G.R. No. 179594 - Manuel Uy and Sons, Inc. vs. Valbueco, Inc.

Petitioner, Manuel Uy & Sons, Inc., owned four parcels of land in Teresa, Rizal, evidenced by Transfer Certificates of Title Nos. 59534, 59445, 59446, and 59444, covering areas from approximately 6,119 square meters to 32,047 square meters.
On November 29, 1973, petitioner executed two Conditional Deeds of Sale in favor of respondent, Valbueco, Incorporated.

The first conditional deed of sale covered TCT Nos. 59534, 59445, and 59446 and set forth a total purchase price of Php164,749.00 with specific terms regarding an initial payment, installment schedule with 12% interest per annum, a grace period for overdue installments, and conditions concerning mortgage release and clearance of unlawful occupants.
The second conditional deed of sale, covering TCT No. 59444, established a purchase price of Php208,–(split into an immediate payment and a balance payable within one year) with similarly detailed provisions on installment payments, grace period, mortgage discharge (with payments made payable to Philippine Trust Company), clearance of occupants, and stipulations on non-transferability of interests without consent.

Respondent made partial payments amounting to P275,055.55 as partial settlement corresponding to initial payments and first installments for the properties.
Petitioner complied with several contractual undertakings:

The mortgage for TCT No. 59446 was released on May 18, 1984, and those for TCT Nos. 59445 and 59534 were released on July 19, 1974.
Unlawful occupants of the properties surrendered possession in exchange for a nominal amount, with an agreement to demolish their shanties by a stipulated deadline.
The mortgage on TCT No. 59444, managed by the Philippine Trust Company, was discharged in 1984.

Despite these partial performances, respondent suspended further payment on the ground that petitioner had not satisfied its obligations (e.g., concerning mortgage discharge and clearance of occupants).

On March 17, 1978, petitioner sent respondent a letter indicating its intention to rescind the conditional deeds of sale by attaching the original notarial rescission copy, asserting that respondent’s failure to pay in full would render the contracts rescinded after a 30‑day period.
Respondent denied receipt of the notice and questioned the identification of the alleged recipient, noting discrepancies in the delivery address and employment relationship.
Litigation timeline:

Respondent first filed a Complaint for specific performance and damages on November 28, 1994, in the RTC of Antipolo City, which was dismissed without prejudice on January 15, 1996, due to lack of interest (failure to attend the pre-trial conference).
Subsequently, on March 16, 2001, respondent filed another Complaint in the RTC of Manila, Branch 1, seeking to compel petitioner to accept the remaining purchase price and execute the corresponding Deeds of Absolute Sale.

The trial court rendered a Decision on August 1, 2005, dismissing the complaint for lack of merit on the grounds that petitioner had lawfully exercised its right to rescind the contracts.
On appeal, the Court of Appeals reversed the RTC decision on December 11, 2006, reinstated respondent’s complaint, and directed petitioner to execute Deeds of Absolute Sale pending respondent’s payment of the balance of the purchase price.
Petitioner then filed a petition for review before the Supreme Court challenging the Court of Appeals’ ruling.

Whether the respondent is entitled to the relief granted by the Court of Appeals despite its failure to fully pay the purchase price as required by the contracts.

Did petitioner’s alleged rescission of the contracts under the terms stipulated in the conditional deeds of sale take effect due to respondent’s default in payment?
Was the proper procedure for rescission followed, particularly regarding the notice of notarial rescission?

Whether the service of the notice of rescission was valid and whether respondent actually received sufficient notice.

Was sending the notice to the address of Mahogany Products Corporation (instead of the agreed business address of respondent) legally effective?
Does the evidence demonstrate constructive receipt of the notice by respondent?

Whether the action for specific performance and damages is barred by the statute of limitations.

Given that the contracts are based on a written agreement, did the right of action expire within the prescribed ten-year period from the last installment due (November 15, 1974)?
How do the provisions of Article 1144 of the Civil Code apply in this context?

Considering the parties’ agreement that litigation should be held in Manila, was the filing in the RTC of Manila proper despite the properties being located in Antipolo City?

Whether penalizing petitioner for enforcing its right to rescind the contract, when respondent admitted non-payment and arguably breached the contract, constitutes an actionable wrong.