Calilap-Asmeron v. Development Bank of the Philippines
REITERATIONFacts
The Antecedents: The petitioner, Lina Calilap-Asmeron, and her brother mortgaged two parcels of land to the Development Bank of the Philippines (DBP) to secure a loan. After the loan remained unpaid, DBP foreclosed the mortgage, and the properties were sold to DBP as the highest bidder. The redemption period expired without the petitioner repurchasing the properties. Subsequently, the petitioner entered into a deed of conditional sale with DBP to repurchase both lots. However, she failed to complete the stipulated quarterly amortizations, leading to DBP's rescission of the deed of conditional sale and the subsequent sale of one of the properties to Pablo Cruz, and later to respondents Emerenciana Cabantog and Eni S.P. Atienza. Procedural History: The petitioner initiated a civil case to set aside DBP's rescission of the deed of conditional sale and to annul the subsequent sales of the property. The Regional Trial Court (RTC), Branch 11, Malolos, Bulacan, dismissed her complaint, finding that her communications and the deed of conditional sale clearly indicated her intention to repurchase both properties. The Court of Appeals (CA) affirmed the RTC's decision, ruling that DBP validly rescinded the contract due to the petitioner's failure to pay her amortizations and that she had not presented sufficient evidence to support her claim of being misled. The Petition: The petitioner filed a petition for review on certiorari under Rule 45 of the Rules of Court, arguing that the CA erred in disregarding her testimonial evidence, which she claimed proved she was misled into signing the deed of conditional sale and that her nonpayment was a slight breach. She also contended that the CA erred in upholding the rescission despite her having paid a substantial amount. DBP countered that the petition raised questions of fact, which are not permissible under Rule 45, and that it had the right to rescind the contract. The Supreme Court denied the petition, holding that the issues raised were questions of fact, not reviewable under Rule 45, and that the CA's findings were supported by the evidence on record, including the petitioner's own written communications to DBP.
Issue(s)
Whether the Court of Appeals committed reversible error in disregarding the petitioner's testimonial evidence regarding the execution of the deed of conditional sale. Whether the Court of Appeals erred in affirming the RTC's decision upholding the respondent bank's rescission of the deed of conditional sale despite the petitioner having paid a substantial amount, and whether Article 1332 of the Civil Code applies to the petitioner's situation. Whether DBP validly exercised its right to rescind the deed of conditional sale.
Ruling
The Supreme Court denied the petition for review for lack of merit and affirmed the decision of the Court of Appeals. The Court held that the petitioner's appeal raised questions of fact, which are generally not reviewable under Rule 45 of the Rules of Court. The Court found no reversible error in the CA's affirmation of the RTC's findings, which were based on the evidence on record, including the petitioner's own written communications to DBP indicating her intent to repurchase both properties. The Court also ruled that Article 1332 of the Civil Code was not applicable as the petitioner was not illiterate and understood the English language in which the contract was written. Finally, the Court upheld DBP's rescission of the deed of conditional sale due to the petitioner's default in payment, finding it a valid exercise of its contractual right.
Ratio Decidendi
On the issue of disregarding testimonial evidence and raising questions of fact: The Court held that the petitioner's submission that her testimonial evidence sufficiently established facts and that she did not fully understand the deed involved questions of fact. Under Rule 45 of the Rules of Court, appeals to the Supreme Court are limited to questions of law. The Court reiterated that it is not a trier of facts and that the findings of the CA are generally conclusive and binding. While exceptions exist, the Court found that this case did not fall under any of them, as the CA's findings were grounded on the evidence on record, particularly the petitioner's own letters and telegrams to DBP. The petitioner's bare allegations of being misled were insufficient without corroborating evidence. Therefore, the appeal was dismissible for raising factual issues. On the issue of rescission despite substantial payment and the applicability of Article 1332: The Court found no merit in the petitioner's plea for the application of Article 1332 of the Civil Code. This provision applies when a party is unable to read or understand the language of the contract, and the burden is on the enforcing party to show full explanation. The Court noted that the petitioner did not specify which stipulations she had difficulty understanding and that her generalized averment of being misled was unsubstantiated. Her own testimony and correspondence demonstrated her ability to understand English and the terms of the contract, including her questioning the nature of the deed as a "Deed of Probitional Sale" instead of an "Absolute Sale." Thus, Article 1332 was inapplicable. On the issue of DBP's valid exercise of rescission: The Court affirmed that DBP validly exercised its right to rescind the deed of conditional sale. The Court emphasized that a contract is the law between the parties and must be complied with in good faith. The deed of conditional sale contained clear stipulations regarding rescission upon failure to pay amortizations. The petitioner's argument that her non-payment was a slight breach was unpersuasive, as the contract itself provided for rescission. The Court reiterated that it adopts the factual findings of the RTC and CA, which determined that DBP's rescission was proper after the petitioner's failure to pay her quarterly amortizations and after due notice. Consequently, DBP had the legal right to sell the property to a third party.
Main Doctrine
A party who voluntarily enters into a contract, understanding its terms, cannot later claim to have been misled or to have misunderstood the contract, especially when the terms are clear and unambiguous. The right to rescind a contract due to non-payment, as stipulated therein, is a valid exercise of contractual rights, and Article 1191 of the Civil Code does not prohibit such contractual stipulations.