G.R. No. L-67207 August 26, 1985
ST. DOMINIC CORPORATION, petitioner, vs. INTERMEDIATE APPELLATE COURT, HON. AMANTE P. PURISIMA, Presiding Judge, Branch VII, Regional Trial Court of Manila, HON. ARSENIO M. GONONG, Presiding Judge, Branch VIII, Regional Trial Court of Manila, EVA A. ACOSTA & CONSTANTINO B. ACOSTA, respondents.

FACTS

Private respondents, the Acostas, entered into a Land Purchase Agreement with petitioner St. Dominic Corporation in 1967 for a lot in Quezon City. They paid a down payment and agreed to pay the balance in monthly installments. The contract stipulated automatic cancellation and rescission if the purchaser failed to pay any installment and did not cure the default within a 60-day grace period. The Acostas fell into arrears by about seven months. In April 1969, they tendered payment, but the petitioner rejected it, informing them that the contract had been cancelled as early as July 1968. The Acostas filed an action for specific performance. The trial court dismissed their complaint, declared the contract rescinded, and considered prior payments as rent. On appeal, the Court of Appeals reversed the trial court on October 21, 1981. It ruled the contract was not yet rescinded and gave the Acostas 60 days from receipt of the decision to pay the remaining balance to the petitioner. The Acostas received the decision on October 30, 1981.

ISSUE

The core issue is whether the private respondents made a timely consignation of the balance of the purchase price as ordered by the Court of Appeals in its 1981 decision.

RULING

The Supreme Court set aside the decision of the Intermediate Appellate Court and declared the Land Purchase Agreement rescinded. The legal logic centers on the finality of judgments and the protection of an innocent purchaser for value. The Court of Appeals’ 1981 decision became final and executory. The Acostas’ obligation was to pay the balance within 60 days from October 30, 1981, or by December 29, 1981. Their actual consignation was made only on October 25, 1982, nearly ten months after the deadline. This failure rendered the appellate court’s decision in their favor unenforceable. Crucially, during the pendency of the litigation and before the 1981 decision, petitioner had already sold the lot to Angel N. Panajon on August 24, 1981, who was a third party in good faith and for value, and had obtained a new title and built a house on the property. The law must protect this innocent third party who acquired rights based on the registered title. Equity also favored this outcome, as the petitioner had made several good-faith offers to settle, including returning all payments with interest or providing a substitute lot, which the Acostas unreasonably refused. Therefore, the contract is deemed rescinded, and the petitioner is ordered to return all amounts received from the Acostas with interest and pay moral and exemplary damages.