Nameal, Bonrostro vs. Luna

[Civil Law: Obligation; consignation; judicial in character]

Spouses Nameal and Lourdes Bonrostro, Petitioners,   

vs.  

Spouses Juan and Constancia Luna, Respondents.

G.R. No. 172346, July 24, 2013

Facts:  Constancia Luna, as buyer, entered into a contract to sell with Bliss Development Corporation involving a house located in Quezon City. A year after, Luna sold it to Lourdes Bonrostro under the ff. terms:

The stipulated price of P1,250,000.00 shall be paid by the VENDEE to the VENDOR in the following manner:
(a)  P200,000.00 upon signing x x x [the] Contract To Sell,
(b)  P300,000.00 payable on or before April 30, 1993,
(c)  P330,000.00 payable on or before July 31, 1993,
(d)  P417,000.00 payable to the New Capitol Estate, for 15 years at [P6,867.12] a month,

x x x [I]n the event the VENDEE fails to pay the second installment on time, [t]he VENDEE will pay starting May 1, 1993 a 2% interest on the P300,000.00 monthly.  Likewise, in the event the VENDEE fails to pay the amount of P630,000.00 on the stipulated time, this CONTRACT TO SELL shall likewise be deemed cancelled and rescinded and x x x 5% of the total contract price [of] P1,250,000.00 shall be deemed forfeited in favor of the VENDOR.  Unpaid monthly amortization shall likewise be deducted from the initial down payment in favor of the VENDOR. After execution of the contract, Bonrostro took possession of the property. However, except for P200,000.00 downpayment, she failed to pay subsequent amortization. Luna then filed before the RTC a Complaint for Rescission of Contract and Damages. This is a petition for review on certiorari assailing the decision of CA affirming with modification the decision of RTC in favor herein respondents.

Issue:  Whether or not delay in the payment of installment is a substantial breach of obligation as to warrant its rescission.

Ruling:   No, in a contract to sell, payment of the price is a positive suspensive condition. Failure of which is not a breach of contract warranting rescission under Article 1191 of the Civil Code, but rather just an event that prevents the supposed seller from being bound to convey title to the supposed buyer. The contract to sell entered by the parties refers to real property on installment basis, in which Art. 1191 cannot apply since they are governed by the Maceda Law. However, there being no breach, Bonrostro is still not excused from being made liable for interest on the installments due from the date of default until fully paid. Tender of payment, a manifestation by the debtor of a desire to comply with or pay an obligation, asserted by Bonrostro for the accrual of interest to be suspended is not a valid defense because for a tender of payment to take effect it must be accompanied by the means of payment and debtor must take immediate step to make a consignation, the deposit of the proper amount with a judicial authority, then interest is suspended from the time of such tender.