20.

MCLAUGHLIN v CA
FACTS:
Petitioner Luisa McLaughlin (seller)
and privaterespondent Ramon Flores
(buyer) entered into acontract of
conditional sale of real property.
The totalpurchase price is P140,000.
P26,550 should be paid uponexecution
of the deed and the balance not later
thanMay 31, 1977 with an interest of
1% per month until fullypaid.
Flores failed to pay and hence
petitioner filed acomplaint for the
rescission
of
the
deed
of
conditionalsale.
Eventually, the parties entered into a
compromiseagreement, which was
accepted by the court.The parties
agreed that Flores shall pay P50,000
uponsigning of the agreement and the
balance
in
2
equalinstallments
payable on June 30, 1980 and
December31, 1980. Flores also agreed
to pay P1,000 monthlyrental until the
obligation is fully paid for the use of
thesubject matter of the deed of
conditional sale.
Theyalso agreed that in the event
Flores
fails
to
comply
withhis
obligations, the petitioner will be
entitled to theissuance of a writ of
execution
rescinding
the
deed
ofconditional
sale
and
all
the
payments made will beforfeited in
favor of the plaintiff.
On October 15, 1980, petitioner wrote
to Floresdemanding payment of the
balance on or before October31.
This demand included the installment
due on June30 and December 31,
1980.

On October 30, Flores sent aletter

signifying his willingness and intention
to pay thefull balance.
On November 7, petitioner filed a
motion for writ ofexecution alleging
that Flores failed to pay theinstallment
due on June 1980 and also failed to
pay themonthly rentals from that date.
She prayed that thedeed of conditional
sale be rescinded with forfeiture ofall
payments and payment of the monthly
rentals andeviction of Flores.
The trial court granted the motion.On
November 17, Flores filed a motion
forreconsideration tendering at the
same time a certifiedmanagers check
payable to petitioner and covering
theentire obligation including the
December 1980 installment.
The trial court denied the motion.On
appeal, the CA ruled in favor of Flores
holding thatthe delay in payment was
not a violation of an essential
condition which would warrant a
rescission since On November 17 or
just 17 days from the October
31deadline set by petitioner, Flores
tendered the certifiedmanagers check
and that it was inequitable for Flores
to forfeit all the payments made
(P101,550).
ISSUE:
Whether it is inequitable to cancel the
contractand to have the amount paid
by Flores be forfeited topetitioner
particularly after Flores had tendered
thecertified managers check in full
payment of theobligation.
HELD:
Yes. There is already substantial
compliance
by
Floreswith
the
compromise agreement.
More importantly, theMaceda law
recognizes the vendors right to cancel

thecontract to sell upon the breach

and nonpayment of thestipulated
installments but requires a grace
period afterat least 2 years of regular
installment payments.

Considering petitioners motion for

execution filed on November 7 as a
notice of cancellation, petitioner could
cancel the contract after 30 days from
the receipt by Flores of said motion.

But in cases where less than 2 years of

installmentswere paid, the seller shall
give the buyer a grace period of not
less than 60 days from the date the
installment became due.

Flores tender of payment together

with his motion for reconsideration on
November 17 was well within the30
day period granted by law.

If the buyer fails to pay the

installmentsdue at the expiration of
the grace period, the seller maycancel
the contract after thirty days from the
receipt by the buyer of the notice of
the cancellation or the demand for
rescission of the contract by a notarial
act.
Assuming that under the terms of
agreement
the
December
31
installment was due when on October
15petitioner demanded payment of
the balance on or before October 31,
petitioner could cancel the contract
after 30 days from the receipt by
Flores of the notice of cancellation.

The tender made by Flores of a

certified bank managers check was a
valid tender of payment.
It covered the full amount of the
obligation. However, although he had
made a valid tender of payment which
preserved his rights as a vendee, he
did not follow it with consignation or
deposit of the sum due with thecourt.
Hence he remains liable for the
payment of his obligation because of
his failure to deposit the amount due
with the court.