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[G.R. No. 146822. May 9, 2001]
FELICIANO BIGOTA vs. DEVELOPMENT BANK OF THE PHILS.
THIRD DIVISION
Gentlemen:
Quoted hereunder, for your information, is a resolution of this Court dated MAY 9, 2001.
G.R. No. 146822 (Feliciano Bigota vs. Development Bank of the Philippines.)
Before us is a petition seeking to review the decision of the Court of Appeals dated November 27, 2000 in its CA G.R. CV No. 49553 which set aside the decision of the lower court. No motion for reconsideration of the said decision was filed.
The present controversy involves a fishpond consisting of two parcels of land with a total area of 23,393 hectares located at Capaculan, Milagros, Masbate.
Sometime in July 1984, a certain Eladio Badia entered into a Conditional Sale with herein respondent Development Bank of the Philippines over the abovementioned parcels of land, pertinently providing:
1. That the consideration of the sale be SEVENTY-FOUR THOUSAND EIGHT HUNDRED NINETY & 70/100 (P74,890.70), on terms with a downpayment of P20,000.00 and the balance of P54,890.70 payable in six (6) years on the semi-annual amortization plan at 21% interest per annum. The first amortization of P8,254.29 shall be due and payable six (6) months from the date of the execution of the documents and all subsequent amortizations shall be due and payable every semi-annual thereafter.
Thereafter, the subject account went into arrears and from November 26, 1991, no further payments thereon were received by DBP. DBP thus notarially rescinded the contract with Eladio Badia on September 21, 1992, pursuant to the provision of the Deed of Conditional Sale-
7. That when the sales account falls in arrears, the corresponding conditional sales contract shall be open for rescission thru notarial act at the instance of the Bank.
On July 16, 1994, upon inquiry, herein petitioner Feliciano Bigota, was informed by DBP that the contract of conditional sale with Badia was already rescinded as early as September 21, 1992. Petitioner then notified DBP about the alleged transfer of rights over the fishpond by Eladio Badia in petitioner's favor which included the obligation to assume Badia's balance with DBP. Petitioner also manifested his intention to redeem the fishpond pursuant to the aforesaid transfer of rights. DBP rejected the offer, contending: a) that the contract entered into by Badia with DBP was a conditional sale and b) that the right of redemption is not available to petitioner Bigota.
Due to such refusal, Bigota filed an action for injunction and damages. The action also sought to nullify the rescission, with the prayer that the transfer of rights between Badia and petitioner be declared valid and binding upon DBP.
DBP filed an Answer with Counterclaim interposing the following defenses, to wit:
(1) The contract of sale involving the subject property was between defendant-appellant DBP and the spouses Eladio Badia and Imelda Vallejo. The contract embodied no stipulation pour autri of any kind in favor of plaintiff-appellee Feliciano Bigota. Hence, the validity or invalidity of the rescission cannot be questioned by plaintiff-appellee, who was not a party to the original contract.
(2) Plaintiff-appellee acted in bad faith in filing the present case because although the title to the property was not yet in his name, he arrogated unto himself the authority or power to lease, as he in fact leased, a portion thereof with an area of six hectares to a certain Linda Baes for three years, and had also offered the entire portion of the subject FLA No. 579 to a certain Abundio Lee for P1.4 million.
(3) Plaintiff is not the real party in interest and has failed to show that he is entitled to the reliefs prayed for in the complaint.
After due proceedings, the Regional Trial Court of Masbate, Branch 44, among other things, set aside the rescission and obligated DBP to recognize the sale between Badia and petitioner.
Expectedly, DBP appealed and not surprisingly the Court of Appeals sustained him, stating that DBP was correct in its assertion that petitioner was without personality to question the rescission for the simple reason that -petitioner has no existing contractual relation of any kind with DBP. Cited was Article 1311 of the New Civil Code which provides:
Contracts take effect only between parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property he received from the decedent.
If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person.
The Court of Appeals further stated that even granting ex gratia argumenti that petitioner had 'the personality to impugn the rescission, the fact remains that the said rescission is valid and binding on the parties because the contract itself provides for the right of rescission in case of non-payment of one semi-annual amortization. This provision was known to and agreed upon between the parties, hence it is binding on them. Needless to state, such provision in the contract is the law between the parties.
Hence, the instant petition which is unimpressed with merit.
Initially, the Court notes that the petition lacks the essential affidavit and proof of service upon the Court of Appeals, thus failing to comply with Sections 3 and 5, Rule 45 in relation with Section 5(d), Rule 56 and Section 13, Rule 13, which by themselves are sufficient grounds for dismissal.
Over and above these technical lapses is the fact that the issues and arguments raised by petitioner are too feeble and deserve scant consideration as they were sufficiently and correctly passed upon by the Court of Appeals.
The crux of the controversy is simple enough - whether or not the rescission of the conditional sale is valid or not. While the two courts below had conflicting decisions on this matter, suffice it to say that it is the ruling of the Court of Appeals which is proper.
The appellate court erred not when it ruled that the rescission through a notarial act was valid pursuant to a provision of the conditional contract of sale executed between the bank and Eladio Badia. One hardly be reminded of the cardinal rule that obligations arising from contracts have the force of law between the parties," for which reason they must be followed and observed in good faith. More noteworthy also is the fact that the one impugning the validity of the rescission is not even a party to the contract. He thus lacks the personality to question said contract.
WHEREFORE, the petition is denied due course.
SO ORDERED.
Very truly yours,
(Sgd.) JULIETA Y. CARREON
Clerk of Court
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