**De La Cruz v. Legaspi:** Understanding Contractual Obligations and Remedies for Non-payment in Property Sale
### Facts:
In November 1950, Eusebia de la Cruz initiated a lawsuit against Apolonio Legaspi and Concordia Samperoy in the Court of First Instance of Antique. De la Cruz sought to compel the delivery of a parcel of land they had sold to him in December 1949 for the sum of PHP 450. Despite the execution of the sale agreement, Legaspi and Samperoy refused to accept the payment tendered by De la Cruz, leading to an impasse over the property’s possession.
Legaspi and Samperoy admitted the sale but contended that De la Cruz had failed to pay the agreed purchase price immediately after the contract’s execution, as initially agreed, leading them to seek the contract’s annulment for lack of consideration and purported deceit.
De la Cruz moved for a judgment on the pleadings, arguing the defense provided by Legaspi and Samperoy did not legally justify their retention of the property. The trial court sided with De la Cruz, ordering him to pay the purchase price and Legaspi and Samperoy to subsequently deliver the land. Dissatisfied, Legaspi and Samperoy appealed, raising issues mainly around the supposed lack of consideration due to non-payment and the legal implications thereof.
### Issues:
1. Whether non-payment of the purchase price immediately after the contract’s execution nullifies the sale for lack of consideration.
2. Whether subsequent non-payment of the agreed price can automatically resolve the contract without a specific stipulation or demand for rescission.
3. The appropriate remedy for failure to pay the purchase price as agreed in a contract of sale.
### Court’s Decision:
The Supreme Court affirmed the trial court’s judgment. It held that:
1. The contract was not void for lack of consideration because the consideration, PHP 450, was acknowledged at the time of the contract’s execution. Subsequent failure to pay did not make the contract void ab initio but constituted a breach of contract, entitling the seller to legal interest for the delay as per article 1501(3) of the Civil Code.
2. Non-payment did not automatically resolve the contract as there was no stipulation or allegation to that effect. The Court distinguished between failure to pay and the contractual stipulation for automatic rescission, noting that without a prior demand for rescission by suit or notarial act, the contract stands.
3. The Court highlighted that even in cases where an automatic rescission clause exists, payment can be made until a formal demand for rescission has been initiated; thus, allowing De la Cruz to enforce the contract upon payment.
### Doctrine:
This case underscores the distinction between the lack of contractual consideration and the failure to fulfill a payment obligation. It elucidates the principle that non-payment of the purchase price at the time agreed upon does not automatically nullify a contract of sale but constitutes a breach, entitling the aggrieved party to interest for delay or a demand for rescission through proper legal channels.
### Class Notes:
– **Lack of Consideration vs. Non-payment**: A contract is not considered void for lack of consideration if the consideration was present at the time of execution but was not subsequently paid as agreed.
– **Breach of Contract Remedies**: In cases of non-payment, the aggrieved party may seek legal interest for the delay (Civil Code, Art. 1501(3)) or demand rescission.
– **Automatic Rescission Clause**: A contract does not automatically resolve due to non-payment without a specific clause and a formal demand for rescission (Civil Code, Art. 1504).
### Historical Background:
In the context of post-World War II Philippines, the legal framework surrounding contractual agreements was transitioning, and the judiciary played a crucial role in interpreting and applying the provisions of the Old Civil Code to emerging economic and social challenges, as evidenced by this 1950 judicial decision. The case provides insights into the legal perspectives on contract enforcement, consideration, and the consequences of breaches, reflecting broader principles of contract law in the Philippines.
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