Case Digest (G.R. No. L-57552)
Facts:
Luisa F. McLaughlin v. The Court of Appeals and Ramon Flores, G.R. No. L-57552, October 10, 1986, Supreme Court Second Division, Feria, Acting C.J., writing for the Court.
On February 28, 1977, Luisa F. McLaughlin (petitioner) and Ramon Flores (private respondent) executed a deed of conditional sale for real property fixing the total purchase price at P140,000, with P26,550 paid at execution and the balance of P113,450 payable not later than May 31, 1977; the balance was to bear interest at 1% per month beginning December 1976. After alleged failure to pay the balance, petitioner filed a complaint for rescission on June 19, 1979 in the Court of First Instance of Rizal (Civil Case No. 33573).
The parties submitted a compromise agreement on December 27, 1979, incorporated in the court's January 22, 1980 decision. Under the compromise, private respondent acknowledged indebtedness of P119,050.71 and agreed to pay P50,000 upon signing and the balance of P69,059.71 in two equal installments on June 30, 1980 and December 31, 1980. He paid the P50,000 and an additional P25,000 described as an “escalation cost.” The compromise also required payment of P1,000 monthly rental from December 5, 1979 until full payment, and contained stipulations that, upon defendant's failure to comply, plaintiff could obtain a writ of execution rescinding the deed and that all payments made would be forfeited as liquidated damages.
Petitioner wrote on October 15, 1980 demanding payment of the P69,059.71 balance by October 31, 1980. On November 7, 1980 petitioner filed a Motion for Writ of Execution alleging default (including unpaid rentals) and prayed for rescission, forfeiture of payments, recovery of back rentals, and eviction. The Court of First Instance granted the motion on November 14, 1980. On November 17, 1980 private respondent filed a motion for reconsideration and tendered a Pacific Banking Corporation certified manager’s check for P76,059.71 (covering the balance and arrears); the trial court denied the motion on November 21, 1980, issued the writ on November 25, 1980, and on November 27, 1980 granted petitioner’s ex parte motion for clarification of the order of execution rescinding the deed.
Private respondent petitioned the Court of Appeals on November 28, 1980 for certiorari and prohibition to annul the trial court’s November 21 and 27 orders. The Court of Appeals granted relief, nullified the challenged orders, and directed the trial judge to order petitioner to accept respondent’s certified manager’s check (or equivalent) in full settlement, applying precedents that: (a) rescission is available only for substantial breaches (Song Fo & Co. v. Hawaiian‑Philippine Co.; Universal Food Corp. v. Court of Appeals), and (b) a certified/cashier’s/manager’s check is treated as cash (New Pacific Timber & Supply Co., Inc. v. Seneris and related authorities), and emphasizing the inequity of forfeiture given the large payments already made.
Petitioner sought review in this Court by appeal by certiorari. The Supreme Court considered competing arguments about the effect of the tender, the requirements of consignation under Articl...(Subscriber-Only)
Issues:
- Did the Court of Appeals correctly conclude that the trial court committed grave abuse of discretion in issuing the orders rescinding the deed of conditional sale?
- Did private respondent’s tender of a certified/manager’s check in the amount of P76,059.71 constitute a valid payment that barred rescission and preserved his rights as vendee?
- Was private respondent released from liability without consignation or deposit of the tendered funds with the court?
- Did Republic Act No. 6552 (the Maceda Law) or the parties’ penal clause in the compromise agreement control...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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