Lagandaon v. Court of Appeals
REITERATIONFacts
The Antecedents: Pacweld Steel Corporation (Pacweld) executed Contracts to Sell for lots in its subdivision in favor of private respondents. Pacweld failed to develop the subdivision as agreed. Subsequently, Pacweld defaulted on a loan secured by a real estate mortgage over the subdivision lots, leading to their foreclosure by the Development Bank of the Philippines (DBP). DBP became the registered owner. On May 12, 1980, DBP executed a Deed of Absolute Sale in favor of petitioners (Sps. Lagandaon), who became registered owners. This deed contained a stipulation that petitioners would assume all claims, liens, liabilities, and damages arising from any litigation involving the properties. Procedural History: Petitioners filed complaints to rescind the original Contracts to Sell, alleging they had become stale and inoperative due to DBP's acquisition. They claimed a "modified contract to sell" existed, where private respondents would update their accounts, but petitioners would not be bound by Pacweld's development obligations. The Regional Trial Court (RTC) dismissed the complaints, finding no modified contract to sell and that petitioners could not base their acts on such a non-existent contract. The Court of Appeals (CA) affirmed the RTC's dismissal but deleted the award of attorney's fees. The CA noted that petitioners did not challenge the RTC's finding of no modified contract and that raising ownership rights from the DBP sale would constitute a change of theory. The Petition: Petitioners filed a petition for review on certiorari under Rule 45, assailing the CA's decision, primarily arguing that the CA erred in finding no modified contract to sell and in dismissing their complaints.
Issue(s)
Whether the Court of Appeals erred in finding that there was no modified Contract (verbal) to Sell between petitioners and respondents. Whether the Court of Appeals erred in finding that there was a change of theory on appeal by petitioners. Whether the Court of Appeals erred in finding that petitioners have no right to ask for rescission of the various contracts to sell on the basis of the modified contract (verbal) to sell, and consequently, in dismissing the complaints. Whether petitioners assumed the obligations of Pacweld, including the dormancy of the CFI Decision and developer qualifications.
Ruling
The petition is denied, and the assailed Decision of the Court of Appeals is affirmed. Petitioners are ordered to pay the costs.
Ratio Decidendi
On the existence of a modified contract to sell: The Court affirmed the findings of the RTC and CA that no modified contract to sell existed. The petitioners' theory hinged on the existence of such a contract, which they alleged was entered into orally after DBP acquired the property. However, both lower courts found this contract to be non-existent, both physically and legally. The Supreme Court reiterated the rule that factual findings of the trial court, especially when affirmed by the appellate court, are binding and conclusive. The existence of a modified contract to sell is a question of fact, and petitioners failed to provide any valid reason to depart from this rule or to justify a re-examination of the evidence. The self-serving and unsubstantiated allegation of an oral modification was insufficient to overturn the concurrent findings of the lower courts. On the change of theory on appeal: The Court agreed with the CA that petitioners could not raise their alleged ownership rights arising from the DBP sale on appeal. Their cause of action before the trial court was premised on the existence of a modified contract to sell and the private respondents' default under it. To introduce new arguments based on their ownership derived from the DBP sale would constitute a change of theory, which is generally not allowed on appeal. This would prejudice the private respondents, who had based their defense on the absence of a modified contract and the petitioners' failure to fulfill Pacweld's obligations. On the right to rescission based on a modified contract: Since the Court found no modified contract to sell, the petitioners' right to demand rescission based on such a contract was consequently denied. Their complaints were dismissed because their legal basis – the alleged modified contract – was found to be non-existent. The Court emphasized that petitioners could not selectively enforce rights (collecting payments) while disclaiming obligations (development of the subdivision) under the original contracts, especially when their claim of modification lacked factual and legal basis. On the assumption of Pacweld's obligations, the dormancy of the CFI Decision and developer qualifications: The Court ruled that petitioners assumed Pacweld's obligations. Petitioner Lorenzo Lagandaon, as president of Pacweld, had actual knowledge of the original contracts to sell when he acquired the property from DBP. Furthermore, the Deed of Absolute Sale explicitly stipulated that petitioners would assume all claims, liens, and liabilities involving the properties. Their subsequent actions, such as demanding payments under the original contracts, further demonstrated their assumption of Pacweld's role and obligations. The Court also clarified that the Maceda Law was intended to protect buyers on installment, not sellers like the petitioners in this context, and thus did not apply to grant petitioners the right to cancel the contracts. The argument that the CFI decision ordering Pacweld to develop the subdivision was dormant was deemed irrelevant because petitioners had personally assumed those obligations through their purchase agreement with DBP. Similarly, their qualification or licensing as real estate developers was irrelevant, as their obligations were personal and assumed voluntarily. The express condition in the Deed of Absolute Sale regarding assumption of liabilities was not mere surplusage but a binding stipulation.
Main Doctrine
Questions of fact, as a general rule, may not be raised in a petition for review under Rule 45, especially when such questions have already been disposed of by the trial court and affirmed by the appellate court. The failure to justify a departure from this rule warrants the dismissal of the petition. Furthermore, a buyer who had actual knowledge of prior unregistered interests, such as contracts to sell, cannot claim to be a buyer in good faith and for value to the exclusion of such interests.