SELEGNA MGT. DEV’T CORP. V. UCPB the principal obligation.

From respondent’s demand letter, it is clear and

DOCTRINE undisputed by petitioners that they failed to meet those monthly payments
Mora solvendi, or debtor’s default, is defined as a delay in the fulfillment of an since May 30, 1998. Their nonpayment is defined as an "event of default" in
obligation, by reason of a cause imputable to the debtor. There are three the parties’ Credit Agreement.
requisites necessary for a finding of default.
1. the obligation is demandable and liquidated; Considering that the contract is the law between the parties, respondent is
2. the debtor delays performance; justified in invoking the acceleration clause declaring the entire obligation
3. the creditor judicially or extrajudicially requires the debtor’s immediately due and payable. That clause obliged petitioners to pay the entire
performance. loan on January 29, 1999, the date fixed by respondent.

FACTS: Selegna Management and Sps. Edgardo and Zenaida Angeles were Petitioners’ failure to pay on that date set into effect Article IX of the Real Estate
granted a credit facility of P70 million by UCPB. As security, Selegna executed Mortgage of their contract.
real estate mortgages over several parcels of land, condo units and a
promissory note. Both parties stipulated in their Credit Agreement that, failure Hence, UCPB had every right to apply for extrajudicial foreclosure on the basis
to pay shall constitute an event of default, which shall consequently allow the of petitioners’ undisputed and continuing default.
bank to, “declare all outstanding availments of the accommodation together
with accrued interest and any other sum payable. [as immediately due and
payable] “

Petitioner however, failed to render payment for their amortization. UCPB sent
a demand letter and invoke the provision in their Credit Agreement that the
payment to be immediately due and payable. Petitioners paid a partial
payment, however UCPB, still unsatisfied, applied for extrajudicial mortgage
foreclosure. When petitioners received the Notice, they requested to
restructure or to negotiate for a takeout of their account, UCPB Bank denied
petitioners request.

RTC: ordered the foreclosure proceedings to be enjoined and considered that

petitioners are not in default
CA: reversed RTC decision

ISSUE: W/N Petitioners are deemed in default pursuant to the acceleration

clause

RULING: YES.

Mora solvendi, or debtor’s default, is defined as a delay in the fulfillment of an

obligation, by reason of a cause imputable to the debtor. There are three
requisites necessary for a finding of default.
1. the obligation is demandable and liquidated;
2. the debtor delays performance;
3. the creditor judicially or extrajudicially requires the debtor’s
performance.

In the present case, the Promissory Note executed on March 29, 1998,
expressly states that petitioners had an obligation to pay monthly interest on
SPS. CACAYORIN V. AFPMBAI
DOCTRINE: Under Article 1256 of the Civil Code, the debtor shall be released
from responsibility by the consignation of the thing or sum due, without need
of prior tender of payment, when the creditor is absent or unknown, or when
he is incapacitated to receive the payment at the time it is due, or when two or
more persons claim the same right to collect, or when the title to the obligation
has been lost.
Here, it appears that the petitioners’ debt is outstanding; that the Rural Bank’s
receiver, PDIC, informed petitioners that it has no record of their loan even as
it took over the affairs of the Rural Bank, which on record is the petitioners’
creditor as per the July 4, 1994 Loan and Mortgage Agreement; that one way
or another, AFPMBAI came into possession of the loan documents as well as
TCT No. 37017; that petitioners are ready to pay the loan in full; however,
under the circumstances, they do not know which of the two – the Rural Bank
or AFPMBAI – should receive full payment of the purchase price, or to whom
tender of payment must validly be made.
Hence, tender of payment is not necessary. There was a valid consignation.
FACTS: On July 4, 1994, Oscar and his wife and co-petitioner herein, Thelma,
on one hand, and the Rural Bank of San Teodoro (the Rural Bank) on the
other, executed a Loan and Mortgage Agreement with the former as borrowers
and the Rural Bank as lender, under the auspices of Pag-IBIG or Home
Development Mutual Fund’s Home Financing Program.
The Rural Bank issued an August 22, 1994 letter of guaranty informing
AFPMBAI that the proceeds of petitioners’ approved loan in the amount of
₱77,418.00 shall be released to AFPMBAI after title to the property is
transferred in petitioners’ name and after the registration and annotation of the
parties’ mortgage agreement.
On the basis of the Rural Bank’s letter of guaranty, AFPMBAI executed in
petitioners’ favor a Deed of Absolute Sale, and a new title – Transfer Certificate
of Title No. 370178 (TCT No. 37017) – was issued in their name, with the
corresponding annotation of their mortgage agreement with the Rural Bank,
under Entry No. 3364.
Unfortunately, the Pag-IBIG loan facility did not push through and the Rural
Bank closed and was placed under receivership by the Philippine Deposit
Insurance Corporation (PDIC). Meanwhile, AFPMBAI somehow was able to
take possession of petitioners’ loan documents and TCT No. 37017, while
petitioners were unable to pay the loan/consideration for the property.
AFPMBAI made oral and written demands for petitioners to pay the loan/
consideration for the property.
In July 2003, petitioners filed a Complaint for consignation of loan payment,
recovery of title and cancellation of mortgage annotation against AFPMBAI,
PDIC and the Register of Deeds of Puerto Princesa City. The case was
docketed as Civil Case No. 3812 and raffled to Branch 47 of the Regional Trial
Court (RTC) of Puerto Princesa City (Puerto Princesa RTC). Petitioners
alleged in their Complaint that as a result of the Rural Bank’s closure and
PDIC’s claim that their loan papers could not be located, they were left in a
quandary as to where they should tender full payment of the loan and how to
secure cancellation of the mortgage annotation on TCT No. 37017.
AFPMBAI contended however that the consignation was fatally defective and
susceptible to dismissal. Also, it questioned the jurisdiction of the court.
RTC: Consignation is valid; Court has jurisdiction.
CA: Affirmed RTC decision
ISSUE W/N there was a valid consignation?
RULING: YES.
Under Article 1256 of the Civil Code, the debtor shall be released from
responsibility by the consignation of the thing or sum due, without need of prior
tender of payment, when the creditor is absent or unknown, or when he is
incapacitated to receive the payment at the time it is due, or when two or more
persons claim the same right to collect, or when the title to the obligation has
been lost.
Applying Article 1256 to the petitioners’ case as shaped by the allegations in
their Complaint, the Court finds that a case for consignation has been made
out, as it now appears that there are two entities which petitioners must deal
with in order to fully secure their title to the property: 1) the Rural Bank (through
PDIC), which is the apparent creditor under the July 4, 1994 Loan and
Mortgage Agreement; and 2) AFPMBAI, which is currently in possession of the
loan documents and the certificate of title, and the one making demands upon
petitioners to pay.
Clearly, the allegations in the Complaint present a situation where the creditor
is unknown, or that two or more entities appear to possess the same right to
collect from petitioners. Whatever transpired between the Rural Bank or PDIC
and AFPMBAI in respect of petitioners’ loan account, if any, such that
AFPMBAI came into possession of the loan documents and TCT No. 37017,
it appears that petitioners were not informed thereof, nor made privy thereto.
Finally, the lack of prior tender of payment by the petitioners is not fatal to their
consignation case. They filed the case for the exact reason that they were at
a loss as to which between the two – the Rural Bank or AFPMBAI – was
entitled to such a tender of payment. Besides, as earlier stated, Article 1256
authorizes consignation alone, without need of prior tender of payment, where
the ground for consignation is that the creditor is unknown, or does not appear
at the place of payment; or is incapacitated to receive the payment at the time
it is due; or when, without just cause, he refuses to give a receipt; or when two
or more persons claim the same right to collect; or when the title of the
obligation has been lost.

Issue on Jurisdiction: Art. 1258. Consignation shall be made by depositing the

things 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.

The consignation having been made, the interested parties shall also be
notified thereof. he above provision clearly precludes consignation in venues
other than the courts.1âwphi1 Elsewhere, what may be made is a valid tender
of payment, but not consignation. The two, however, are to be distinguished.

Tender of payment must be distinguished from consignation. Tender is the

antecedent of consignation, that is, an act preparatory to the consignation,
which is the principal, and from which are derived the immediate
consequences which the debtor desires or seeks to obtain. Tender of payment
may be extrajudicial, while consignation is necessarily judicial, and the priority
of the first is the attempt to make a private settlement before proceeding to the
solemnities of consignation.

As such, consignation is necessarily judicial; hence, jurisdiction lies with the

RTC, not with the HLURB.
BOSTON BANK V. MANALO
DOCTRINE: For a perfected contract of sale or contract to sell to exist in law,
there must be an agreement of the parties, not only on the price of the property
sold, but also on the manner the price is to be paid by the vendee. It is not
enough for the parties to agree on the price of the property. The parties must
also agree on the manner of payment of the price of the property to give rise
to a binding and enforceable contract of sale or contract to sell. This is so
because the agreement as to the manner of payment goes into the price, such
that a disagreement on the manner of payment is tantamount to a failure to
agree on the price.
FACTS: The Xavierville Estate, Inc. (XEI) was the owner of parcels of land in
Quezon City, known as the Xavierville Estate Subdivision, with an area of 42
hectares. XEI caused the subdivision of the property into residential lots, which
was then offered for sale to individual lot buyers.
Sometime in 1972, then XEI president Emerito Ramos, Jr. contracted the
services of Engr. Carlos Manalo, Jr. who was in business of drilling deep water
wells and installing pumps under the business name Hurricane Commercial,
Inc. For P34,887.66, Manalo, Jr. installed a water pump at Ramos residence.
Manalo, Jr. then proposed to XEI, through Ramos, to purchase a lot in the
Xavierville subdivision, and offered as part of the downpayment the
P34,887.66 Ramos owed him. XEI, through Ramos, agreed.
Ramos confirmed the reservation of the lots. He also pegged the price of the
lots at P200.00 per square meter, or a total of P348,060.00, with a 20% down
payment of the purchase price amounting to P69,612.00 less the P34,887.66
owing from Ramos, payable on or before December 31, 1972; the
corresponding Contract of Conditional Sale would then be signed on or before
the same date, but if the selling operations of XEI resumed after December 31,
1972, the balance of the downpayment would fall due then, and the spouses
would sign the aforesaid contract within five (5) days from receipt of the notice
of resumption of such selling operations. It was also stated in the letter that, in
the meantime, the spouses may introduce improvements thereon subject to
the rules and regulations imposed by XEI in the subdivision.
However, they did not pay the balance of the downpayment on the lots
because Ramos failed to prepare a contract of conditional sale and transmit
the same to Manalo for their signature. On August 14, 1973, Perla Manalo
went to the XEI office and requested that the payment of the amount
representing the balance of the downpayment be deferred, which, however,
XEI rejected. On August 10, 1973, XEI furnished her with a statement of their
account as of July 31, 1973, showing that they had a balance of P34,724.34
on the downpayment of the two lots. Further, they demanded that a deed of
conditional sale over the two lots be transmitted to them for their signatures.
However, XEI ignored the demands. Consequently, the spouses refused to
pay the balance of the downpayment of the purchase price.
A case was filed against the Sps. Manalo. Boston Bank, (nabili ng Boston ang
XEI), maintains that the records do not reflect any schedule of payment of the
80% balance of the purchase price, or P278,448.00. Petitioner insists that
unless the parties had agreed on the manner of payment of the principal
amount, including the other terms and conditions of the contract, there would
be no existing contract of sale or contract to sell.
ISSUE: W/N there was a perfected contract of sale or contract to sell?
RULING: NONE.
For a perfected contract of sale or contract to sell to exist in law, there must be
an agreement of the parties, not only on the price of the property sold, but also
on the manner the price is to be paid by the vendee.
Under Article 1458 of the New Civil Code, in a contract of sale, whether
absolute or conditional, one of the contracting parties obliges himself to
transfer the ownership of and deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent. A contract of sale is
perfected at the moment there is a meeting of the minds upon the thing which
is the object of the contract and the price. From the averment of perfection, the
parties are bound, not only to the fulfillment of what has been expressly
stipulated, but also to all the consequences which, according to their nature,
may be in keeping with good faith, usage and law. On the other hand, when
the contract of sale or to sell is not perfected, it cannot, as an independent
source of obligation, serve as a binding juridical relation between the parties.
A definite agreement as to the price is an essential element of a binding
agreement to sell personal or real property because it seriously affects the
rights and obligations of the parties. Price is an essential element in the
formation of a binding and enforceable contract of sale. The fixing of the price
can never be left to the decision of one of the contracting parties. But a price
fixed by one of the contracting parties, if accepted by the other, gives rise to a
perfected sale.
It is not enough for the parties to agree on the price of the property. The parties
must also agree on the manner of payment of the price of the property to give
rise to a binding and enforceable contract of sale or contract to sell. This is so
because the agreement as to the manner of payment goes into the price, such
that a disagreement on the manner of payment is tantamount to a failure to
agree on the price.
In a contract to sell property by installments, it is not enough that the parties
agree on the price as well as the amount of downpayment. The parties must,
likewise, agree on the manner of payment of the balance of the purchase price
and on the other terms and conditions relative to the sale. Even if the buyer
makes a downpayment or portion thereof, such payment cannot be considered
as sufficient proof of the perfection

Here, there is no showing, in the records, of the schedule of payment of the

balance of the purchase price on the property amounting to P278,448.00. We
have meticulously reviewed the records.

Hence, parties failed to forge a perfected contract to sell over the 2 lots.
LIM V. CA
DOCTRINE: The moment she affixed her signature thereon, petitioner became
bound by all the terms stipulated in the receipt. She, thus, opened herself to
all the legal obligations that may arise from their breach. This is clear from
Article 1356 of the New Civil Code which provides: Contracts shall be
obligatory in whatever form they may have been entered into, provided all the
essential requisites for their validity are present. In the case before us, the
parties did not execute a notarial will but a simple contract of agency to sell on
commission basis, thus making the position of petitioners signature thereto
immaterial.
FACTS: Lim, who arrived from Cebu, received from Suarez 2 pieces of
jewelry: a diamond ring and a bracelet to be sold on commission basis. Lim
returned the bracelet to Suarez, but failed to return the diamond ring or to turn
over the proceeds thereof if sold. Suarez wrote a demand letter asking for the
return of the ring or the proceeds of the sale thereof. Lim, however, alleges
that she had returned both the ring and the bracelet, hence she no longer has
any liability.
contract of agency to sell on commission basis, thus making the position of
petitioners signature thereto immaterial.
Furthermore, there are some provisions of the law which require certain
formalities for particular contracts. The first is when the form is required for the
validity of the contract; the second is when it is required to make the contract
effective as against the third parties such as those mentioned in Articles 1357
and 1358; and the third is when the form is required for the purppose of proving
the existence of the contract, such as those provided in the Statute of Frauds
in Article 1403. A contract of agency to sell on commission basis does not
belong to any of these three categories, hence, it is valid and enforceable in
whatever form it may be entered into.

Lim has a different version of the facts. She denies the transaction was for her
to sell the 2 pieces of jewelry on commission basis. She told Suarez that she
would consider buying the pieces of jewelry for her own use. Lim took the
pieces of jewelry and asked Suarez to prepare the necessary papers for her
to sign because she was not yet prepared to buy it. The document was
prepared, and Lim signed it, but she claims that she didn’t agree to the terms
of the receipt regarding the sale on commission basis. Her ‘proof’ is that she
signed the document on the upper portion and not at the bottom where a space
is provided for the signature of the persons receiving the jewelry.

ISSUE W/N the contract of agency to sell on commission basis is valid

RULING: YES.

Rosa Lim’s signature indeed appears on the upper portion of the receipt
immediately below the description of the items taken. We find that this fact
does not have the effect of altering the terms of the transaction from a contract
of agency to sell on commission basis to a contract of sale. Neither does it
indicate absence or vitiation of consent thereto on the part of Rosa Lim which
would make the contract void or voidable. The moment she affixed her
signature thereon, petitioner became bound by all the terms stipulated in the
receipt. She, thus, opened herself to all the legal obligations that may arise
from their breach. This is clear from Article 1356 of the New Civil Code which
provides: Contracts shall be obligatory in whatever form they may have been
entered into, provided all the essential requisites for their validity are present.
In the case before us, the parties did not execute a notarial will but a simple
GATCHALIAN REALTY V. ANGELES
DOCTRINE: Mandatory Twin Req’ts for a valid and effective cancellation
under RA 6552:
1. Notarized Notice of Cancellation
2. Refund of Cash Surrender Value
Here, there was no actual cancellation of the contracts because of GRI’s
failure to actually refund the cash surrender value to Angeles.
In view of the absence of a valid cancellation, the Contract to Sell between
GRI and Angeles remains valid and subsisting.
FACTS: On 28 December 1994, [Angeles] purchased a house (under Contract
to Sell No. 2272) and lot (under Contract to Sell No. 2271) from [GRI] valued
at Seven Hundred Fifty Thousand Pesos (Php 750,000.00) and Four Hundred
Fifty Thousand Pesos (Php 450,000.00), respectively, with twenty-four percent
(24%) interest per annum to be paid by installment within a period of ten years.
The house and lot were delivered to [Angeles] in 1995. Nonetheless, under the
contracts to sell executed between the parties, [GRI] retained ownership of the
property until full payment of the purchase price.
After sometime, [Angeles] failed to satisfy her monthly installments with [GRI].
[Angeles] was only able to pay thirty-five (35) installments for Contract to Sell
No. 2271 and forty-eight (48) installments for Contract to Sell No. 2272.
According to [GRI], [Angeles] was given at least twelve (12) notices for
payment in a span of three (3) years but she still failed to settle her account
despite receipt of said notices and without any valid reason. [Angeles] was
again given more time to pay her dues and likewise furnished with three (3)
notices reminding her to pay her outstanding balance with warning of
impending legal action and/or rescission of the contracts, but to no avail. After
giving a total of fifty-one (51) months grace period for both contracts and in
consideration of the continued disregard of the demands of [GRI], [Angeles]
was served with a notice of notarial rescission dated 11 September 2003 by
registered mail which she allegedly received on 19 September 2003 as
evidenced by a registry return receipt.
Consequently [Angeles] was furnished by [GRI] with a demand letter dated 26
September 2003 demanding her to pay the amount of One Hundred Twelve
Thousand Three Hundred Four Pesos and Forty Two Centavos (Php
112,304.42) as outstanding reasonable rentals for her use and occupation of
the house and lot as of August 2003 and to vacate the same. She was informed
in said letter that the fifty percent (50%) refundable amount that she is entitled
to has already been deducted with the reasonable value for the use of the
properties or the reasonable rentals she incurred during such period that she
was not able to pay the installments due her. After deducting the rentals from
the refundable amount, she still had a balance of One Hundred Twelve
Thousand Three Hundred Four Pesos and Forty Two Centavos (Php
112,304.42) which she was required to settle within fifteen (15) days from
receipt of the letter.
Allegedly, [Angeles] subsequently sent postal money orders through
registered mail to [GRI]. In a letter dated 27 January 2004 [Angeles] was
notified by [GRI] of its receipt of a postal money order sent by [Angeles]. More
so, she was requested to notify [GRI] of the purpose of the payment. [Angeles]
was informed that if the postal money order was for her monthly amortization,
the same will not be accepted and she was likewise requested to pick it up
from [GRI’s] office. On 29 January 2004, another mail with a postal money
order was sent by [Angeles] to [GRI]. In her 6 February 2004 letter, [GRI] was
informed that the postal money orders were supposed to be payments for her
monthly amortization. Again, in its 8 February 2004 letter, it was reiterated by
[GRI] that the postal money orders will only be accepted if the same will serve
as payment of her outstanding rentals and not as monthly amortization. Four
(4) more postal money orders were sent by [Angeles] by registered mail to
[GRI].
For her continued failure to satisfy her obligations with [GRI] and her refusal to
vacate the house and lot, [GRI] filed a complaint for unlawful detainer against
[Angeles] on 11 November 2003.
MeTC: in favor of GRI
RTC: No valid cancellation of the Contract to Sell based on RA 6552
MR granted; There was a valid cancellation
CA: No valid cancellation of the Contract to Sell based on RA 6552
ISSUE: W/N there was a valid cancellation of the contract to sell?
RULING: NONE
Republic Act No. 6552, also known as the Maceda Law, or the Realty
Installment Buyer Protection Act, has the declared public policy of "protecting
buyers of real estate on installment payments against onerous and oppressive
conditions." Section 3 of R.A. 6552 provides for the following rights of a buyer
who has paid at least two years of installments but 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 fixed at the rate of one month
grace period for every one year of installment payments made: Provided, That
this right shall be exercised by the buyer only once in every five years of the
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 fifty per cent of
the total payments made, and, after five years of installments, an additional
five per cent every year but not to exceed ninety per cent 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.

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

computation of the total number of installment payments made.

Otherwise stated, the actual cancellation of the contract can only be deemed
to take place upon the expiry of a 30-day period following the receipt by the
buyer of the notice of cancellation or demand for rescission by a notarial act
and the full payment of the cash surrender value.

Here, there was no actual cancellation of the contracts because of GRI’s failure
to actually refund the cash surrender value to Angeles.

In view of the absence of a valid cancellation, the Contract to Sell between

GRI and Angeles remains valid and subsisting.