HEIRS OF THE DECEASED PEDRO AVENDAÑO, NAMELY, MA. ROSELLE C. AVENDAÑO, RAINIER C. AVENDAÑO, ROMMEL C. AVENDAÑO, JOANNA C. AVENDAÑO AND MA. HANNAH AVENDAÑO-ARCEO, AND THE HEIRS O…

Avendaño versus Development Bank of the Philippines

The Case

This is a petition for review on certiorari brought by the heirs of the deceased Pedro Avendaño against the Development Bank of the Philippines. The heirs seek to compel the bank to execute a contract to sell over four foreclosed parcels of land that their late father had offered to repurchase. The case matters because it teaches the limits of the Supreme Court's review in petitions for certiorari, the primacy of the parties' written agreement over the relief prayed for, and the effect of a valid rescission on the buyer's rights.

Procedural History

Avendaño filed a complaint for specific performance or rescission with damages, with a prayer for a writ of preliminary injunction, before the Court of First Instance of Rizal, Branch V. The trial court granted the injunction. The complaint was later dismissed with prejudice for lack of interest to prosecute. Avendaño appealed to the Court of Appeals. While the appeal was pending, he entered into a compromise agreement with the Daughters of St. Mary of Leuca, Inc., waiving his claim over the Quezon City property. The Court of Appeals set aside the dismissal order and remanded the case to the trial court, which proceeded on the merits and eventually decided in favor of the bank. On appeal, the Court of Appeals affirmed the trial court. Avendaño passed away while the appeal was pending and was substituted by his heirs, who then filed this petition for review on certiorari before the Supreme Court.

Facts

Pedro Avendaño was the assignee of Philippine Apitong Development Corporation's redemption rights over four parcels of land in Quezon City, Baguio City, and Cebu, all of which the bank had foreclosed. He offered to purchase the properties for the bank's total claim of 464,748 pesos and 97 centavos, made a partial downpayment of 50,000 pesos, and asked for one year to complete the full downpayment. The bank's board of governors accepted his offer and outlined the terms of payment in a letter dated November 26, 1975, to which he expressed his conformity. This letter-agreement became the cornerstone of the heirs' case.

Avendaño took possession of the properties and made a downpayment of 100,000 pesos. A bank manager then directed the preparation of a contract of sale, but Avendaño did not show up to sign it. The bank later revoked its approval of his offer. Avendaño acknowledged the revocation and proposed to renegotiate with a new offer of 636,000 pesos plus interest, asking that his 100,000 pesos be credited. The bank accepted on condition that he update his account within one week, under pain of rescission and forfeiture. Reminders and a final appeal followed, but Avendaño did not comply.

The bank then sold the Quezon City lot to the Daughters of St. Mary of Leuca for 575,000 pesos and published an invitation for bids over the remaining lots. Avendaño sued for specific performance or rescission. The trial court initially dismissed his complaint, but after a compromise with the religious congregation and a remand by the Court of Appeals, the case proceeded on the merits and was decided in the bank's favor. The Court of Appeals affirmed, and the heirs elevated the matter to the Supreme Court.

Issues

• Whether or not the late Pedro Avendaño was entitled to the execution of a contract to sell in his favor.
• Whether or not the Supreme Court may review the factual findings of the trial court and the Court of Appeals in a petition for review on certiorari.
• Whether or not the bank validly rescinded its agreement with Avendaño, thereby extinguishing his rights to the parcels of land.

Applicable Provisions

The decision applies Rule 45 of the Rules of Court on appeals by certiorari, which limits the Court to questions of law. It bears on the case because the heirs raised factual assertions that the Court declined to reexamine. The text of the rule is not quoted in the decision.

The decision quotes the letter-agreement dated November 26, 1975, which provides:

We are pleased to inform you that your offer to purchase the former properties of Spouses Flaviano R. Pacheco and Corazon R. Pacheco for P464,743.97...has been approved by our Board of Governors subject to the following terms and conditions: xxx xxx xxx The accrued interest and expenses with interest thereon from August 29, 1975 up to the date of execution of the contract of sale shall first be paid; xxx xxx xxx That if the offeror fails to pay the interest and expenses accruing from August 29, 1975, or sign the Contract of Sale within sixty (60) days from his receipt of the notice of approval hereof, or fails to pay P25,000.00 on September 25, 1975 and P25,000.00 on October 25, 1975, the acceptance of the offer shall automatically be revoked and the deposit forfeited in accordance with the rules and regulations of the Bank.

This provision bears on the case because it speaks of a contract of sale, not a contract to sell, and because it expressly authorizes automatic revocation upon the offeror's failure to comply.

Ruling

On the first issue, the Court held that Avendaño was not entitled to a contract to sell. The letter-agreement on which the heirs based their claim made no mention of a contract to sell but of a contract of sale. Thus, the very document they relied on contradicted their own claim.

On the second issue, the Court held that the heirs' assertions were factual ones, such as whether Avendaño fulfilled his obligations or actually demanded the execution of a contract to sell. These were joined and ventilated in the trial court and the Court of Appeals, and the Court declined to reexamine or reweigh the evidence. The standing rule is that only questions of law may be appealed to the Court by certiorari, and this is especially true when the Court of Appeals affirms the factual findings of the trial court. None of the recognized exceptions obtained.

On the third issue, the Court held that both the trial and appellate courts found that Avendaño defaulted on his obligations despite repeated extensions. The bank therefore validly rescinded its agreement with him, extinguishing his rights to the parcels of land. The heirs' bare allegation that their father did not pay because he was waiting for the contract to sell was belied by his own attempt to renegotiate his offer after failing to comply.

Doctrine

A petition for review on certiorari under Rule 45 is limited to questions of law, and the Supreme Court will not reexamine the evidence or reweigh the factual findings of the trial court, especially when the Court of Appeals affirms those findings. The parties are bound by the terms of their written agreement, and a claim for a contract to sell cannot stand where the agreement itself speaks of a contract of sale. A valid rescission of an agreement extinguishes the buyer's rights to the property, and the buyer's subsequent attempt to renegotiate his offer belies any claim that he was merely awaiting the execution of a contract.

Disposition

The petition was denied, and the decision and resolution of the Court of Appeals were affirmed, with costs against the petitioners.

Remember This

The single line worth memorizing is that the Supreme Court will not review factual findings affirmed by the Court of Appeals, and that a valid rescission extinguishes the buyer's rights. Examiners like to use this case to test the limits of Rule 45 review and the distinction between a contract of sale and a contract to sell.