THIRD DIVISION

[G.R. No. 130347. March 3, 1999.]

ABELARDO VALARAO, GLORIOSA VALARAO and CARLOS VALARAO ,

petitioners, vs . COURT OF APPEALS and MEDEN A. ARELLANO ,
respondents.

De Castro & Cagampang Law Offices for petitioners.

Quijano & Padilla Law Offices for private respondent.

SYNOPSIS

Petitioners sold to private respondents under a Deed of Conditional Sale a parcel of

land for the sum of Three Million Two Hundred Twenty Five Thousand Pesos
(P3,225,000.00) payable under a schedule of payment stated therein. The Deed of
Conditional Sale provided, among others, for automatic rescission in case the vendee
failed to pay three (3) successive monthly installments or any one year-end lump sum
payment within the stipulated period therein. As of September, 1990 private respondent
had already paid the amount of Two Million Twenty-Eight Thousand Pesos
(P2,028,000.00). Private respondent, however, failed to pay the installments for October
and November, 1990. Since petitioner's maid had received monthly installment payment in
the past, private respondent, on December 30 and 31, 1990, offered to pay to the maid the
total amount of the three monthly installments due. However, petitioner's maid refused to
accept the payments allegedly upon instructions of petitioners. Four days later, private
respondent led a Petition for Consignation before the Regional Trial Court of Quezon City.
Petitioners, on the other hand, noti ed private respondent that they were enforcing the
provision on automatic rescission and demanded that the subject property be vacated.
The RTC ruled in favor of petitioners and declared the Deed of Conditional Sale as
automatically rescinded and all payments made thereunder by private respondent
forfeited in favor of petitioners. On appeal, the Court of Appeals reversed and set aside the
decision of the trial court. Hence, this petition. cITAaD

The Supreme Court held that petitioners were not justi ed in refusing to accept the
tender of payment made by private respondent. There was no deliberate failure on her part
to meet her responsibility to pay. The court took notice of her willingness and persistence
to do so. Thus, petitioners have no reason to demand the enforcement of the automatic
forfeiture clause. They cannot be rewarded for their own misdeed. Moreover, petitioners
were estopped from denying that their maid had authority to accept private respondent's
tender of payment. In addition, it would be inequitable to allow the forfeiture of the amount
of more than two million pesos already paid by private respondent, a sum which
constitutes two-thirds of the total consideration. In any event, the rescission of the
contract and the forfeiture of the payments already made could not be effected because
the case falls squarely under Republic Act No. 6552, otherwise known as the "Maceda
Law." Accordingly, private respondent was entitled to a one-month grace period for every
year of installments paid, which means that she had a total grace period of three months
from December 31, 1990.

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 SYLLABUS

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT TO SELL

DIFFERENTIATED FROM CONTRACT OF SALE. — We believe, however, that the issue of
whether the requirement of a judicial demand or a notarial act has been ful lled is
immaterial to the resolution of the present case. It is well-settled that Article 1592 of the
Civil Code applies only to a contract of sale, and not to a sale on installment or a contract
to sell. Thus, in Luzon Brokerage v. Maritime Building , this Court ruled that "Art. 1592 of the
new Civil Code (Art. 1504 of the old Civil Code) requiring demand by suit or notarial act in
case the vendor of realty wants to rescind does not apply to a contract to sell or promise
to sell, where title remains with the vendor until" full payment of the price. The Court
stresses the difference between these two types of contract. In a contract to sell, " the title
over the subject property is transferred to the vendee only upon the full payment of the
stipulated consideration. Unlike in a contract of sale, the title does not pass to the vendee
upon the execution of the agreement or the delivery of the thing sold."
2. ID.; ID.; AGREEMENT IN CASE AT BAR, CONSIDERED AS CONTRACT TO SELL.
— In the present case, the Deed of Conditional Sale is of the same nature as a sale on
installment or a contract to sell, which is not covered by Article 1592. Petitioners-vendors
unmistakably reserved for themselves the title to the property until full payment of the
purchase price by the vendee. Clearly, the agreement was not a deed of sale, but more in
the nature of a contract to sell or of a sale on installments. Even after the execution of the
Deed of Conditional Sale, the Torrens Certi cate of Title remained with and in the name of
the vendors. In rejecting the application of Article 1592 to a contract to sell, the Court held
in Luzon Brokerage that "the full payment of the price (through the punctual performance
of the monthly payments) was a condition precedent to the execution of the nal sale and
to the transfer of the property from [the vendor] to the [vendee]; so that there was to be no
actual sale until and unless full payment was made."
3. ID.; ID.; DEED OF CONDITIONAL SALE; VENDOR HAS THE RIGHT TO DEMAND
ENFORCEMENT OF CONTRACT UPON PROOF OF VENDEE'S NON-PERFORMANCE OF HIS
OBLIGATION. — As a general rule, a contract is the law between the parties. Thus, "from the
moment the contract is perfected, the parties are bound not only to the ful llment of what
has been expressly stipulated but also to all consequences which, according to their
nature, may be in keeping with good faith, usage and law." Also, "the stipulations of the
contract being the law between the parties, courts have no alternative but to enforce them
as they were agreed [upon] and written, there being no law or public policy against the
stipulated forfeiture of payments already made." However, it must be shown that private
respondent-vendee failed to perform her obligation, thereby giving petitioners-vendors the
right to demand the enforcement of the contract.
4. ID.; ID.; ID.; AUTOMATIC FORFEITURE CLAUSE; ENFORCEMENT THEREOF
REQUIRES PROOF OF CONTRACTUAL BREACH ON THE PART OF THE VENDEE. — Article
1592 of the Civil Code applies only to contracts of sale, and not to contracts to sell or
conditional sales where title passes to the vendee only upon full payment of the purchase
price. Furthermore, in order to enforce the automatic forfeiture clause in a deed of
conditional sale, the vendors have the burden of proving a contractual breach on the part
of the vendee.
5. ID.; ID.; ID.; ID.; VALIDITY THEREOF UPHELD IN CASE AT BAR. — We concede
the validity of the automatic forfeiture clause, which deems any previous payments
forfeited and the contract automatically rescinded upon the failure of the vendee to pay
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 three successive monthly installments or any one year-end lump sum payment. However,
petitioners failed to prove the conditions that would warrant the implementation of this
clause.
6. ID.; ID.; ID.; ID.; ENFORCEMENT THEREOF CANNOT BE DEMANDED IN THE
ABSENCE OF DELIBERATE FAILURE ON THE PART OF THE VENDEE TO PAY. — From the
foregoing, it is clear that petitioners were not justi ed in refusing to accept the tender of
payment made by private respondent on December 30 and 31, 1990. Had they accepted it
on either of said dates, she would have paid all three monthly installments due. In other
words, there was no deliberate failure on her part to meet her responsibility to pay. The
Court takes notes of her willingness and persistence to do so, and, petitioners cannot now
say otherwise. The fact is: they refused to accept her payment and thus have no reason to
demand the enforcement of the automatic forfeiture clause. They cannot be rewarded for
their own misdeed.
7. ID.; ID.; ID.; ID.; FORFEITURE OF PAYMENTS MADE CONSIDERED
INEQUITABLE WHERE SUCH PAYMENT CONSTITUTES TWO-THIRDS OF THE TOTAL
CONSIDERATION. — True, there is no showing that she deposited the money with the
proper judicial authority which, taken together with the other requisites for a valid
consignation, would have released her from her obligation to pay. However, she does not
deny her obligation and, in fact, is willing to pay not only the three monthly installments due
but also the entire residual amount of the purchase price. Verily, she even led a Motion to
Deposit the said entire balance with the trial court, which however denied said motion upon
opposition of the petitioners. Accordingly, we agree with the Court of Appeals that it would
be inequitable to allow the forfeiture of the amount of more than two million pesos already
paid by private respondent, a sum which constitutes two-thirds of the total consideration.
Because she did make a tender of payment which was unjusti ably refused, we hold that
petitioners cannot enforce the automatic forfeiture clause of the contract.
8. ID.; ID.; ID.; REPUBLIC ACT NO. 6552, OTHERWISE KNOWN AS THE "MACEDA
LAW," APPLIED IN CASE AT BAR. — In any event, the rescission of the contract and the
forfeiture of the payments already made could not be effected, because the case falls
squarely under Republic Act No. 6552, otherwise known as the "Maceda Law." Hence, the
private respondent was entitled to a one-month grace period for every year of installments
paid, which means that she had a total grace period of three months from December 31,
1990. Indeed, to rule in favor of petitioner would result in patent injustice and unjust
enrichment. This tribunal is not merely a court of law, but also a court of justice.
9. ID.; ESTOPPEL; PETITIONERS ARE ESTOPPED FROM DENYING AUTHORITY
OF THEIR MAID TO ACCEPT RESPONDENT'S TENDER OF PAYMENT. — Because their maid
had received monthly payments in the past, it is futile for petitioners to insist now that she
could not have accepted the aforementioned tender of payment, on the ground that she
did not have a special power of attorney to do so. Clearly, they are estopped from denying
that she had such authority. Under Article 1241 of the Civil Code, payment through a third
person is valid "[I]f by the creditor's conduct, the debtor has been led to believe that the
third person had authority to receive the payment."

DECISION

PANGANIBAN , J : p

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 Article 1592 of the Civil Code applies only to contracts of sale, and not to contracts
to sell or conditional sales where title passes to the vendee only upon full payment of the
purchase price. Furthermore, in order to enforce the automatic forfeiture clause in a deed
of conditional sale, the vendors have the burden of proving a contractual breach on the
part of the vendee.
The Case
Before us is a Petition for Review assailing the June 13, 1997 Decision of the Court
of Appeals (CA) 1 which reversed and set aside the October 10, 1994 Decision 2 of the
Regional Trial Court (RTC) of Quezon City, Branch 82. The dispositive portion of the
assailed CA Decision reads:
"WHEREFORE, the decision appealed from is REVERSED and SET ASIDE,
and a new one is entered (1) ordering [herein private respondent] to pay the
amount of [o]ne [m]illion [o]ne [h]undred [n]inety [s]even [t]housand [p]esos
(P1,197,000.00) in favor of [herein petitioners], with legal interest thereon from
December 31, 1992; (2) and directing [herein petitioners] to execute in favor of
[herein respondent], upon receipt of the aforesaid amount, the nal and absolute
deed of sale of the subject property with all the improvements." 3

Also assailed by petitioners is the August 21, 1997 CA Resolution denying

reconsideration.
The aforementioned RTC Decision, which was reversed and set aside by the CA,
disposed as follows:
"WHEREFORE, premises considered, judgment is hereby rendered declaring
the aforesaid Deed of Conditional Sale as automatically rescinded and all
payments made thereunder by the [private respondent] to the [petitioners] as
forfeited in favor of the latter, by way of rentals and as liquidated damages, as
well as declaring all improvements introduced on the property subject to the said
Deed of Condition[al] Sale to belong to the [petitioners] without any right of
reimbursement. Further, the [private respondent] and all persons claiming right
under her are hereby ordered to vacate the said property and to turnover
possession thereof to the [petitioners]. FINALLY, the [private respondent] is hereby
ordered to pay to the [petitioners] the amount of P50,000.00 as attorney's fees
and for expenses of litigation, as well as to pay the costs of the suit. The Writ of
Preliminary Injunction previously issued is hereby ordered LIFTED and
DISSOLVED, and the bond posted for its issuance held liable for the satisfaction
of the money judgment herein made in favor of the [petitioners]." 4 cdtai

The Facts
The undisputed facts of the case as narrated by the Court of Appeals are as follows:
"On September 4, 1987, spouses Abelardo and Gloriosa Valarao, thru their
son Carlos Valarao as their attorney-in-fact, sold to [Private Respondent] Meden
Arellano under a Deed of Conditional Sale a parcel of land situated in the District
of Diliman, Q.C., covered by TCT No. 152879 with an area of 1,504 square meters,
for the sum of THREE MILLION TWO HUNDRED TWENTY FIVE THOUSAND
PESOS (P3,225,000.00) payable under a schedule of payment stated therein.
"In the same Deed of Conditional Sale, the [private respondent] vendee
obligated herself to encumber by way of real estate mortgage in favor of
[petitioners] vendors her separate piece of property with the condition that upon
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 full payment of the balance of P2,225.000.00, the said mortgage shall become
null and void and without further force and effect. (Item No. 3, pp. 2-3 of Deed of
Conditional Sale).

"It was further stipulated upon that should the vendee fail to pay three (3)
successive monthly installments or any one year-end lump sum payment within
the period stipulated, the sale shall be considered automatically rescinded without
the necessity of judicial action and all payments made by the vendee shall be
forfeited in favor of the vendors by way of rental for the use and occupancy of the
property and as liquidated damages. All improvements introduced by the vendee
to the property shall belong to the vendors without any right of reimbursement.
(Par. (2), Item No. 3, p. 3 of Deed of Conditional Sale).
"[Private respondent] appellant alleged that as of September, 1990, she had
already paid the amount of [t]wo [m]illion [t]wenty-[e]ight [t]housand
(P2,028,000.00) [p]esos, although she admitted having failed to pay the
installments due in October and November, 1990. Petitioner, however, [had] tried
to pay the installments due [in] the said months, including the amount due [in] the
month of December, 1990 on December 30 and 31, 1990, but was turned down by
the vendors-[petitioners] thru their maid, Mary Gonzales, who refused to accept
the payment offered. [Private respondent] maintains that on previous occasions,
the same maid was the one who [had] received payments tendered by her. It
appears that Mary Gonzales refused to receive payment allegedly on orders of her
employers who were not at home. LLpr

"[Private respondent] then reported the matter to, and sought the help of,
the local barangay o cials. Efforts to settle the controversy before the barangay
proved unavailing as vendors-[petitioners] never appeared in the meetings
arranged by the barangay lupon.
"[Private respondent] tried to get in touch with [petitioners] over the phone
and was able to talk with [Petitioner] Gloriosa Valarao who told her that she
[would] no longer accept the payments being offered and that [private respondent]
should instead confer with her lawyer, a certain Atty. Tuazon. When all her efforts
to make payment were unsuccessful, [private respondent] sought judicial action
by filing this petition for consignation on January 4, 1991.

"On the other hand, vendors-[petitioners], thru counsel, sent [private

respondent] a letter dated 4 January 1991 (Exh. 'C') notifying her that they were
enforcing the provision on automatic rescission as a consequence of which the
Deed of Conditional Sale [was deemed] null and void, and . . . all payments made,
as well as the improvements introduced on the property, [were] thereby forfeited.
The letter also made a formal demand on the [private respondent] to vacate the
property should she not heed the demand of [petitioners] to sign a contract of
lease for her continued stay in the property (p. 2 of Letter dated Jan. 4, 1991; Exh.
'C').

"In reply, [private respondent] sent a letter dated January 14, 1991 (Exh. 'D'),
denying that she [had] refused to pay the installments due [in] the months of
October, November and December, and countered that it was [petitioners] who
refused to accept payment, thus constraining her to le a petition for
consignation before the Regional Trial Court of Quezon City docketed as Civil
Case No. Q-91-7603.
"Notwithstanding their knowledge of the ling by [private respondent] of a
consignation case against them in the Regional Trial Court of Quezon City
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 docketed as Civil Case No. Q-91-7603, [petitioners], through counsel, sent the
[private respondent] another letter dated January 19, 1991 (Exh. 'F'), denying the
allegations of her attempts to tender payment on December 30 and 31, 1990, and
demanding that [private respondent] vacate and turnover the property and pay a
monthly compensation for her continued occupation of the subject property at the
rate of P20,000.00, until she shall have vacated the same." LLjur

Ruling of the Court of Appeals

In reversing the Regional Trial Court, the Court of Appeals held that the refusal of
herein petitioners "to accept the tender of payment was unjusti ed." Notwithstanding the
stipulation in the Deed of Conditional Sale that "the rescission of the contract shall of right
take place" upon the failure of the vendee to pay three successive monthly installments,
the appellate court observed that a judicial demand or a notarial act was still required
pursuant to Article 1592 of the Civil Code. Thus, petitioners' letter informing private
respondent of the rescission of the contract did not su ce, for it was not notarized. The
CA also observed that "the alleged breach of contract arising from the failure of the vendee
to pay the monthly installments for October and November 1990 within the stipulated time
is rather slight and not substantial, and to authorize the automatic rescission on account
thereof will work injustice to the other party, who has paid a total of P2,028,000.00 out of a
total obligation of P3,225,000.00. The rule is that rescission cannot be availed of as to
unjustly enrich one party."
The Issues
In their Memorandum before us, petitioners raise the following issues: 5
"I Whether the Answer [— (a)] categorically indicating willingness to
accept the amount already due if the [private respondent] would update the
account, [(b)] praying that 'if she fail[ed] to do so immediately, . . . the Deed of
Conditional Sale be declared rescinded, pursuant to the second paragraph of
Section 3 thereof, with costs against the [private respondent], [(c)] ordering the
latter to vacate and turn over possession of the premises to the [petitioners], and
to pay the latter attorney's fees in the amount of P50,000.00 and the expenses of
litigation' [—] is tantamount to a judicial demand and notice of rescission under
Art. 1592 of the Civil Code.
"II Whether the automatic forfeiture clause is valid and binding
between the parties."
"III Whether the action for consignation may prosper without actual
deposit [in court] of the amount due . . . [so as] to produce the effect of payment."
LLphil

The Court's Ruling

The petition 6 is devoid of merit.
Preliminary Matter:
Notarial or Judicial Demand
Citing Article 1592 of the Civil Code, the Court of Appeals ruled that the petitioners'
letter dated January 4, 1991, could not effect the rescission of the Deed of Conditional
Sale, because the said letter was not notarized. On the other hand, petitioners argue that
they made a judicial demand, which was embodied in their Manifestation led on May 1,
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 1991, and Answer submitted on July 1, 1991. 7
We believe, however, that the issue of whether the requirement of a judicial demand
or a notarial act has been ful lled is immaterial to the resolution of the present case.
Article 1592 of the Civil Code states:
"ART. 1592. In the sale of immovable property, even though it may
have been stipulated that upon failure to pay the price at the time agreed upon the
rescission of the contract shall of right take place, the vendee may pay, even after
the expiration of the period, as long as no demand for rescission of the contract
has been made upon him either judicially or by notarial act. After the demand, the
court may not grant him a new term."

It is well-settled that the above-quoted provision applies only to a contract of sale, 8

and not to a sale on installment 9 or a contract to sell. 1 0 Thus, in Luzon Brokerage v.
Maritime Building, 1 1 this Court ruled that "Art. 1592 of the new Civil Code (Art. 1504 of the
old Civil Code) requiring demand by suit or notarial act in case the vendor of realty wants
to rescind does not apply to a contract to sell or promise to sell, where title remains with
the vendor until" full payment of the price. The Court stresses the difference between these
two types of contract. In a contract to sell, "the title over the subject property is
transferred to the vendee only upon the full payment of the stipulated consideration. Unlike
in a contract of sale, the title does not pass to the vendee upon the execution of the
agreement or the delivery of the thing sold." 1 2
In the present case, the Deed of Conditional Sale is of the same nature as a sale on
installment or a contract to sell, which is not covered by Article 1592. The aforementioned
agreement provides: Cdpr

"xxx xxx xxx

"Should the VENDEE fail to pay three (3) successive monthly
installments or any one year-end lump sum payment within the period
stipulated herein, this Deed of Conditional Sale shall be considered . . .
automatically rescinded without the necessity of judicial action[,] and all
payments made by the VENDEE shall be forfeited in favor of the VENDORS
by way of rental for the use and occupancy of the property and as
liquidated damages. All improvements introduced by the VENDEE to the
property shall belong to the VENDORS without any right of reimbursement.
The VENDORS and/or their agents or representatives shall have the right to
enter the premises of the property and to eject the VENDEE and all persons
claiming right under her therefrom with the use of reasonable force if
necessary.
That upon full payment to the VENDORS of the total consideration of
P3,225,000.00, the VENDORS shall immediately and without delay execute in
favor of the VENDEE the nal and absolute deed of sale of the property and all its
improvements."

Petitioners-vendors unmistakably reserved for themselves the title to the property

until full payment of the purchase price by the vendee. Clearly, the agreement was not a
deed of sale, but more in the nature of a contract to sell or of a sale on installments. 1 3
Even after the execution of the Deed of Conditional Sale, the Torrens Certi cate of Title
remained with and in the name of the vendors. In rejecting the application of Article 1592
to a contract to sell, the Court held in Luzon Brokerage 1 4 that "the full payment of the price
(through the punctual performance of the monthly payments) was a condition precedent
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 to the execution of the final sale and to the transfer of the property from [the vendor] to the
[vendee]; so that there was to be no actual sale until and unless full payment was made." cdlex

Main Issue: Enforcement of the

Automatic Forfeiture Clause
As a general rule, a contract is the law between the parties. 1 5 Thus, "from the
moment the contract is perfected, the parties are bound not only to the ful llment of what
has been expressly stipulated but also to all consequences which, according to their
nature, may be in keeping with good faith, usage and law." 1 6 Also, "the stipulations of the
contract being the law between the parties, courts have no alternative but to enforce them
as they were agreed [upon] and written, there being no law or public policy against the
stipulated forfeiture of payments already made." 1 7 However, it must be shown that private
respondent-vendee failed to perform her obligation, thereby giving petitioners-vendors the
right to demand the enforcement of the contract.
We concede the validity of the automatic forfeiture clause, which deems any
previous payments forfeited and the contract automatically rescinded upon the failure of
the vendee to pay three successive monthly installments or any one yearend lump sum
payment. However, petitioners failed to prove the conditions that would warrant the
implementation of this clause.
Both the appellate and the trial courts agree on the following:
1. The Deed of Conditional Sale provided for automatic rescission in
case the vendee failed to pay three (3) successive monthly
installments or any one yearend lump sum payment within the
stipulated period therein.
2. Each monthly installment was due at the end of the month.
3. The installments for October and November 1990 were not paid.
4. The private respondent-vendee, Meden Arellano, went to the house of
the petitioners-vendors on December 30, 1990.
5. Arellano offered to pay P48,000 (total amount of installments due in
October, November, and December 1990) to Mary Gonzales, the
petitioner's maid, but the latter refused to accept it upon instruction
of petitioners.
6. Arellano returned the next day, December 31, 1990, and insisted on
paying, but again the maid refused to accept it.
7. Arellano proceeded to the barangay o ce around 10:00 a.m. to le a
case against petitioners for their refusal to accept the payments.
8. Four (4) days later, on January 4, 1991, private respondents led a
Petition for Consignation.
9. Despite the said petition, the money was nevertheless not deposited
in court.
10. Negotiations between both parties went under way, culminating in
the vendee's ling a Motion to Deposit the entire balance due, which
was duly opposed by the vendor, and hence was denied by the trial
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 court. Cdpr

From the foregoing, it is clear that petitioners were not justi ed in refusing to accept
the tender of payment made by private respondent on December 30 and 31, 1990. Had
they accepted it on either of said dates, she would have paid all three monthly installments
due. In other words, there was no deliberate failure on her part to meet her responsibility to
pay. 1 8 The Court takes note of her willingness and persistence to do so, and, petitioners
cannot now say otherwise. The fact is: they refused to accept her payment and thus have
no reason to demand the enforcement of the automatic forfeiture clause. They cannot be
rewarded for their own misdeed.
Because their maid had received monthly payments in the past, 1 9 it is futile for
petitioners to insist now that she could not have accepted the aforementioned tender of
payment, on the ground that she did not have a special power of attorney to do so. Clearly,
they are estopped from denying that she had such authority. Under Article 1241 of the Civil
Code, payment through a third person is valid "[i]f by the creditor's conduct, the debtor has
been led to believe that the third person had authority to receive the payment."
Failure to Consign the
Amount Due
Petitioners also maintain that the consignation was not valid because the amount
tendered was not deposited with the trial court. True, there is no showing that she
deposited the money with the proper judicial authority which, taken together with the other
requisites for a valid consignation, 2 0 would have released her from her obligation to pay.
However, she does not deny her obligation and, in fact, is willing to pay not only the three
monthly installments due but also the entire residual amount of the purchase price. Verily,
she even led a Motion to Deposit the said entire balance with the trial court, which
however denied said motion upon opposition of the petitioners. 2 1
Accordingly, we agree with the Court of Appeals that it would be inequitable to allow
the forfeiture of the amount of more than two million pesos already paid by private
respondent, a sum which constitutes two thirds of the total consideration. Because she
did make a tender of payment which was unjusti ably refused, we hold that petitioners
cannot enforce the automatic forfeiture clause of the contract. cdll

Application of the Maceda Law

In any event, the rescission of the contract and the forfeiture of the payments
already made could not be effected, because the case falls squarely under Republic Act
No. 6552, 2 2 otherwise known as the "Maceda Law." Section 3 of said law provides:
"SEC. 3. In all transactions or contracts involving the sale or nancing
of real estate on installment payments, including residential condominium
apartments but excluding industrial lots, commercial buildings and sales to
tenants under Republic Act Numbered Thirty-eight hundred Forty-four as amended
by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has
paid at least two years of installments, the buyer is entitled to the following rights
in case he defaults in the payment of succeeding installments:
"(a) To pay, without additional interest, the unpaid installments due
within the total grace period earned by him, which is hereby xed at the rate of
one month grace period for every year of installment payments made: Provided,
That this right shall be exercised by the buyer only once in every ve years of the
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 life of the contract and its extensions, if any.
"(b) If the contract is cancelled, the seller shall refund to the buyer the
cash surrender value of the payments on the property equivalent to fty percent
of the total payments made and, after ve years of installments, an additional
ve percent every year but not to exceed ninety percent of the total payments
made: Provided, That the actual cancellation of the contract shall take place after
thirty days from receipt by the buyer of the notice of cancellation or the demand
for rescission of the contract by a notarial act and upon full payment of the cash
surrender value to the buyer. cdphil

"Down payments, deposits or options on the contract shall be included in

the computation of the total number of installments made."

Hence, the private respondent was entitled to a one-month grace period for every
year of installments paid, which means that she had a total grace period of three months
from December 31, 1990. Indeed, to rule in favor of petitioner would result in patent
injustice and unjust enrichment. This tribunal is not merely a court of law, but also a court
of justice.
WHEREFORE, the Petition is DENIED and the dispositive portion of the appealed
Decision of the Court of Appeals is hereby AFFIRMED. The CA's discussion on the need for
judicial or notarial demand is MODIFIED in accordance with this Decision. Costs against
petitioners. LibLex

SO ORDERED.
Romero, Purisima and Gonzaga-Reyes, JJ.,concur.
Vitug, J.,is abroad on official business.

Footnotes
1. Seventeenth Division composed of the chairman and ponente, J. Fermin A. Martin Jr.;
and the members, JJ. Ruben T. Reyes and Omar U. Amin, concurring.
2. Penned by Judge Salvador C. Ceguera.
3. CA Decision, p. 18; rollo, p. 47.
4. RTC Decision, p. 13; rollo, p. 72.

5. Petitioners' Memorandum, p. 9; rollo, p. 195.

6. The case was deemed submitted for resolution on November 19, 1998, when this Court
received the private respondent's Memorandum. Petitioners' Memorandum was filed
earlier, on November 12, 1998.
7. Petitioners' Memorandum, p. 10; rollo, p. 196.

8. Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. V,
1992 ed., p. 138. See also Vitug, Compendium of Civil Law and Jurisprudence, 1st ed.,
pp. 433-434.
9. Roque v. Lapuz, 96 SCRA 741, March 31, 1980; Caridad Estates v. Santero, 71 Phil. 114,
December 19, 1940.

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 10. Manuel v. Rodriguez, 109 Phil. 9, July 27, 1960; Albea v. Inquimboy, 86 Phil. 476, May
29, 1950; Joseph & Sons Enterprises, Inc. v. Court of Appeals, 143 SCRA 663, August 29,
1986; Alfonso v. Court of Appeals, 186 SCRA 400, June 8, 1990; Adelfa Properties, Inc. v.
Court of Appeals, 240 SCRA 565, January 25, 1995; Ayala y Compañia v. Joseph
Arcache, 53 Off. Gazette, January 31, 1956; Quibir v. La Orden, 49 Off. Gazette 4857,
July 15, 1953.
11. 46 SCRA 381, August 18, 1972, per Reyes, J.B.L., J.

12. Dawson v. Register of Deeds of Quezon City, GR No. 120600, September 22, 1998, per
Panganiban, J.; Coronel v. Court of Appeals, 263 SCRA 15, October 7, 1996; Salazar v.
Court of Appeals, 258 SCRA 317, July 5, 1996; Jacinto v. Kaparas, 209 SCRA 246, May
22, 1992; Pingol v. Court of Appeals, 226 SCRA 118, September 6, 1993; Dignos v. Court
of Appeals, 158 SCRA 375, February 29, 1998; Taguba v. De Leon, 132 SCRA 722,
October 23, 1984.
13. See Rillo v. Court of Appeals, 274 SCRA 461, June 19, 1997; Roque v. Lapuz, supra.

14. Supra.
15. Article 1306, Civil Code; Philippine Telegraph and Telephone Company v. NLRC, 272
SCRA 596, May 23, 1997; Banana Growers Collective at Puyod Farms v. NLRC, 276 SCRA
544, July 31, 1997; Cha v. Court of Appeals, 277 SCRA 690, August 18, 1997;

16. Pangilinan v. Court of Appeals, 279 SCRA 590, September 29, 1997, per Torres, J.
17. Luzon Brokerage Co, Inc. v. Maritime Building Co., Inc., supra; citing Manila Racing Club
v. Manila Jockey Club, 69 Phil. 57, October 28, 1939.
18. CA Decision, pp. 16, 18; rollo, pp. 45, 47.
19. RTC Decision, p. 10; rollo, p. 69.

20. "Art. 1256. If the creditor to whom tender of payment has been made refuses without
just cause to accept it, the debtor shall be released from responsibility by the
consignation of the thing or sum due. . . .
Art. 1257. In order that the consignation of the thing due may release the obligor,
it must first be announced to the persons interested in the fulfillment of the obligation.
...

Art. 1258. Consignation shall be made by depositing the thing, due at the
disposal of judicial authority, before whom the tender of payment shall be proved, in a
proper case, and the announcement of the consignation in other cases. . . ."

21. CA rollo, p. 41.

22. "An Act to Provide Protection to Buyers of Real Estate on Installment Payments."

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