GR 259066; (December, 2023) (Digest)
G.R. No. 259066 , December 04, 2023
SALVADOR BUCE, PETITIONER, VS. HEIRS OF APOLONIO GALANG, REPRESENTED BY CRISPIN GALANG AS ATTORNEY-IN-FACT, RESPONDENTS.
FACTS
In January 1996, Salvador Buce and Apolonio Galang executed a “Conditional Sale” for an 80-square meter parcel of land. The contract stipulated a total price of PHP 64,000.00, with a PHP 10,000.00 down payment and a PHP 54,000.00 balance payable in monthly installments of PHP 1,000.00 starting April 1996. A clause imposed a 3% monthly interest on delayed payments. The contract further stated that upon full payment, the vendor would execute a deed of absolute sale. From 1996 to 2007, Buce made payments totaling PHP 72,000.00, exceeding the principal price, but his payments were irregular and he did not pay the stipulated interest for delays.
After Apolonio’s death, Buce demanded the execution of the deed of absolute sale. The heirs refused, prompting Buce to file a complaint for specific performance. The Regional Trial Court (RTC) granted the heirs’ demurrer to evidence and dismissed the complaint. It characterized the agreement as a contract to sell, not a conditional sale, and ruled that Buce’s failure to pay the full price with interest constituted a breach, preventing the obligation to execute the deed from arising. The Court of Appeals affirmed this decision.
ISSUE
Whether Salvador Buce is entitled to the execution of a deed of absolute sale and to reinstate the contract by paying the updated balance with accrued interest.
RULING
Yes. The Supreme Court reversed the lower courts’ rulings. It clarified that the agreement, despite its “Conditional Sale” title, was a contract to sell where ownership is reserved by the seller until full payment of the price. Crucially, the Court emphasized that in contracts to sell involving installment payments, the contract subsists and is not automatically rescinded upon a buyer’s default. A valid cancellation requires the seller to comply with statutory and contractual procedures, including a demand for payment and a notice of cancellation or rescission.
The records showed no evidence that the vendor, Apolonio Galang, or his heirs ever validly cancelled the contract through a notarial act or a judicial action for rescission. Mere failure to pay on time does not ipso facto extinguish the contract. Consequently, the contract remained in force. As the contract was not validly cancelled, Buce, as the defaulting buyer, retained the right to reinstate the same by paying the updated accounts. His payment of PHP 72,000.00 did not constitute full payment as it did not include the accrued 3% monthly interest on his delayed installments. Therefore, the Court ordered Buce to pay the balance of the purchase price plus the stipulated interest. Upon complete payment, the heirs of Apolonio Galang are required to execute the deed of absolute sale. The case was remanded to the RTC for the computation of the exact updated amount due.