Case Summary (G.R. No. 186329)
Factual Background
On September 4, 1987, the Valaraos, through their son Carlos Valarao, sold a parcel of land to Arellano for P3,225,000.00 under a contract stipulating payment in installments. The deed included provisions for automatic rescission if Arellano defaulted on three successive monthly payments. Arellano made significant payments, totaling P2,028,000.00 by September 1990, but failed to pay the installments due in October and November 1990, leading the Valaraos to assert that the contract was rescinded and the payments forfeited. Arellano contended that she attempted to make these payments but was refused by the Valaraos' maid, Mary Gonzales. Attempts to resolve the matter amicably through local officials were unsuccessful.
Court Decisions
The initial ruling by the Regional Trial Court declared the contract rescinded, forfeiting Arellano's payments and awarding the property and improvements to the Valaraos. The Court of Appeals reversed this decision, finding that the Valaraos' refusal to accept payment was unjustified and that Arellano's attempts to pay should have prevented rescission.
Issues Raised
The petitioners raised several key issues, including whether their actions constituted a judicial demand for rescission, the validity and enforcement of the automatic forfeiture clause, and whether Arellano could pursue a claim for consignation without actually depositing payment in court.
Court's Analysis on Demand and Forfeiture Clause
The Court of Appeals ruled that the Valaraos' attempt to rescind the contract without a proper judicial or notarial demand was insufficient under Article 1592 of the Civil Code, which applies solely to outright sales, not conditional sales. The Deed of Conditional Sale in this case was determined to function similarly to a contract to sell, wherein the title transfer remains with the vendor until full payment is made.
Enforcement of the Automatic Forfeiture Clause
While the Court acknowledged the validity of the automatic forfeiture clause, it emphasized that the Valaraos failed to prove that Arellano committed a breach of contract. The evidence demonstrated that Arellano was willing to pay the overdue installment payments, which the Valaraos unjustifiably refused to accept. Consequently, the Court concluded that the Valaraos could not enforce the forfeiture clause.
Consignation and Payment
The petitioners claimed that Arellano's inability to deposit the amount due invalidated her consignation. However, the Court found her actions—seeking to make payments despite the Valaraos' refusal—demonstrated her commitment to fulfilling her obligations under the contract. The Court asserted that because her refusal to accept payment led to the situation, Arellano's consignation claim held merit.
Application of Maceda Law
The Court discussed the implications
...continue readingCase Syllabus (G.R. No. 186329)
Case Background
- Petitioners: Abelardo Valarao, Gloriosa Valarao, and Carlos Valarao
- Respondents: Court of Appeals and Meden A. Arellano
- G.R. No.: 130347
- Date of Decision: March 03, 1999
- Nature of the Case: Petition for Review challenging the decision of the Court of Appeals which reversed the ruling of the Regional Trial Court (RTC) of Quezon City.
Procedural History
- The RTC originally ruled in favor of the petitioners, declaring a Deed of Conditional Sale automatically rescinded and ordering forfeiture of payments made by the private respondent.
- The Court of Appeals reversed this decision on June 13, 1997, leading to the petition before the Supreme Court.
- The petitioners also contested the CA's August 21, 1997 resolution denying their motion for reconsideration.
Facts of the Case
- Sale Agreement: On September 4, 1987, the petitioners sold a parcel of land to Meden Arellano under a Deed of Conditional Sale for P3,225,000.00, with payments structured in installments.
- Mortgage Requirement: The vendee was required to mortgage another property as security, which would be nullified upon full payment.
- Automatic Rescission Clause: The contract stipulated that failure to pay three successive monthly installments would result in automatic rescission without judicial intervention, with all payments forfeited.
- Payments Made: By September 1990, Arellano paid P2,028,000.00 but failed to pay installments due in October and November 1990.
- Refusal of Payment: Arellano attempted to pay the overd