GR 74781; (March, 1991) (Digest)
G.R. No. 74781; March 13, 1991
FRANCISCO S. PE AND ANITA MONASTERIO PE, petitioners, vs. HON. INTERMEDIATE APPELLATE COURT, DOMINGA SY, LILIA ONG, JOSE JUAN TONG, LILY LIM, ONG SEE FU alias ONG TO AN AND LUISA YU, respondents.
FACTS
Petitioners, the Pe spouses, were registered owners of five mortgaged lots. They entered into a Contract to Sell with respondent Domingo Sy for a total price of P620,000.00. A key stipulation provided that the buyer shall pay the sellers’ mortgage obligations to the respective banks, with such payments to be considered as payment for the corresponding lots. Upon release of the mortgage, the sellers would execute the final deed of sale. Respondents paid off the mortgages for four lots, and deeds of sale were executed, though stating lower nominal considerations. A dispute arose over Lot No. 47. The Pe spouses insisted the buyer must pay their entire obligation to PCIB (which had ballooned due to subsequent loans) and the full P620,000 price. The buyer offered only the mortgage amount for that lot. The Pe spouses failed to settle, leading to foreclosure. They then sued for specific performance, rescission, and reconveyance.
ISSUE
Whether the Contract to Sell obligated the buyer to pay both the specified mortgage debts and the separate, total consideration of P620,000.00 for the properties.
RULING
No. The Supreme Court affirmed the lower courts’ dismissal of the complaint. Applying Article 1370 of the Civil Code, the Court held the contract terms were clear and left no doubt as to the parties’ intention. Paragraph 2 of the contract did not stipulate an additional consideration but explicitly outlined the manner of payment: the buyer’s payment of the mortgage obligations to the bank constituted the payment for the lots themselves. The contract did not state that the P620,000.00 was payable on top of the mortgage debts. The subsequent acts of the parties, wherein deeds of sale were executed after mortgage payments for four lots, conformed to this interpretation. The increase in the obligation for Lot No. 47 was due to the petitioners’ subsequent separate loans, not the original mortgage covered by the contract. Contracts are binding as the law between the parties, and absent any illegality, their clear stipulations must be respected. The petitioners, experienced in business, were bound by the agreement they signed.