respects the expressed desire of the majority members who would rather accept the Gotianse family's offer for relocation. The RTC mentioned in its decision:
Before resolving the principal issue raised, let it be stressed that prior to the filing of the case, the majority of the members of [NMVAI] have agreed in a REFERENDUM made on February 16, 1996 to accept the relocation proposed by the [Gotianse's] family x x x[.] 42
The alternative prayer in NMVAI's complaint for the reimbursement of its expenses for particular improvements on the land and the CMP application is unwarranted. The Court relies upon the factual findings of both the RTC and the CA, given the rule that excludes factual issues from the scope of Rule 45 of the Rules of Court. As the Court denies the plea, it refers to the following disquisition by the appellate court on the NMVAI's monetary contribution in the said expenses:
Finally, [NMVAI] is not entitled to a reimbursement of the improvements introduced in the parcels of land owned by the Gotianse family for the simple reason that they did not spend for the same as they were either donated by the government and/or private individuals, or, they are located outside the Gotianse property. Gravilla testified that the materials and the cost of labor for the construction of the Sta. Lucia Chapel were donated by a certain Gilbert Go. Furthermore, she stated that the electric posts were installed by the Davao Light and Power Company because it was given by then Mayor Respicio. During the ocular inspection, it was admitted that the water drainage system was not made through the funds of the association but through the Community Development Fund (CDF) of Congressman Garcia. This was also admitted in the complaint. The basketball court and Project Hope are outside the property of the Gotianse family. The Sta. Lucia main road already existed before [NMVAI] occupied the subject property and the Pag-asa street was developed by the barangay with the help of the city government. Moreover, Atty. Pascua candidly admitted that the earth-filling for the improvement of the subject property was financed by the city government. cHDAIS
No evidence was presented as to the amount spent for the processing of the loan with NHMFC. In fact, during Inocencio's testimony as witness for [NMVAI], she stated that [NMVAI] did not spend much money on the subdivision. x x x. 43 (Citations omitted)
WHEREFORE, the petition is DENIED. The Decision dated February 28, 2013 and Resolution dated June 26, 2013 issued by the Court of Appeals in CA-G.R. CV No. 02307 are AFFIRMED." (Caguioa,J., on leave.)
Very truly yours,
MA. LOURDES C. PERFECTODivision Clerk of Court
By:
(SGD.) TERESITA AQUINO TUAZONDeputy Division Clerk of Court
Footnotes
1.Rollo, pp. 4-20.
2. Penned by Associate Justice Edgardo T. Lloren, with Associate Justices Jhosep Y. Lopez and Henri Jean Paul B. Inting concurring; id. at 169-175.
3.Id. at 180-181.
4.Id. at 65.
5. Previously known as the Sta. Lucia Homeseekers Association.
6.Rollo, pp. 169-170.
7.Id. at 170.
8.Id. at 67.
9.Id. at 170.
10.Id. at 170-171.
11.Id. at 171.
12.Id. at 120, 171.
13.Id. at 21-29.
14.Id. at 22.
15.Id. at 22-23.
16.Id. at 25.
17.Id. at 26.
18.Id. at 28.
19.Id. at 30-32.
20.Id. at 33.
21.Id. at 33-34.
22. Issued by Presiding Judge Emmanuel C. Carpio; id. at 119-123.
23.Id. at 123.
24.Id. at 122.
25.Id. at 152-166.
26.Id. at 169-175.
27.Id. at 175.
28.Id. at 176-178.
29.Id. at 180-181.
30.Id. at 11.
31.Id. at 170.
32.Id. at 67-68.
33.Id. at 170-171.
34.Id. at 122.
35.Id. at 171.
36. Article 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 claimed, unless there be just cause for authorizing the fixing of the period.
37. Article 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 notarial act. After the demand, the court may not grant him a new term.
38.Rollo, p. 170.
39.Hulst v. PR Builders, Inc., 558 Phil. 683, 702 (2007).
40. 704 Phil. 373 (2013).
41.Id. at 390-392.
42.Rollo, p. 120.
43.Id. at 174.