Avendaño v. Development Bank
REITERATIONFacts
The Antecedents: Pedro Avendaño, as assignee of Philippine Apitong Development Corporation's redemption rights, offered to purchase four parcels of land foreclosed by the Development Bank of the Philippines (DBP) for DBP's total claim of P464,748.97. Avendaño made an initial downpayment of P50,000 and requested to complete the balance within one year. DBP's Board of Governors accepted his offer, outlining payment terms in a letter-agreement dated November 26, 1975, which Avendaño accepted. Avendaño took possession of the properties and made further downpayments totaling P100,000, but failed to sign the contract of sale and fully settle the outstanding balance despite reminders and extensions. Procedural History: Avendaño filed a complaint for specific performance or rescission with damages against DBP before the Court of First Instance of Rizal. The trial court initially dismissed the complaint for lack of prosecution. While this dismissal was on appeal, Avendaño settled his claim over one of the properties with a third-party buyer. The Court of Appeals subsequently set aside the dismissal order and remanded the case. The trial court then proceeded to rule in favor of DBP. On appeal, the Court of Appeals affirmed the trial court's decision. During the pendency of the appeal in the Court of Appeals, Pedro Avendaño passed away and was substituted by his heirs, the petitioners herein. The Petition: The petitioners, the heirs of Pedro Avendaño, filed this petition for review on certiorari under Rule 45 of the Rules of Court, challenging the Court of Appeals' decision. They argued that their deceased father was entitled to the execution of a contract to sell. The Supreme Court, however, noted that the letter-agreement itself referred to a contract of sale, not a contract to sell, and that the petitioners' claims were primarily factual. The Court reiterated that its jurisdiction is limited to questions of law, and since both lower courts found that Avendaño defaulted on his obligations, leading to the valid rescission of the agreement by DBP, the petition was denied.
Issue(s)
Whether the Court of Appeals erred in not finding that the deceased Avendaño was entitled to the execution of a contract to sell. Whether Avendaño fulfilled his obligations under the letter-agreement. Whether Avendaño actually demanded from respondent the execution of a contract to sell.
Ruling
The petition is hereby DENIED. The decision dated April 16, 2002 and resolution dated August 30, 2002 of the Court of Appeals in CA-G.R. CV No. 34756 are AFFIRMED. Costs against petitioners.
Ratio Decidendi
On the entitlement to a contract to sell: The Supreme Court held that Avendaño was not entitled to a contract to sell. The letter-agreement dated November 26, 1975, which formed the basis of the petitioners' claim, explicitly mentioned the execution of a "contract of sale," not a "contract to sell." The relevant portions of the letter-agreement clearly stipulated terms and conditions related to a contract of sale, including payment of accrued interest and expenses up to the date of execution of the contract of sale, and the consequences of failure to sign the contract of sale within sixty days. Therefore, the petitioners' claim for a contract to sell was directly contradicted by the very document they relied upon. On Avendaño's fulfillment of obligations: Both the trial court and the Court of Appeals found that Avendaño defaulted on his obligations under the letter-agreement, despite repeated extensions granted by the respondent bank. The evidence established that Avendaño failed to comply with the payment terms and to sign the contract of sale within the stipulated periods. His subsequent attempt to renegotiate his offer after failing to meet his undertakings, as conclusively established by the evidence, belied any assertion that he was merely waiting for the execution of a contract to sell. Consequently, the respondent bank validly rescinded its agreement with him, thereby extinguishing his rights to the parcels of land. On the demand for a contract to sell: The Court found that the assertions regarding Avendaño's fulfillment of obligations and his demand for a contract to sell were factual issues that were adequately ventilated and resolved by the lower courts. The Supreme Court, in a petition for review on certiorari, is limited to questions of law and generally refrains from re-examining evidence when the Court of Appeals affirms the factual findings of the trial court. Since no exceptions to this rule were present in this case, the Court did not re-evaluate the evidence concerning whether Avendaño actually demanded the execution of a contract to sell.
Main Doctrine
The Supreme Court affirmed the Court of Appeals' decision, holding that the heirs of the deceased Avendaño were not entitled to the execution of a contract to sell because Avendaño defaulted on his obligations under the letter-agreement, which stipulated a contract of sale, and the respondent bank validly rescinded the agreement.