Siska Development Corporation v. Office of the President
REITERATIONFacts
The Antecedents: Petitioner Siska Development Corporation (Siska) entered into a Contract to Sell with Guadalupe Sering for a lot in Mira-Nila Subdivision. Guadalupe Sering transferred her rights to respondents Spouses Jose and Socorro Sering, who assumed the monthly amortizations. The Spouses Sering defaulted on payments on several occasions, but Siska accepted late payments. Siska sent a notice of rescission on October 18, 1974, but cancelled it on November 12, 1974, after the Spouses Sering updated their payments, with the condition that future defaults would result in final rescission. The Spouses Sering again defaulted from January to September 1, 1975. When Jose Sering offered to pay the remaining balance on September 18, 1975, a Siska employee refused, claiming the contract was cancelled. Jose Sering protested, stating he had not received any notice of rescission. Procedural History: The Spouses Sering filed an action for specific performance in the Court of First Instance (CFI) of Surigao, which was dismissed due to improper venue. They filed another case in the CFI of Quezon City, which was dismissed for lack of jurisdiction, as the National Housing Authority (NHA) had exclusive jurisdiction. The case was transferred to the Human Settlements Regulatory Commission (HSRC). The Office of Appeals Adjudication and Legal Affairs (OAALA) of the HSRC denied specific performance and ordered Siska to refund P15,960.73. The HSRC affirmed this decision on appeal. The Spouses Sering then appealed to the Office of the President. The Petition: The Office of the President reversed the HSRC decision, directing Siska to execute a final deed of sale upon payment of the remaining balance of P9,341.24. The Order dated December 8, 1989, denied Siska's motion for reconsideration. Siska filed this petition for certiorari under Rule 65 of the Revised Rules of Court.
Issue(s)
Whether the Office of the President committed grave abuse of discretion in finding that the notice of rescission served no real purpose because it was not received by the respondents. Whether the Office of the President committed grave abuse of discretion in finding that the petitioner is estopped from insisting on rescission due to accepting delayed payments on several occasions. Whether the Office of the President committed grave abuse of discretion in ordering the petitioner to accept the remaining balance and issue the final deed of sale.
Ruling
The petition is DISMISSED. Petitioner Siska Development Corporation is ordered to accept the amount of P9,341.24, the balance of the purchase price, and to execute immediately the final deed of sale in favor of the respondent Spouses Sering.
Ratio Decidendi
On the issue of the notice of rescission: The Court affirmed the Office of the President's finding that the respondents never received the notice of rescission, which is a factual finding that will not be disturbed. Even if the contract provided for automatic rescission, jurisprudence requires a written notice to the defaulter informing them of the rescission. This requirement is also mandated by R.A. 6552 (Maceda Law), which requires notice of cancellation or demand for rescission by notarial act. The Court noted that even before the Maceda Law, jurisprudence required that the act of rescission be made known to the other party. The fact that Jose Sering went to petitioner's office to pay the balance without being informed of any rescission further supports the conclusion that no effective notice was given. On the issue of estoppel: The Court held that petitioner Siska is estopped from insisting on rescission because it had, on several occasions, accepted delayed payments beyond the grace period stipulated in the contract. The Court characterized the contract as having characteristics of a contract of adhesion, where private respondents had no opportunity to negotiate terms. By accepting delayed payments repeatedly, Siska waived its right to rescind the contract based on delay. The Court found that Siska's attempt to rescind based on the last delayed payment, after consistently tolerating previous delays, demonstrated bad faith and an attempt to unjustly enrich itself at the expense of the respondents. On the issue of ordering the execution of the deed of sale: The Court found that unilateral cancellation of a contract to sell is not warranted if the breach is slight or casual. In this case, the respondents had paid a substantial amount of the purchase price, and the remaining balance was relatively small. The willingness of the respondents to pay the full balance further indicated that the breach was not substantial enough to justify rescission. To sanction the rescission would work injustice to the respondents and unjustly enrich the petitioner, contrary to the principles of equity and the Civil Code.
Main Doctrine
The acceptance of delayed payments by a vendor, even if the contract stipulates automatic rescission upon default, may constitute a waiver of the right to rescind and estop the vendor from enforcing the rescission, especially when the breach is slight and the vendee is willing to pay the remaining balance. Furthermore, the notice of rescission requirement under R.A. 6552 (Maceda Law) is mandatory, even for contracts entered into prior to its effectivity, if the rescission occurs after its effectivity.