Gold Loop Properties, Inc. vs. Court of Appeals

A buyer is justified in suspending payment of the purchase price balance when the seller, despite repeated demands and after accepting substantial payment, fails to furnish the buyer a copy of the contract to sell, as the buyer is entitled to be informed of the rights and obligations under the contract before being required to perform.

The Sadhwanis (private respondents) are spouses who sought to purchase a condominium unit at the Gold Loop Towers residential complex in the Ortigas Complex, Pasig, from Gold Loop Properties, Inc. (GLPI), represented by its President Emmanuel Zapanta (petitioners), through St. Martin Realty Corporation, which acted as realtor agent. The transaction was subject to the regulatory jurisdiction of the Housing and Land Use Regulatory Board (HLURB), which has authority over disputes between subdivision or condominium buyers and developers under the applicable housing laws.

On July 16, 1988, spouses Bhavna Harilela and Ramesh J. Sadhwani submitted through St. Martin Realty Corporation, a realtor agent of Gold Loop Properties, Inc. (GLPI), a signed pro forma reservation application for the purchase of one condominium unit at Gold Loop Towers, located in the Ortigas Complex, Pasig. One of the terms of the reservation was the execution of a contract to sell once the downpayment was paid in full. Upon submission, the Sadhwanis issued a check for P50,000.00 to cover the reservation fee, and the agent issued a receipt.

On November 18, 1988, the Sadhwanis paid GLPI the amount of P819,531.25 as the net downpayment, bringing total payments to P878,366.35 inclusive of the reservation deposit. Bhavna Harilela signed a "Contract To Sell" with GLPI, represented by its President Emmanuel Zapanta. The agent assured them they would be furnished a copy after notarization and that the balance would be included in a bank loan application. However, the contract was not notarized because the Sadhwanis could not supply GLPI with copies of their passports. Under the contract, GLPI agreed to sell Unit R-84 of the Southwest Tower, measuring 198.75 square meters, for a total price of P2,484,375.00. Section 3 of the contract provided that the balance of P1,614,843.80 was payable through a bank designated by the seller, with a proviso that in the event of non-approval of the bank loan, the buyer would adopt a "Co-Terminus Payment Plan" requiring equal monthly installments commencing 30 days after the scheduled downpayment up to January 1990.

GLPI later informed the Sadhwanis that the bank loan was disapproved because banks were unwilling to extend loans secured by an ongoing project. By letter dated March 15, 1989, GLPI directed the Sadhwanis to pay the balance under the Co-Terminus Payment Plan, providing a schedule of monthly installments from March 1989 to January 1990. The next day, March 16, 1989, the Sadhwanis wrote to GLPI offering to resell their rights to the condominium unit, proposing terms that would yield a net cash of P1,258,957.03 payable in six months. Petitioners rejected the offer as unreasonable, unfair, and inequitable.

On March 19 and April 25, 1989, Ramesh Sadhwani demanded a copy of the contract to sell, noting that his wife had no official document evidencing the purchase and could not be expected to comply with conditions she had not been given. On May 22, 1989, counsel for the Sadhwanis made a formal demand for delivery of a copy of the contract. The Sadhwanis failed to pay any of the monthly amortizations under the payment plan. On August 7, 1989, GLPI sent a letter demanding payment of the balance and threatening rescission and forfeiture of the downpayment within five days, pursuant to Section 8 of the contract.

On August 14, 1990, the Sadhwanis filed a complaint for specific performance with the HLURB, praying to be furnished a copy of the contract to sell, allowed to remit the balance, and to be delivered title and possession of the unit, or alternatively to be reimbursed with interest and damages. The HLURB Arbiter ruled in their favor on October 2, 1992, and the HLURB Board of Commissioners modified the decision on October 11, 1993, directing the Sadhwanis to pay the balance without interest within 30 days and ordering GLPI to accept payment and turn over the unit. The Office of the President affirmed on August 24, 1994, and the Court of Appeals affirmed on June 22, 1995, finding that the Sadhwanis were justified in suspending payment because GLPI had failed to furnish them a copy of the eight-page, single-spaced contract despite repeated demands and after accepting P878,366.35.

• Entitlement to Suspend Payment: Petitioners contended that private respondents were not entitled to suspend payment of their monthly amortizations due to the alleged failure to furnish a copy of the contract to sell, and that the respondents used this alleged failure as an excuse for defaulting on their contractual obligation to pay the installments.
• Delivery of Contract Copy: Petitioners insisted that private respondents were in fact given a copy of the contract to sell.
• Right to Rescind: Petitioners pointed out that under the contract, they had the right to rescind in case private respondents breached their payment obligations.

• Non-Receipt of Contract: Private respondents averred that they had not in fact received a copy of the contract to sell.
• Cause to Suspend Payment: Respondents argued that petitioners' assertion was premised on a completely wrong proposition — that the respondents had given petitioners cause to rescind. What was truly in issue was that it was petitioners who gave respondents sufficient and well-founded cause to suspend payment of their monthly amortizations.

• Suspension of Payment: Whether private respondents may suspend payment of their monthly amortizations due to petitioners' failure to furnish them a copy of the contract to sell.

• Suspension of Payment: Yes. The buyers were justified in suspending payment of the monthly amortizations, as the seller's failure to furnish a copy of the contract to sell despite repeated demands and after accepting substantial payment constituted valid ground for suspension.

• Suspension of Payment: The Court applied the well-established rule that findings of fact of the Court of Appeals are conclusive on the parties and are not generally reviewable by the Supreme Court. No compelling reason was found to disturb the CA's factual findings, as none of the recognized exceptions applied. The CA found that the Sadhwanis were justified in suspending payment because GLPI failed to give them a copy of the contract to sell despite repeated demands, notwithstanding the Sadhwanis' payment of P878,366.35. The Court subscribed to the CA's finding that the contract to sell, being an eight-page single-spaced document broken down into twelve sections spelling out the parties' respective monetary and non-monetary rights and obligations, could not be expected to be recalled in full detail without a copy. The Sadhwanis were entitled to a copy of the contract; otherwise they would not be informed of their rights and obligations thereunder. When they parted with P878,366.35 — more than one-third of the purchase price — the contract to sell was concrete proof of the purchase and sale. The Court further adopted the CA's characterization that it was petitioners who committed fraudulent acts by entering into the contract, accepting the downpayment, withholding a copy for no valid reason, and then threatening rescission and forfeiture when the buyers merely suspended payment while waiting for their copy.

• Conclusiveness of Court of Appeals Factual Findings — Findings of fact of the Court of Appeals are conclusive on the parties and are not generally reviewable by the Supreme Court. The rationale is that review of the CA's factual findings is not a function the Supreme Court normally undertakes. The doctrine admits of exceptions, including: (1) when the conclusion is grounded entirely on speculations, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the CA went beyond the issues and the same is contrary to the admissions of both parties; (7) when the CA's findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence; (9) when the CA manifestly overlooked certain relevant facts not disputed by the parties which, if properly considered, would justify a different conclusion; and (10) when the findings are premised on the absence of evidence and are contradicted by the evidence on record. In this case, none of the exceptions was found to apply.
• Buyer's Right to a Copy of the Contract to Sell — A buyer who has paid a substantial portion of the purchase price is entitled to a copy of the contract to sell, as the contract is the concrete proof of the purchase and sale and the source of the buyer's rights and obligations. Failure of the seller to furnish such copy despite repeated demands constitutes valid ground for the buyer to suspend payment of the balance.

• "The private respondents are entitled to a copy of the contract to sell, otherwise they would not be informed of their rights and obligations under the contract. When the Sadhwanis parted with P878,366.35 or more than one third of the purchase price for the condominium unit, the contract to sell, or what it represents is concrete proof of the purchase and sale of the condominium unit." — This passage articulates the ratio decidendi: the buyer's entitlement to a copy of the contract as a necessary incident of being informed of contractual obligations, and the justification for suspending payment when that entitlement is violated.
• "x x x Private respondents were indeed justified in suspending payment of their monthly amortizations. The failure of petitioners to give them a copy of the Contract to Sell sued upon, despite repeated demands therefor, and notwithstanding the private respondents' payment of P878,366.35 for the subject condominium unit was a valid ground for private respondents to suspend their payments. x x x" — This is the Court of Appeals' finding as adopted and subscribed to by the Supreme Court, establishing the controlling factual-legal conclusion that non-delivery of the contract copy justifies suspension of payment.

• Cebu Shipyard and Engineering Works, Inc. vs. William Lines, Inc., 306 SCRA 762 (1999) — Cited for the doctrine that findings of fact of the Court of Appeals are conclusive on the parties and are not generally reviewable by the Supreme Court.
• Commissioner on Internal Revenue vs. Embroidery and Garments Industries (Phils.), Inc., 305 SCRA 70 (1999) — Cited as the source of the enumerated exceptions to the conclusiveness rule, itself drawing from a line of cases including Misa vs. Court of Appeals, Golangco vs. Court of Appeals, Fule vs. Court of Appeals, Halili vs. Court of Appeals, Remalante vs. Tibe, and Ayala Corporation vs. Ray Burton Development Corporation.

Chief Justice Davide Jr., Justice Puno, Justice Kapunan, and Justice Ynares-Santiago concurred.