Spouses Remedios & Teodoro Dijamco vs CA & Premiere Devt Bank

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Spouses Remedios & Teodoro Dijamco vs CA & Premiere Devt Bank
G.R. No. 113665
October 7, 2004

Facts:

This is a petition for review of the January 7, 1994 resolution and March 30, 1993 decision of the Court of Appeals, affirming the February 27, 1991 decision of the Regional Trial Court, Pasay City in a civil case which dismissed petitioners’ complaint against private respondent Premiere Development Bank for recovery of real property and damages.

It appears on record that plaintiffs were granted four separate loans by defendant bank, as follows: Industrial Loan No. 1833 in the amount of P75,000.00 granted on April, 1976; Industrial loan No. 2985 in the amount of P80,000.00 granted on March, 1980; Real Estate Loan No. 2084 in the amount of P80,000.00 granted on February, 1986 and Real Estate Loan No. 64 in the amount of P210,000.00 granted on October, 1981. The subject of this complaint pertains to the fourth loan or the Real Estate Loan No. 2084. To secure the payment of the fourth loan, plaintiffs executed a real estate mortgage over a parcel of land located in Pasay City covered by TCT No. 34450 which according to plaintiffs has an improvement thereon a five-door apartment.

Due to severe economic reverses, plaintiffs failed to remit monthly amortizations regularly on the fourth loan. It appears that plaintiffs were not only in arrears on the fourth loan but also on the second and third loans, as well. At the time that the plaintiffs were negotiating for the settlement of the second and third loans, the fourth loan was about ten (10) months in arrears.

On March 6, 1983, defendant bank sought the assistance of the City Sheriff of Pasay City regarding defendant bank’s Petition for Extrajudicial Foreclosure of Mortgage under Act 3135 against spouses Remedios R. Dijamco and Teodoro S. Dijamco.
In a letter dated June 11, 1986 addressed to Dr. Procopio C. Reyes, President of defendant bank, plaintiff Remedios Dijamco offered to repurchase the subject property. Repurchase price as of May 30, 1986 - P622,095.00 and the Interest of 26% PA to be paid monthly – P13,478.00.

Grace period requested to repurchase the subject properties is one (1) year from May 30, 1986 or until May 30, 1987, with the following conditions: (1) Interest of P13,478.73 shall be paid on a monthly basis starting June 30, 1986 and every 30th day of every month until May 30, 1987; (2) Failure to remit interest payment when the same is due will render this proposal automatically revoked without need of formal demand, and you may immediately enforce your Writ of Possession; (3) That in case of failure to repurchase the subject property within the period above mentioned, all interest and other payment made by us shall be treated as rentals for the use of the property.

In accordance with the June 11, 1986 agreement, petitioners remitted monthly interest for six months, until January 1987, after which petitioners stopped paying and sued respondent Premiere Development Bank on May 13, 1988. They claimed that the latter employed fraud and undue advantage in depriving them of their property and prayed for recovery of said property for P350,000 and damages. The RTC dismissed the complaint for utter lack of merit and the CA affirmed such dismissal.

Held:

We hold that the RTC and the CA were correct in dismissing petitioners’ complaint. Thus, we deny this petition.

Petitioners themselves admit the uniform factual findings of the RTC and the CA that respondent bank validly acquired the subject property at the auction sale, and that it was only after the title was consolidated and transferred to the bank that petitioner Remedios Dijamco signed the June 11, 1986 agreement to purchase the same property (not to repurchase it, as their right of redemption had long expired).

Remedios voluntarily entered into the June 11, 1986 agreement without fraud or undue advantage from respondent bank. As such, the agreement was binding, valid and enforceable between the parties, pursuant to Articles 1315, 1159 and 1370 of the Civil Code of the Philippines.

Indeed, the CA was correct in finding that the June 11, 1986 agreement was a contract to sell because (1) By its own terms, it [was] a contract whereby the appellants [were] granted the right to repurchase the property involved at the fixed price of P622,095.00 within a year provided they [paid] monthly interest payments of P13,478.73; (2) No transfer or conveyance of ownership was effected by its terms; (3) The interest payments [were] not even part of the repurchase price because in case of failure to exercise the right to repurchase they would be considered as rentals for the use of the property. They [were] not to be returned (Condition No. 3); and (4) The interest payments were in a way a consideration to preserve the right to repurchase. In default of the interest payments, the right to repurchase terminate [d] (Condition No. 2).

Although petitioners paid six months’ interest until January 1987, they did not exercise their right to purchase the property during that period. Neither did they keep on paying the monthly interest as consideration for the continuation of their option right for the next six months. Hence, the automatic revocation clause of the agreement took effect, resulting in the rescission of the contract of option to purchase and the contract to sell by respondent bank. A judicial action for the rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions.15 Furthermore, inasmuch as the six months’ interest was the consideration for petitioners’ option to purchase the property during that period, the payments therefor could not possibly be credited as part of the purchase price of the contract to sell.

All told, petitioners have no right to demand reconveyance of the subject property for P350,000 and claim damages. WHEREFORE, the petition is hereby DENIED for lack of merit. Costs against petitioners. SO ORDERED.