G.R. No. 186329 - Malaba vs. Sandiganbayan

On September 4, 1987, spouses Abelardo and Gloriosa Valarao, through their son Carlos Valarao (as attorney-in-fact), executed a Deed of Conditional Sale involving a parcel of land in the District of Diliman, Quezon City, covered by TCT No. 152879 with a total area of 1,504 square meters.
The sale price was set at P3,225,000.00, payable in installments according to a specified schedule.
The deed contained an automatic forfeiture clause stating that if the vendee failed to pay three successive monthly installments or any one year-end lump sum payment, the sale would be automatically rescinded without the necessity for judicial action.
Additionally, it was provided that the vendee’s separate property would be mortgaged in favor of the vendors as security, with the mortgage ceasing once the balance of P2,225,000.00 was fully paid.

The private respondent, Meden Arellano, claimed to have paid P2,028,000.00 by September 1990, acknowledging however that installments for October and November 1990 were not remitted on schedule.
On December 30 and 31, 1990, the private respondent attempted to pay the accumulated installment amount (P48,000.00 covering October, November, and December 1990) by tendering payment to Mary Gonzales, the vendors’ maid.
Mary Gonzales refused the tender, reportedly following orders from her employers, despite past instances when she had received payments on behalf of the vendors.
The respondent escalated the matter by consulting local barangay officials, and after unsuccessful attempts to resolve the disagreement through barangay meetings and direct contact with Gloriosa Valarao, she filed a petition for consignation on January 4, 1991, to address the non-acceptance of payment.

After the failed tender of payment, the vendors, through their counsel, sent a letter dated January 4, 1991, notifying the respondent that they were enforcing the rescission clause, thereby declaring the conditional sale null and the payments made forfeited as rentals, with all improvements on the property passing to the vendors.
A subsequent letter dated January 19, 1991, reiterated the vendors’ position by denying that tenders on December 30 and 31, 1990, were accepted and demanded that the respondent vacate the property and sign a lease for continued occupancy.
In response to the vendors’ actions and communications, the respondent filed the consignation case, and later, a Motion to Deposit the entire balance due. However, this motion was opposed by the vendors and subsequently denied by the trial court.

Whether the vendors’ communications (including the letter mandating rescission and the subsequent demand for vacation) amounted to a valid judicial demand or notarial act sufficient to trigger rescission under Article 1592 of the Civil Code.

Whether the automatic forfeiture clause stipulated in the deed—which provides for the forfeiture of payments made and the rescission of the contract upon non-payment of three consecutive monthly installments or one lump sum payment—is valid and enforceable given the nature of the contract.

Whether the action for consignation may give the vendee the effect of payment without an actual deposit in court, especially given that the respondent was willing to pay or deposit the balance due despite the vendors’ refusal to accept tender.