Angeles v. Calasanz
REITERATIONFacts
The Antecedents: Plaintiffs-appellees (Angeles and Juani) entered into a contract to sell with defendants-appellants (Calasanz and Calasanz) for a parcel of land for P3,920.00 plus 7% interest per annum. Plaintiffs-appellees made a downpayment and paid monthly installments until July 1966, with an aggregate payment of P4,533.38. Defendants-appellants had a history of accepting delayed installment payments. Procedural History: Defendants-appellants cancelled the contract on January 28, 1967, due to plaintiffs-appellees' failure to meet subsequent payments, specifically for August 1966. Plaintiffs-appellees' plea for reconsideration was denied. Plaintiffs-appellees filed a case to compel the execution of a final deed of sale. The Court of First Instance of Rizal ruled in favor of the plaintiffs-appellees, declaring the cancellation invalid and ordering the execution of the deed of sale and payment of attorney's fees. Defendants-appellants appealed. The Petition: The case was certified to the Supreme Court as it involved only pure questions of law. The defendants-appellants argued that the contract was validly cancelled, and even if not, the lower court erred in ordering the execution of the deed of sale and awarding attorney's fees.
Issue(s)
Whether the contract to sell was legally and validly cancelled by the defendants-appellants. Whether the lower court erred in ordering the defendants to execute a final deed of sale in favor of the plaintiffs, assuming the contract was not validly cancelled. Whether the lower court erred in ordering the defendants to pay attorney's fees.
Ruling
The Supreme Court affirmed the decision of the lower court with a modification. The contract to sell was declared NOT VALIDLY cancelled. The defendants-appellants were ordered to execute a final deed of sale in favor of the plaintiffs-appellees upon payment of the remaining balance of P671.67 without interest. Attorney's fees were also affirmed.
Ratio Decidendi
On the validity of the cancellation: The Court held that the cancellation of the contract to sell by the defendants-appellants was not valid. While paragraph six of the contract allowed for cancellation upon default and expiration of the grace period, the Court emphasized that such extrajudicial rescission is always provisional and subject to judicial review. The defendants-appellants had consistently accepted delayed payments from the plaintiffs-appellees, even beyond the grace period. This consistent acceptance constituted a waiver of their right to demand strict compliance and estopped them from unilaterally cancelling the contract. The breach, in light of the substantial payments made and the near completion of the obligation, was considered slight and casual, not a substantial and fundamental breach that would defeat the object of the parties. On the execution of the deed of sale: The Court affirmed the order to execute the deed of sale. The plaintiffs-appellees had already paid P4,533.38, which exceeded the principal obligation of P3,920.00 plus interest. The contract, being a contract of adhesion, was construed against the defendants-appellants who drafted it. The Court found that the plaintiffs-appellees had substantially performed their obligation in good faith, entitling them to recover as though there had been strict fulfillment, less any damages. The defendants-appellants' attempt to apply the payments first to interest, leaving a balance, was deemed unfair given the substantial amount already paid and the nature of the contract. On attorney's fees: The Court affirmed the award of attorney's fees. Given that the plaintiffs-appellees were compelled to litigate to enforce their rights due to the defendants-appellants' improper cancellation and refusal to execute the deed of sale, the award of attorney's fees was deemed justified to compensate them for the expenses incurred in protecting their interests.
Main Doctrine
A contract to sell, even with a stipulation for automatic cancellation upon default, cannot be unilaterally cancelled by the seller without judicial intervention if the breach is slight or casual, especially when the seller has consistently accepted delayed payments, thereby waiving the right to strict compliance. Furthermore, contracts of adhesion must be construed against the party who drafted them.