Go v. Pura V. Kalaw, Inc.
REITERATIONFacts
The Antecedents: Pura V. Kalaw, Inc. (respondent) was constructing a condominium building. Vicente Go (petitioner) agreed to purchase Unit 1-A for P665,200.00, executing a Contract to Sell with a down payment of P327,600.00. Petitioner occupied the unit since February 1982. Respondent demanded payment of the balance. Respondent's request to register the building as a condominium was denied due to lack of parking spaces, and they asked petitioner to sign a waiver, which he refused, citing defects. Respondent offered to reimburse the down payment with interest, but petitioner refused. Respondent rescinded the Contract to Sell, considering payments as rentals. Procedural History: Respondent filed an illegal detainer case. Petitioner filed a specific performance or rescission of contract case, obtaining an injunction against the detainer case. Petitioner amended his complaint, alleging failure to complete the unit and deliver it, seeking specific performance or rescission, plus damages and attorney's fees. Respondent counter-argued that petitioner's refusal to sign the waiver prevented condominium approval and that payments should be applied as rentals. The RTC declared the contract rescinded, ordered respondent to refund the down payment with interest, and awarded substantial damages and attorney's fees to petitioner. The Court of Appeals modified the RTC decision, affirming the rescission and the surrender of premises, but declared the down payment as rentals and awarded attorney's fees to respondent. The Petition: Petitioner seeks to reverse the Court of Appeals' decision, arguing it erred in rescinding the Contract to Sell.
Issue(s)
Whether the Court of Appeals erred in rescinding the parties' Contract to Sell; and whether the petitioner's refusal to sign the waiver of parking space constituted a breach of contract. Whether the down payment should be considered rentals or refunded with interest; and whether the award of damages and attorney's fees to the respondent was proper.
Ruling
The petition is denied. The assailed Decision and Resolution of the Court of Appeals are affirmed in toto. Dispositive Portion: The Contract to Sell is declared rescinded. Petitioner is directed to surrender the premises. The down payment of P327,600.00 is declared as rentals for the use of the premises. Petitioner is ordered to pay respondent attorney's fees of P200,000.00 and costs of suit.
Ratio Decidendi
On the issue of rescission of the Contract to Sell and the waiver of parking space: The Court affirmed the Court of Appeals' decision to rescind the Contract to Sell. The agreement was clearly a contract to sell, not a contract of sale, as ownership was reserved by the respondent until full payment of the purchase price. Paragraph (g) explicitly granted the respondent two remedies upon the petitioner's failure to pay the balance: unilateral rescission and application of the down payment to unpaid rentals. Since the petitioner occupied the unit for eight years without paying the balance, the respondent was within its rights to avail of these remedies. The Court found no merit in the petitioner's contention that the respondent violated the contract by asking him to sign a waiver of parking space because the Contract to Sell did not guarantee a parking space. The petitioner's refusal, coupled with his non-payment, constituted a breach of his contractual obligations. On the treatment of the down payment and the award of damages and attorney's fees: The Court ruled that the down payment should be considered rentals for the use of the premises. Paragraph (g) of the Contract to Sell clearly states that in the event of the purchaser's failure to pay within thirty (30) days from completion and notice, the contract shall expire, become null and void, and any sums paid shall be considered and become rentals on the property. The petitioner's failure to pay the balance of the purchase price triggered this provision. The Court denied the petitioner's claim for damages and attorney's fees, stating that he did not come to court with clean hands due to his contractual violations. Consequently, the respondent was compelled to seek legal recourse to protect its rights; therefore, the award of attorney's fees in favor of the respondent was deemed proper.
Main Doctrine
In a contract to sell, ownership is reserved by the vendor and does not pass to the vendee until full payment of the purchase price. Upon failure to pay the balance when due, the vendor may unilaterally rescind the contract and apply the down payment as rentals, as stipulated.