Vive Eagle Land, Inc. v. National Home Mortgage Finance Corporation
REITERATIONFacts
The Antecedents: On November 17, 1999, Vive Eagle Land, Inc. (Vive) entered into a Deed of Sale of Rights, Interests, and Participation Over Foreclosed Assets with National Home Mortgage Finance Corporation (NHMFC) for the purchase of a 73.5565-hectare property for P40,000,000.00. Vive paid the first downpayment installment of P4,000,000.00 but failed to pay subsequent installments, citing issues with the property, including its classification as agricultural and the issuance of land awards. Vive requested a moratorium, waiver of interest, and price reduction from NHMFC. NHMFC, through its President, initially agreed to a moratorium but advised Vive to submit other requests to the Board. Subsequently, NHMFC, through a new President, rescinded the Deed of Sale due to Vive's non-payment. Procedural History: Vive filed a complaint for declaration of nullity of rescission. The RTC initially dismissed Vive's complaint, upholding NHMFC's rescission. However, upon inhibition of the judge and re-raffling, another RTC branch granted Vive's motion for reconsideration, declaring the rescission void and Vive as the owner. This order was later set aside by another RTC branch, which reinstated the initial decision upholding NHMFC's rescission. The Court of Appeals (CA) affirmed the RTC's decision, holding that the Deed of Sale was a contract to sell and that NHMFC validly rescinded it due to Vive's default. Vive's motion for reconsideration was denied. The Petition: Vive filed a Petition for Review on Certiorari with the Supreme Court, assailing the CA's decision. Vive argued that the Deed of Sale was a contract of sale, not a contract to sell; that it was not in default due to a moratorium; that there was no substantial breach; that the subsequent sale to Cavacon Corporation was in bad faith; and that its claim for attorney's fees was wrongly dismissed. In its Motion for Reconsideration, Vive raised the applicability of the Maceda Law and the need for mutual restitution.
Issue(s)
Whether the Deed of Sale of Rights, Interests, and Participation Over Foreclosed Assets is a contract of sale or a contract to sell; Whether Vive was in default in its payment of the purchase price; Whether NHMFC validly rescinded the Deed of Sale; and Whether an alleged moratorium on payments was validly granted. Whether the Maceda Law is applicable to the transaction. Whether the subsequent Memorandum of Agreement between NHMFC and Cavacon Corporation is valid; and Whether Vive is entitled to attorney's fees and litigation expenses.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court ruled that the Deed of Sale was a contract to sell, that Vive was in default, that NHMFC validly rescinded the contract, and that the Maceda Law was inapplicable. Consequently, the subsequent sale to Cavacon Corporation was upheld, and Vive's claim for attorney's fees was denied. WHEREFORE, premises considered, the instant petition is DENIED. The assailed Decision dated August 23, 2016 and the Resolution dated March 30, 2017 of the Court of Appeals in CA-G.R. CV No. 105312 are AFFIRMED.
Ratio Decidendi
On the nature of the Deed of Sale, Vive's default, the validity of rescission, and the alleged moratorium: The Court affirmed the CA's finding that the agreement was a contract to sell, not a contract of sale, based on Section 7 of the Deed of Sale. Vive was found to be in default, and NHMFC validly rescinded the contract because Vive's claim that it was prevented from paying was rejected, as Vive had full knowledge of the property's nature. The Court dismissed Vive's argument that a moratorium on payments was validly granted because any agreement for a moratorium by NHMFC's then-President, Atty. Salud, was unenforceable without prior approval from NHMFC's Board of Directors. On the applicability of the Maceda Law: The Court ruled that the Maceda Law (R.A. No. 6552) was inapplicable to the transaction because the argument was raised for the first time in Vive's Motion for Reconsideration and the transaction involved two corporations, Vive and NHMFC, and Vive was not the "innocent, low-income buyer" the law was designed to protect. On the validity of the sale to Cavacon Corporation and attorney's fees: The Court upheld the validity of the Memorandum of Agreement (MOA) between NHMFC and Cavacon Corporation because NHMFC validly rescinded the contract with Vive, it was at liberty to dispose of the property as if the sale to Vive had never been made. Consequently, Vive's claim for attorney's fees and litigation expenses was denied as it was based on the premise that NHMFC's rescission was invalid.
Main Doctrine
A contract to sell, characterized by the vendor's reservation of ownership until full payment of the purchase price, allows the vendor to validly rescind the contract upon the buyer's default. The Maceda Law is inapplicable to transactions between corporations or where the buyer is not a low-income earner.