G.R. No. 182409. March 20, 2017.

FELIX PLAZO URBAN POOR SETTLERS COMMUNITY

ASSOCIATION, INC., petitioner, vs. ALFREDO LIPAT, SR.
and ALFREDO LIPAT, JR., respondents.
DECISION
REYES, J p:
This is a petition for review on certiorari under Rule 45 of the Rules
of Court assailing the Decision dated April 30, 2007 and
Resolution dated March 17, 2008 of the Court of Appeals (CA) in
CA-G.R. CV No. 85684 which granted the appeal of Alfredo Lipat,
Sr. (Lipat Sr.) and Alfredo Lipat, Jr. (Lipat Jr.) (respondents) and
accordingly dismissed the action for Specific Performance and
Damages with Prayer for Preliminary Injunction filed by Felix
Plazo Urban Poor Settlers Community Association, Inc.
(petitioner) for lack of cause of action.
The Facts
On December 13, 1991, Lipat Sr., as represented by Lipat Jr.,
executed a Contract to Sell (CTS) in favor of the petitioner, as
represented by its President, Manuel Tubao (Tubao), whereby the
former agreed to sell to the latter two parcels of land in Naga City
covered by Transfer Certificates of Title Nos. 12236 and 12237
(subject properties) for a consideration of P200.00 per square
meter.
As stipulated in the CTS, the petitioner had 90 days to pay in full
the purchase price of the subject properties; otherwise, the CTS
shall automatically expire. The period, however, elapsed without
payment of the full consideration by the petitioner.
According to the petitioner, the 90-day period provided in the CTS
was subject to the condition that the subject properties be cleared
of all claims from third persons considering that there were pending
litigations involving the same.
Upon the expiry of the 90-day period, and despite the failure to
clear the subject properties from the claims of third persons, the
petitioner contributed financial assistance for the expenses of
litigation involving the subject properties with the assurance that
the CTS will still be enforced once the cases are settled.
In the meantime, the petitioner agreed to pay rental fees for their
occupation of the subject properties from 1992 to 1996.
After the termination of the cases involving the subject properties,
however, the respondents refused to enforce the CTS on the ground
that the same had expired and averred that there was no agreement
to extend its term.
Consequently, the petitioner filed a case for Specific Performance
and Damages with Prayer for the Issuance of Preliminary
Injunction against the respondents on June 10, 1997 before the
Regional Trial Court (RTC) of Naga City.
For their defense, the respondents alleged that the CTS was not
enforced due to the petitioner's failure to pay the P200.00 per sq m
selling price before the expiration of its term. As a result, the
members of the petitioner were required to pay rental fees
corresponding to the area they occupy. SDHTEC
Moreover, the respondents claimed that the so called "financial
assistance" they received from the petitioner's members was in the
nature of a loan and that it has nothing to do with the alleged
extension of their CTS.
Considering that the CTS already expired, Lipat Jr. suggested an
individual contract for each member of the petitioner. Only four
members, however, were able to buy individual lots, namely,
Consuelo Gomez, Edna Estioko, Gina Villar, and Pablo Calubad.
Also, Rosemarie Buenaventura, who is not a member of the
petitioner, was able to buy two lots on the subject properties.
Consequently, she filed an urgent Motion for Leave to Intervene
which was granted by the trial court on August 4, 1997.
Ruling of the RTC
On August 9, 2004, the RTC of Naga City, Branch 22, in Civil Case
No. RTC '97-3777, rendered a Decision in favor of the petitioner
directing the respondent to enforce the CTS after payment by the
petitioner of the selling price in the amount of P200.00 per sq m.
The dispositive portion thereof provides:
WHEREFORE, premises considered, the petitioner having proved
by preponderance of evidence the enforceability of the CTS, dated
December 13, 1991, judgment is hereby rendered ordering the
respondents, to sell to the petitioner the properties subject of this
case, previously covered by TCT No. 12236 and 12237, upon
payment by the petitioner of the selling price of P200.00 per square
meter.
SO ORDERED.
Aggrieved, the respondents filed an appeal to the CA to assail the
RTC decision in holding that the CTS dated December 13, 1991
they entered into with the petitioner is still in force and effect.
Ruling of the CA
In a Decision dated April 30, 2007, the CA granted the appeal of
the respondents. Accordingly, it dismissed the action for Specific
Performance and Damages with Prayer for Preliminary Injunction
filed by the petitioner for being premature. The dispositive portion
thereof states:
WHEREFORE, the instant appeal is GRANTED. The assailed
decision in CIVIL CASE No. RTC '97-3777 is REVERSED and
SET ASIDE. The action for Specific Performance and Damages
with Prayer for Preliminary Injunction filed by the petitioner
against the respondents with the court a quo is hereby DISMISSED
for lack of cause of action. No pronouncement as to costs.
SO ORDERED.
The CA held that the petitioner cannot exact fulfillment from the
respondents without itself having first complied with what is
incumbent upon it under the CTS. As shown in the records, the
petitioner failed to make full payment of the purchase price.
Further, records do not show that the petitioner ever attempted to
at least, make the proper consignation of the amounts due to the
court.
A Motion for Reconsideration was filed by the petitioner, but the
same was denied in a Resolution dated March 17, 2008.
Issues
Hence, the instant petition for review on certiorari based on the
following assignment of errors:
1. WHETHER OR NOT THE CA ERRED IN REVERSING THE
TRIAL COURT'S DECISION THAT THE PETITIONER CAN
OBLIGE THE RESPONDENTS TO SELL THE PROPERTIES
COVERED BY THE CTS, THE CONTRACT BEING STILL
EFFECTIVE;
2. WHETHER OR NOT THE CA ERRED IN DECLARING
THAT THE CAUSE OF ACTION IS PREMATURE AND IN
DISREGARDING THE PAYMENTS AND EXPENSES MADE
BY THE PETITIONER OVER THE PROPERTIES IN
QUESTION; and
3. WHETHER OR NOT THE CA ERRED IN NOT GRANTING
THE MOTION FOR RECONSIDERATION DESPITE THE
FACT THAT THE PETITIONER SHOWED PROOF OF
READINESS TO PAY.
Ruling of the Court
To begin with, it bears stressing that the scope of the Court's
judicial review under Rule 45 of the Rules of Court is confined
only to errors of law. It does not extend to questions of fact. This
rule, however, admits of exceptions, such as in the present case,
where the factual findings of the CA and the trial court are
contradictory.
After a careful review of the records of the case, however, the Court
upholds the findings of the CA in dismissing the complaint for
specific performance filed by the petitioner against the respondents
for lack of merit.
The parties are bound to the
stipulations they mutually agreed
upon in the CTS
Indeed, the contract executed by the parties is the law between
them. Consequently, from the time the contract is perfected, all
parties privy to it are bound not only to the fulfillment of what has
been expressly stipulated but likewise to all consequences which,
according to their nature, may be in keeping with good faith, usage
and law. AScHCD
Here, the pertinent provisions of the CTS, denominated as
Contract/Agreement, between the parties read:
1. The Parties hereby agree that for and in consideration of the
amount of TWO HUNDRED (P200.00) Pesos, Philippine
Currency per square meter, the VENDOR shall sell, cede, convey
and transfer unto the VENDEE, its assigns, or representative the
above mentioned property;
...
3. The registration fee for the mortgage to secure the loan to be
obtained by the vendee to finance the acquisition of the land shall
be for the account of the VENDEE; and
4. This Contract/Agreement shall automatically expire on the
Ninetyth sic (90) th sic day commencing from the aforesaid date.
Concededly, it is undisputed that the abovementioned contract is in
the nature of a CTS. As such, the obligation of the seller to sell
becomes demandable only upon the occurrence of the suspensive
condition. In the present case, as correctly observed by the CA, the
suspensive condition is the payment in full of the purchase price by
the petitioner prior to the expiration of the 90-day period stipulated
in their CTS, which the latter failed to do so. The relevant portion
of the CA's decision reads:
As shown in the case at bar, the petitioner did not pay the full
purchase price which is its obligation under the CTS. As the
payment of the full purchase price is a positive suspensive
condition the non-fulfillment of which prevents the perfection of a
CTS, it is indubitable that the subject CTS is ineffective and
without force and effect. x x x.
In Spouses Garcia, et al. v. Court of Appeals, et al., the Court
emphasized that in a CTS, payment of the full purchase price is a
positive suspensive condition, failure of which is not considered a
breach of the same but an occurrence that prevents the obligation
of the seller to transfer title from becoming effective. Here, there is
no dispute that the petitioner failed to pay the full purchase price
stipulated in the CTS on the date fixed therein. Thus, the
respondents are within their rights to refuse to enforce the same.
As a rule, proof of verbal agreement
that tends to vary the terms of a
written agreement, is inadmissible
under the parol evidence rule
Rule 130, Section 9 of the Revised Rules on Evidence embodies
the parol evidence rule which states:
SEC. 9. Evidence of written agreements. When the terms of an
agreement have been reduced to writing, it is considered as
containing all the terms agreed upon and there can be, between the
parties and their successors-in-interest, no evidence of such terms
other than the contents of the written agreement.
However, a party may present evidence to modify, explain or add
to the terms of the written agreement if he puts in issue in his
pleading:
(a) An intrinsic ambiguity, mistake or imperfection in the written
agreement;
(b) The failure of the written agreement to express the true intent
and agreement of the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or their
successors-in-interest after the execution of the written agreement.
The term "agreement" includes wills.
In Norton Resources and Development Corporation v. All Asia
Bank Corporation, the Court discussed the parol evidence rule in
this manner:
The "parol evidence rule" forbids any addition to or contradiction
of the terms of a written instrument by testimony or other evidence
purporting to show that, at or before the execution of the parties'
written agreement, other or different terms were agreed upon by
the parties, varying the purport of the written contract. When an
agreement has been reduced to writing, the parties cannot be
permitted to adduce evidence to prove alleged practices which, to
all purposes, would alter the terms of the written agreement.
Whatever is not found in the writing is understood to have been
waived and abandoned. x x x. (Citation omitted)
These rule and principle notwithstanding, the petitioner would
have the Court rule that the CTS it executed with the respondents
falls within the exceptions, more specifically that the written
agreement failed to express the true intent and agreement of the
parties considering that the same is also subject to the condition
that all pending litigations relative to the subject properties are
settled. This argument is untenable.
It is well settled that parol evidence can serve the purpose of
incorporating into the contract additional contemporaneous
conditions, which are not mentioned at all in writing, only if there
is fraud or mistake. Here, the petitioner's claim that the reason for
their failure to pay the full purchase price was due to the failure of
the respondents to settle the pending litigation involving the subject
properties is not tenable. Clearly, a perusal of the CTS executed by
the parties does not show any provision pertaining to such
condition. Also, the petitioner failed to present sufficient evidence
to show that such failure was due to fraud or mistake.
Moreover, the petitioner likewise failed to prove by preponderant
evidence their claim that an extension was given to them to pay the
full purchase price indicated in the CTS. In main, they presented
documents showing that they paid for the expenses and attorney's
fees to settle the pending litigations of the subject properties.
According to them, in exchange for their financial assistance, the
respondents agreed to extend the period of payment until after the
conclusion of the pending litigations. AcICHD
The allegation of the petitioner, however, was successfully rebutted
by the respondents when they presented a purported new contract
pre-signed by Tubao, the petitioner's former president, and two of
its members as witnesses. Clearly, the petitioner itself recognized
the expiration of the 90-day period provided in their CTS and
instead offered a new contract to Lipat Jr., who, however, refused
to sign the same. Unfortunately, this has not been controverted by
the petitioner.
At any rate, assuming without conceding that the 90-day period
was extended by the parties, the obligation of the respondents
based on the CTS did not arise as a result of the continued failure
of the petitioner to pay the full purchase price. As the Court held in
Ursal v. Court of Appeals, the perfected CTS imposed on the buyer
the obligation to pay the balance of the purchase price. As such, the
buyer should have made the proper tender of payment and
consignation of the price in court as required by law. It is essential
that consignation be made in court in order to extinguish the
obligation of the buyer to pay the balance of the purchase price.
Here, records are bereft of any showing that the petitioner even
attempted to make the proper consignation of the amounts due, as
a result, the obligation on the part of the respondents never acquired
obligatory force, thus, the seller is released from his obligation to
sell.
Payments made by the petitioner for
the subject properties, however, must
be refunded
In Pilipino Telephone Corporation v. Radiomarine Network
(Smartnet) Philippines, Inc., the Court ordered the refund to the
buyer of all sums previously made, after terminating the CTS for
failure to pay the purchase price, based on the principle against
unjust enrichment. The Court in part stated:
Likewise, a cause of action for specific performance does not arise
where the CTS has been cancelled due to nonpayment of the
purchase price. Smartnet obviously cannot demand title to the
Valgoson Property because it did not pay the purchase price in full.
For its part, Piltel also cannot insist on full payment since
Smartnet's failure to pay resulted in the cancellation of the CTS.
Indeed, in the case of Ayala Life Assurance, Inc. v. Ray Burton
Devt. Corp., the Court rejected the seller's demand for full payment
and instead ordered it to refund to the buyer all sums previously
paid. The order to refund is correct based on the principle that no
one should unjustly enrich himself at the expense of another.
(Citations omitted)
In the present case, however, since the records are insufficient to
use as bases to properly compute all payments previously made by
the petitioner to the respondents in connection with the CTS they
executed dated December 13, 1991, the case should be remanded
to the RTC for a detailed computation of the refund and to include
the imposition of an interest at the rate of six percent (6%) per
annum pursuant to the Court's ruling in Nacar v. Gallery Frames,
et al.
WHEREFORE, the petition is DENIED. The Decision dated April
30, 2007 and Resolution dated March 17, 2008 of the Court of
Appeals in CA-G.R. CV No. 85684 are hereby AFFIRMED with
the MODIFICATION that the case is REMANDED to the
Regional Trial Court of Naga City, Branch 22, for the computation
of all payments previously made by petitioner Felix Plazo Urban
Poor Settlers Community Association, Inc. to respondents Alfredo
Lipat, Sr. and Alfredo Lipat, Jr. in connection with the Contract to
Sell they executed which the respondents should refund without
delay. Also, the Regional Trial Court is directed to include the
imposition of an interest at the rate of six percent (6%) per annum
pursuant to prevailing jurisprudence.
SO ORDERED.