LINA CALILAP-ASMERON, PETITIONER, VS. DEVELOPMENT BANK OF THE PHILIPPINES, PABLO CRUZ, TRINIDAD CABANTOG, ENI S.P. ATIENZA AND EMERENCIANA CABANTOG, RESPONDENTS.

Lina Calilap-Asmeron versus Development Bank of the Philippines

The Case

This is a petition for review on certiorari brought by Lina Calilap-Asmeron against the Development Bank of the Philippines and the subsequent buyers of her foreclosed property. The petitioner asks the Supreme Court to set aside the rescission by the bank of a deed of conditional sale covering two parcels of land that had been foreclosed, and to annul the later sales of one of those lots to private respondents. The case matters because it is a compact lesson on three things every examinee must command: the strict limits of a petition for review on certiorari under Rule 45, which reaches only questions of law; the burden of proving bad faith and mistake; and the narrow reach of the protective rule in Article 1332 of the Civil Code, which shelters the illiterate, not the merely careless.

Procedural History

The petitioner commenced the action in the Regional Trial Court of Malolos, Bulacan, Branch 11, to set aside the bank's rescission of the deed of conditional sale and to annul the subsequent sales of the property to other persons. After trial, the Regional Trial Court rendered judgment dismissing the complaint, holding that the petitioner's own letters and telegrams showed she intended to reacquire both foreclosed lots, and that the clear terms of the contract bound her. The petitioner appealed to the Court of Appeals, which affirmed the trial court in a decision promulgated in June 2002. She then elevated the matter to the Supreme Court by petition for review on certiorari, commenced in April 2003, raising what she insisted were errors of law but which the Court characterized as questions of fact.

Facts

In March 1975, the petitioner and her brother constituted a real estate mortgage over two parcels of land in Malolos, Bulacan, in favor of the Development Bank of the Philippines to secure a loan. The principal obligation went unpaid, the bank foreclosed the mortgage, and the parcels were sold to the bank as the highest bidder. The one-year redemption period expired in September 1981.

Thereafter the petitioner sought to reacquire the properties. In a letter dated September 14, 1981, she expressed interest in reacquiring both parcels on an installment basis, and she followed this with telegrams and a letter dated August 31, 1982, offering to buy back both lots for 157,000 pesos, with a deposit of 55,500 pesos and the balance payable over five years on a quarterly amortization plan. The bank accepted, and the terms were embodied in a deed of conditional sale executed in January 1983. The petitioner paid the first quarterly amortization on time but later incurred delays, made her last payment of 4,500 pesos in March 1985, and left five quarterly amortizations unpaid. Despite her handwritten requests to hold any sale while she arranged financing, the bank demanded payment of her outstanding obligation of 121,013 pesos in cash, and when she did not pay, rescinded the deed of conditional sale in August 1985. The bank then sold the lot covered by one of the titles to respondent Pablo Cruz in November 1987, and Cruz later sold it to respondents Emerenciana Cabantog and Eni Atienza.

The petitioner's version was that she had always intended to buy back only the lot covered by one title, and that she had been made to believe that lot would be released after she paid two amortizations on the other, so that she was misled into signing the deed covering both lots. The trial court and the Court of Appeals both rejected this version, finding her bare testimony uncorroborated and contradicted by her own written communications.

Issues

• Whether or not the petition for review on certiorari may be entertained when it raises questions of fact rather than questions of law.
• Whether or not the Court of Appeals erred in upholding the bank's rescission of the deed of conditional sale despite the petitioner's claim that she had already paid a substantial portion of the consideration.
• Whether or not Article 1332 of the Civil Code applies to relieve the petitioner of the terms of the deed of conditional sale on the ground that she did not fully understand them.

Applicable Provisions

Section 1 of Rule 45 of the Rules of Court, in the version in force when the petition was filed, provides:

Section 1. Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.

This confines the Court's review to questions of law and is the ground on which the petitioner's factual submissions are rejected.

Article 1332 of the Civil Code provides:

Article 1332. When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.

The petitioner invokes this provision to escape the terms of the deed, but the Court holds it inapplicable because she was literate and understood the language of the contract.

Ruling

On the first issue, the Court held that the petition raised questions of fact, since resolving the petitioner's claims that she was misled and did not understand the deed would require a re-examination of the evidence. Under Rule 45, only questions of law may be raised, and the findings of fact of the Court of Appeals are conclusive and binding on the Court. The Court acknowledged its recognized exceptions to this rule but found that none applied, because the findings of the appellate court rested on the records.

On the second issue, the Court held that the bank validly rescinded the deed of conditional sale. The petitioner's bare allegation of having been misled was not proof, and as the party alleging a disputed fact she bore the burden of establishing it by preponderance of evidence, which she failed to discharge. Her own letters and telegrams expressed the singular intention to repurchase both lots, and the deed itself provided that upon her failure to pay the amortizations the contract could be deemed annulled at the vendor's option. The Court also noted that bad faith cannot be presumed and must be established by clear and convincing evidence, which she did not do.

On the third issue, the Court held that Article 1332 did not apply. The petitioner did not specify which stipulations she failed to understand; the terms were simply worded and plain enough for one with a slight knowledge of English to grasp; she was educated and had no difficulty understanding English; and by her own admission she had questioned the bank officer why the document was a deed of conditional sale rather than an absolute sale, which showed her full discernment of the transaction.

Doctrine

A petition for review on certiorari under Rule 45 raises only questions of law, and the findings of fact of the Court of Appeals are conclusive and binding on the Supreme Court, save only in the recognized exceptional circumstances, none of which obtained here. A party who alleges a disputed fact, such as having been misled into signing a contract, carries the burden of proving it by preponderance of evidence; a bare allegation is not proof, and bad faith cannot be presumed but must be shown by clear and convincing evidence. Article 1332 of the Civil Code, which requires the party enforcing a contract to show that its terms were fully explained, applies only where a party is unable to read or the contract is in a language not understood by him; it does not shelter a literate party who understood the language of the contract she signed.

Disposition

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, upholding the bank's rescission of the deed of conditional sale and the subsequent sales of the property.

Remember This

Memorize this line: Rule 45 admits only questions of law, and Article 1332 protects the illiterate, not the educated party who simply failed to read what she signed. Examiners use this case to test the limits of appellate review and the requisites of Article 1332 of the Civil Code.