Tuesday, December 14, 2010

Digest: Pilipinas Bank vs IAC June 30, 1987

FACTS: Hacienda Benito, Inc. as vendor, and private respondents, as vendees executed Contract to Sell No. over a parcel of land on monthly installments subject to the condition: “The contract shall be considered automatically rescinded and cancelled and of no further force and effect upon failure of the vendee to pay when due, three or more consecutive installments as stipulated therein or to comply with any of the terms and conditions thereof…”

During the contract, petitioner sent series of notices to private respondents (PR) for thei latter’s balances/arrearages. From time to time, PR partially complied with this and requested for extensions. On May 19, 1970, the petitioner, for the last time, reminded the PR to pay their balance. After more than two years, PR sent a letter expressing their desire to settle their desire to fully settle their obligation. On March 27, 1974, petitioner wrote a letter to PR , informing them that the contract to sell had been rescinded. PR filed Complaint for Specific Performance with Damages to compel petitioner to execute a deed of sale.

After trial, the lower court rendered a decision in PR’s favor, holding that petitioner could not rescind the contract to sell, because: (a) petitioner waived the automatic rescission clause by accepting payment and by sending letters advising private respondents of the balances due, thus, looking forward to receiving payments thereon. Said decision was affirmed on appeal. Hence, this Petition For Review on Certiorari,

ISSUE: whether or not the Contract to Sell was rescinded, under the automatic rescission clause contained therein.

HELD: In case the rescission is found unjustified under the circumstances, still in the instant case there is a clear waiver of the stipulated right of "automatic rescission," as evidenced by the many extensions granted private respondents by the petitioner. In all these extensions, the petitioner never called attention to the proviso on "automatic rescission." The assailed decision is affirmed.


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