G.R. No. 34574 - Abella vs. Gonzaga

On April 28, 1967, petitioner, Siska Development Corporation (a subdivision owner-developer), entered into a Contract to Sell with Guadalupe Sering involving a lot situated at the Mira-Nila Subdivision in Quezon City.
On August 16, 1968, with petitioner’s consent, Guadalupe Sering transferred all her rights and interests over the lot to respondent Socorro Sering, wife of respondent Jose Sering, whereby private respondents assumed the transferor’s obligations by paying the monthly amortizations.

Private respondents defaulted on several monthly amortizations, yet petitioner accepted late payments on multiple occasions.
On October 18, 1974, petitioner sent a notice of rescission of the Contract to Sell due to delayed payments but subsequently canceled the notice on November 12, 1974 after private respondents updated their payments.
Petitioner imposed the condition that the account “must be kept current” and stipulated that a second rescission—if needed—would be final.

Private respondents defaulted again from January to September 1, 1975.
On September 18, 1975, respondent Jose Sering offered to pay the remaining balance of the purchase price; however, an employee of petitioner refused to accept the payment by alleging that the contract had already been canceled.
Respondent Jose Sering protested that he had not received any notice of rescission from petitioner.

To compel the execution of the final deed of sale, private respondents filed an action for specific performance in the Court of First Instance of Surigao.
The trial court’s order (upholding venue) was questioned on appeal; the Court of Appeals later ruled in favor of petitioner, dismissing the case.
A subsequent case filed in the Court of First Instance of Quezon City was dismissed on the ground that under P.D. No. 957 the National Housing Authority (NHA) had exclusive jurisdiction, leading to another complaint with the NHA.

The case was transferred to the HSRC by virtue of Executive Order No. 648, dated February 7, 1981 (HSRC Case No. REM-A-0156).
The Office of Appeals Adjudication and Legal Affairs (OAALA) of the HSRC denied private respondents’ request for specific performance and directed petitioner to refund P15,960.73 to private respondents.
After a motion for reconsideration was denied, the HSRC in its resolution dated May 16, 1986, dismissed the appeal for lack of merit and affirmed the decision of the OAALA.

Dissatisfied with the HSRC resolution, private respondents elevated the case to the Office of the President.
On November 23, 1988, the Office of the President ruled that there was no effective notice of rescission since private respondents never received it, and that petitioner's past acceptance of delayed payments constituted an estoppel preventing rescission.
The ruling emphasized that petitioner’s unilateral cancellation of the contract was inequitable, especially in light of private respondents’ readiness to settle the remaining balance.

The contract’s paragraph 6 provided that if a default period of 90 days elapsed, the contract would automatically become null and void without further formality.
Petitioner argued that a notice of rescission was not necessary under paragraph 6, while the Maceda Law (R.A. 6552) required a written notice of cancellation.
Additionally, petitioner asserted that acceptance of delayed payments should not be deemed a waiver or estoppel of its right to cancel according to paragraph 9 of the contract.

Whether the respondent Office of the President committed a grave abuse of discretion in finding that the notice of rescission sent by petitioner to the respondent spouses served no real purpose, given that it was not received by them.
Whether the acceptance of multiple delayed payments by petitioner constitutes waiver or estoppel, thereby preventing petitioner from insisting on rescission of the Contract to Sell.
Whether the order compelling petitioner to accept the remaining balance of P9,341.24 as full payment and execute the final deed of sale constitutes a grave abuse of discretion.